GGMA Market Wrap 20-05-2026
Asia risk-off extended into a fourth session as the global bond rout deepened: the Nikkei led the move (-1.9%), Australia's ASX (-1.3%) and MSCI EM (-0.9%) followed, with European futures opening soft (DAX -0.7%, Euro Stoxx 50 -0.6%, FTSE -0.6%) and Hong Kong (-0.4%) printing only modestly weaker as China's onshore CSI 300 (+0.3%) outperformed as the PBOC left rates unchanged.
Yesterday, a big Treasury block-sales (~$15bn 10y-equivalent) drove a 'capitulation' selloff with the US 30y reaching 5.20% intraday, the highest since 2007/GFC, according to Bloomberg. A Bloomberg gauge of long-duration government bonds is down 4.6% YTD on concern accelerating inflation will force more central-bank tightening. Pressure is now building for incoming Fed Chair Warsh between White House calls for cuts and FOMC colleagues leaning toward hold or hike. (BBG)
Japan's super-long curve saw the first net foreign outflow since December 2024 — ¥81.3bn / $512m in April (BBG) — and a 20y JGB auction calmed nerves with a strong bid-cover, sending the 20y / 30y / 40y yields lower into the European open, though Pimco still calls the JGB curve 'too steep'.
Philadelphia Fed President Anna Paulson favored keeping rates steady, saying cuts require sustained progress on inflation. She said the labor market remains stable, but inflation is still too high for cuts. She added that the outlook depends on how long the war disrupts oil and goods supplies; a quick resolution would likely ease inflation risks. (BBG).
The European Central Bank will likely raise interest rates at its next meeting in June unless there’s an improvement in the Middle East conflict and a recovery in energy prices, according to ECB Governing Council member Martin Kocher.
Reuters reported US Treasury Sec Bessent's BoJ-backing may clear political hurdles for a June BoJ hike to 1% (markets price 80%) (RTRS) and G7 finance chiefs pledged a 'measured' fiscal approach in their Paris communique (BBG).
In Geopolitics, Trump threatened Iran with a 'Big Hit' if no deal in 'two or three days, maybe Friday, Saturday, Sunday' (BBG). Meanwhile, NATO is considering a Hormuz ship-protection mission if not reopened by early July (BBG). The US Senate voted 50-47 to discharge a war-powers resolution to block further strikes (4 GOP defections) (BBG); and Xi told Putin in Beijing a 'comprehensive Mideast ceasefire is of utmost urgency' — with Power of Siberia 2 talks on the agenda (AJ).
Commodities are all in the red: Precious Metals (-0.9%), WTI (-0.4%), Copper (-0.4%), Industrial Metals (-0.2%), Grains (-0.2%) — with Woodside CEO warning that the world is 'underestimating' the Iran-war LNG supply hit (BBG). FX showed USD broadly bid (USDINR +0.26%, USDKRW +0.20%).
Stocks-side, Meta began notifying 8,000 layoffs starting in Singapore at 04:00 (YF), SpaceX picked Goldman Sachs as lead-left underwriter for what could be a record $75bn IPO at a $1.75trn valuation (Nasdaq debut as soon as 12 June) (CNBC), KKR offloaded its entire 10.6% Kokusai Electric stake at a 7-8% discount (shares -7.1%) (BBG).
Financial Markets Monitor
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