2026 05 13

Global Financial Briefing — Wednesday, 13 May 2026

Market Overview

Global equity markets are staging a broad risk-on rally today, with the S&P 500 breaking to a fresh all-time intraday high and the Nasdaq 100 gaining over 1%, even as the US Producer Price Index for April came in dramatically hotter than expected — +1.4% month-on-month versus +0.5% consensus, putting annualised wholesale inflation near 6%, the highest since 2022. Technology and AI-linked names are absorbing the inflation shock far better than the rest of the market, as investors bet that AI-driven productivity gains can sustain earnings even in a higher-price environment. The Dow Jones, by contrast, slipped modestly, reflecting a rotation away from cyclicals and financials toward growth.

European markets closed uniformly in the green before the US session got going, with the Euro STOXX 600, DAX and CAC 40 all advancing between 0.35% and 0.91%. UK gilts are, however, flashing a warning signal: the 10-year gilt yield climbed to 5.11%, its highest level since July 2008, and the 30-year gilt hit 5.8%, a level not seen since 1998. This reflects a combination of sticky UK inflation and acute political uncertainty, with more than 70 Labour MPs reported to have urged Prime Minister Keir Starmer to resign following poor local election results, raising fears about near-term fiscal loosening. In Asia, Japan's Nikkei 225 closed at 63,272, hovering within 0.2% of its all-time high, while the Shanghai Composite held near its 52-week high ahead of the high-stakes Trump–Xi summit.

The key macro tension of the moment is vivid: equity indices are at or near all-time highs globally, credit spreads are historically tight (risk-on), and yet underlying inflation is re-accelerating sharply in the US — almost certainly driven by surging energy prices linked to the ongoing Iran conflict, which has also pushed WTI crude above $101 and Brent above $106. The Federal Reserve is caught in a difficult spot: having already cut rates to 3.50–3.75%, it faces the prospect of re-tightening if CPI continues to climb. Silver surged nearly 5% today and copper is testing multi-year highs — markets are pricing in ongoing commodity demand even as central bank policy paths become murkier.

Global Indices Snapshot

Note on market states: US indices (^GSPC, ^NDX, ^DJI, EEM) are intraday prices with the market OPEN. European indices closed earlier today (POSTPOST/POST state). Asian indices reflect the most recently completed session (May 13 Asian session, PREPRE state).

Americas

Europe (prev close)

Asia-Pacific (most recent completed session)

Emerging Markets

Index Valuations & Investment Risk

Valuation Table

(†) Hist avg trailing P/E: static long-run reference constants. Trailing P/E (live): yfinance trailingPE on ETF proxies. Premium = (live PE / hist avg midpoint − 1) × 100.

Investment Risk Assessment for ETF Investors

United States (S&P 500 / Nasdaq ETFs)

The S&P 500 is setting intraday all-time highs today at 7,447 — well above its 50-day moving average of 6,884 and 200-day MA of 6,764, confirming the near-term uptrend. However, the valuation picture warrants caution. The trailing P/E of 27.89x via SPY represents a +64% premium to the long-run average of ~17x. More critically, the Equity Risk Premium (ERP) is negative: earnings yield = (1÷27.89) = 3.59%, minus the 10Y Treasury yield of 4.42% (FRED DGS10), gives an ERP of −0.83%. This means US Treasuries are now yielding more than S&P 500 equities on a trailing earnings basis. Historically, negative ERP has correlated with weak forward 5–10 year equity returns, although it can persist for extended periods in bull markets. The 10Y TIPS real yield of 1.95% (FRED DFII10) is meaningfully positive, adding to the discount rate pressure on long-duration assets like growth stocks.

For Nasdaq ETFs, the trailing P/E of 34.86x (QQQ) sits 27% above the historical average of 25–30x. AI-related names are driving outsized earnings beats (Nebius +17% today), which may justify some premium, but concentration risk — with the top handful of mega-cap tech names dominating the index — means a re-rating could be swift and deep if expectations disappoint. Overall US risk: High valuation risk / thin margin of safety.

Europe (STOXX 600 / CAC 40 / DAX ETFs)

European equities look considerably more attractive on a relative basis. The Euro STOXX 600 trades at 18.04x trailing PE — only 13% above the historical average — and the EUR ERP = (1÷18.04) − 3.15% (Bund 10Y ECB API) = 5.54% − 3.15% = +2.39% — meaningfully positive. European equities still offer a genuine premium over bonds. The CAC 40 (16.99x, +13% premium) and DAX (18.03x, +13% premium) are modestly elevated but not stretched by US standards. Key risks: the Iran war energy shock, ECB policy uncertainty, and EUR/USD dynamics that could affect earnings for multinational exporters. The CAC 40 is 7.3% below its all-time high of 8,642, and the DAX is 5.4% below its ATH of 25,508. For non-EUR investors, the strengthening euro (1.1773 vs USD) adds a currency tailwind. Overall European risk: Moderate — fair value on P/E, positive ERP, but macro headwinds.

Japan (Nikkei / TOPIX ETFs)

The Nikkei 225 is within 0.2% of its all-time high at 63,272 — a remarkable recovery from the April 2025 lows near 36,856. The trailing P/E of 24.46x (1321.T) is 16% above the historical average of 20–22x. The BOJ held its policy rate at 0.75% at the April 28 meeting but faces dissent from board members calling for 1.0%, and the market is pricing in resumption of rate hikes in July 2026. The 10Y JGB yield has surged to 2.55% (highest since 1997), compressing yield differentials and exerting pressure on the yen. USD/JPY at 157.85 suggests continued yen weakness, which historically benefits Japan's export-oriented equity market, but also increases imported inflation and BOJ pressure to hike. For hedged yen investors, Japan remains compelling; for unhedged, the currency risk is notable. Corporate governance reforms continue to support re-rating.

Emerging Markets (MSCI EM ETFs)

EEM is trading at 67.38, essentially at its all-time high of 68.15 (within 1.1%). Despite this strong performance, the trailing P/E of 18.27x represents a 31% premium to the historical EM average of 13–15x — the largest relative premium in this briefing outside of US tech. The positive drivers: China re-engagement (Trump-Xi summit upcoming) and resilient growth across Asia ex-Japan. Currency and political risks remain elevated. The high P/E premium may reflect forward-looking optimism about the Trump-Xi outcome. Overall EM risk: Moderate to high — near ATH, elevated PE, binary geopolitical event risk.

Overall Risk Score (qualitative): - US equities: High valuation risk / low margin of safety — negative ERP, P/E +64% above hist avg - European equities: Moderate — fair value, positive ERP, macro headwinds - Japan: Moderate — BOJ risk, JPY volatility, but positive earnings revision cycle - EM: Moderate to high — elevated PE, near ATH, Trump-Xi binary risk

Disclaimer: This is financial information, not personalised investment advice. Past valuations do not guarantee future returns. Consult a financial advisor before investing.

US Economic Indicators (FRED — authoritative)

FRED macro data is monthly and typically lags 4–6 weeks. CPI and Core CPI retrieved with units: "pc1" (YoY % change). NFP change = 158,736K (Apr) − 158,621K (Mar) = +115K.

Key warning: CPI re-acceleration. The CPI surge from 2.39% in January 2026 to 3.78% in April — a 1.4 percentage-point jump in three months — is the fastest re-acceleration of US inflation since the initial 2021–22 spike. Today's PPI print adds further concern: US April PPI rose +1.4% month-on-month vs +0.5% consensus, with the annual rate reaching approximately +6%, the highest since 2022. This combination strongly suggests that the Fed's rate cuts (now at 3.50–3.75%) may have been premature, and the committee will face intense scrutiny at future meetings. Energy price passthrough from the Iran conflict is almost certainly the primary driver.

Other economic releases today: The dominant data release is the US PPI — see above. No major non-US releases confirmed from searches for today; the trading economics calendar did not surface specific international prints for May 13.

Fixed Income & Bond Analysis

All US Treasury yields from FRED (as of 2026-05-11). European yields from ECB YC API (2026-05-12) and web search.

Policy Rates

Government Bond Yields

ECB Yield Curve (full, from ECB YC API 2026-05-12): 3M = 2.12% · 1Y = 2.53% · 2Y = 2.66% · 5Y = 2.78% · 10Y = 3.15% · 20Y = 3.56% · 30Y = 3.58%

Yield Curve Spreads (FRED pre-computed): - 10Y–2Y spread: +47 bps (FRED T10Y2Y, 2026-05-11) — positively sloped / normal. The curve has re-steepened from its inverted state of 2023–2024, signalling that the Fed's cutting cycle has had its intended effect. At +47 bps, the curve is in "flat to mildly normal" territory — not yet signalling robust growth expectations but no longer flashing a recession alarm. - 10Y–3M spread: +72 bps (FRED T10Y3M, 2026-05-12) — normal. This re-inversion of the short end in late 2022–2023 was the classic recession warning; its sustained return to positive territory over the past year is consistent with avoiding a hard landing.

OAT–Bund Spread: France 10Y OAT vs Germany 10Y Bund data was not retrieved from today's searches. From ECB YC API we have the Bund proxy (AAA-rated EUR curve) at 3.15% for 10Y. The OAT-Bund spread is a key indicator of French fiscal stress — monitor separately.

UK Gilt Stress: The 10Y gilt at 5.11% (highest since July 2008) and 30Y at 5.80% (highest since 1998) are a significant concern. The combination of hot UK inflation, BOE still at ~3.73%, and acute political uncertainty (Labour internal crisis post-local elections) is creating a fiscal premium in UK debt. Gilt yields above 5% on the long end historically impose severe pressure on UK mortgage rates and government financing costs. This is a watchlist risk for UK equity investors.

Yield Curve Charts

The US Treasury curve retains a gently upward slope (3M: 3.70% → 30Y: 4.98%), consistent with a normalised post-inversion environment. Compared to the prior month (April 13), yields have risen across the curve by roughly 15–20 bps, most visibly at the 5Y–10Y segment — reflecting the market's repricing of inflation risk following successive hot CPI and PPI prints. The 3-month bill at 3.70% is within 7.5 bps of the Fed Funds midpoint (3.625%), which is the expected level — no anomaly detected.

The eurozone AAA curve shows a classic upward-sloping structure, anchored near the ECB deposit rate of 2.00% at the short end (3M: 2.12%) and rising steeply through the belly to 3.15% at 10Y and 3.58% at 30Y. The curve is significantly steeper than the US curve in absolute yield terms — the US 10Y–3M gap is only 72 bps, while the ECB 10Y–3M gap is ~103 bps — suggesting European markets price in more term premium or a wider range of long-run rate outcomes. No prior-month Bund comparison is available for this chart.

Credit Markets (FRED — authoritative)

FRED OAS spreads are in percentage points; converted to basis points below.

All three spread series are below their long-run "normal" ranges. US IG at 77 bps is below the 80 bps lower bound; US HY at 282 bps is meaningfully below the 300 bps floor. This is a classic complacency signal — credit markets are pricing in an extremely benign default environment, consistent with the equity risk-on sentiment. The risk is asymmetric: spreads can only tighten a little more from here but could widen sharply if credit conditions deteriorate (e.g., if PPI-led inflation forces the Fed to reverse course and hike again).

Bond Portfolio Implications

Equity Risk Premium: - S&P 500 ERP = (1÷27.89) − 4.42% = 3.59% − 4.42% = −0.83% ← NEGATIVE. US bonds are yielding more than US equities on a trailing earnings basis. This is a historically elevated valuation signal for US equities versus fixed income. Investors in a balanced portfolio should consider that bonds now offer superior earnings-equivalent yield to US equities. - Euro ERP = (1÷18.04) − 3.15% = 5.54% − 3.15% = +2.39% ← Positive. European equities still offer a meaningful yield advantage over Bunds. - FTSE ERP = (1÷17.80) − 5.11% = 5.62% − 5.11% = +0.51% ← Low but positive. The sharp rise in UK gilt yields has nearly neutralised the FTSE earnings yield advantage — UK equities are approaching their "compete with bonds" threshold.

Duration risk: A 100 bps rise in yields implies roughly 8–9% price loss on a 10-year bond. With US 10Y at 4.42% and inflation re-accelerating, this tail risk cannot be dismissed — particularly for long-duration bond holders. Short-duration or floating-rate instruments appear more defensible in this environment.

Currencies & Commodities

Currencies

The USD has weakened meaningfully — the Broad USD Index of 118.04 (as of May 8) compares to highs above 130 in 2022–23, reflecting the Fed's cutting cycle and some dollar debasement concerns. EUR/USD at 1.1773 is the strongest euro level in several years, benefiting European holders of USD-denominated assets. The yen remains under pressure at 157.85 per dollar despite the BOJ's ongoing normalization, as the policy rate differential (3.625% USD vs 0.75% JPY) remains large. Sterling (1.2932) faces a negative headwind from UK political uncertainty, even as the BOE holds rates firm via SONIA at 3.73%.

Commodities (all from yfinance MCP front-month futures)

Oil: Brent crude at $106.35 and WTI at $101.92 remain elevated, sustained by supply concerns related to the Iran conflict. Brent is 28% below its all-time high of $147.43 and WTI is 31% below its ATH of $147.27 — these levels do not approach prior crisis peaks, but are high enough to create significant energy cost passthrough into CPI and PPI, as evidenced by today's hot inflation prints.

Gold: Trading at $4,708.90/oz, gold sits 15.7% below its all-time high of $5,586.20 (which was the 52-week high, also the ATH field from yfinance). This means gold peaked well above current levels at some point in the past 52 weeks and has pulled back. At $4,709, gold remains well above its 200-day MA of $4,310, suggesting the medium-term trend is still upward. Gold's strength reflects safe-haven demand from the Iran conflict and inflation protection.

Silver: Up +4.93% today at $89.81/oz — a significant single-day move. Silver is 26.0% below its all-time high of $121.30 (its 52-week high), suggesting it surged to extraordinary levels recently before correcting. At $89.81 vs a 52-week low of $31.91, silver has more than doubled in the past year — a remarkable run driven by industrial demand (solar, EVs) and precious metals momentum.

Copper: At $6.6625/lb, copper is trading at the top of its 52-week range ($4.32 – $6.72). The allTimeHigh field in the API data shows 6.601, but today's day high of 6.716 exceeds that — the ATH field appears stale. Copper appears to be at or setting new multi-year highs, driven by electrification demand and supply constraints. The +2.01% move today reinforces the industrial metals momentum story.

Natural Gas: $2.875/MMBtu — up modestly (+1.13%) but still 82% below its all-time high of $15.78 and 63% below its 52-week high of $7.83, which was reached during the energy crisis earlier in the year. Nat gas remains in a depressed range.

Crypto: Not searched today; no >3% move flagged from primary sources. Omitted per briefing protocol.

Sector & Theme Highlights

Best performing themes today: - AI Infrastructure / Data Centres: Nebius Group +17% on first-quarter revenue of $399M (nearly 8× year-on-year), confirming the extraordinary growth trajectory of AI compute infrastructure. The Nasdaq 100's +1.03% gain is largely attributable to AI-linked mega-caps. - Precious Metals & Industrial Commodities: Silver +4.93%, copper +2.01%, gold +0.47%. The combination of inflation protection demand and electrification/industrial demand is sustaining the commodity super-cycle thesis. - Energy (selective): With oil above $100, energy producers benefit, though energy ETFs face headwinds from the daily decline in crude futures.

Worst performing themes today: - Retail / Consumer Discretionary: Birkenstock −5.5% on earnings miss. Higher energy and goods prices are compressing consumer spending power, hitting discretionary names. - Aerospace/Defence (smaller caps): Karman −11% on earnings miss vs consensus. Not reflective of the broader defence sector (which benefits from Iran-conflict spending), but company-specific. - Banking/Financials: Facing dual headwinds of hot inflation (credit risk repricing) and political uncertainty. Underperforming the broader market.

Global macro themes to watch: 1. AI capital cycle: Multiple data points (Nebius, chip supply) confirm that AI infrastructure spending is genuine and accelerating. This is the single most important equity market driver of 2025–2026. 2. Iran-linked energy shock: Oil above $100 is a macro tax. Every 10% rise in oil adds roughly 0.3–0.5pp to CPI — the April PPI print makes this transmission explicit. 3. Trump–Xi summit: Markets are pricing in some positive outcome — Shanghai Composite near 52-week highs, EM at near-ATH, risk-on broadly. A breakdown in talks could be a significant negative catalyst. 4. BOJ normalisation: BOJ at 0.75% with dissent for 1.0% and OECD projecting 2.0% by end-2027. As JGB yields rise toward 2.55%, the unwinding of yen carry trades remains a background volatility risk. 5. UK political/fiscal stress: Labour internal crisis + hot inflation + gilt yields at 2008 highs is a fragile combination. UK gilt sell-off could spread to risk sentiment if it intensifies.

Top Stories (Global)

• US PPI April 2026 surges: Producer prices rose +1.4% m/m vs +0.5% consensus — the largest monthly increase since 2022. The annual rate hit approximately +6%. This follows April CPI at +3.78% YoY. The inflation re-acceleration is now unmistakable and is being attributed to energy cost passthrough from the Iran conflict.
• S&P 500 sets intraday all-time high: Despite the hot PPI, the S&P 500 touched 7,450.94 — a new record — driven by AI/tech enthusiasm. The disconnect between macro risks and equity valuations widened further today.
• Nebius Group +17%: The AI infrastructure company reported first-quarter revenue of $399M, up ~8× year-on-year from $50.9M. The beat underscores the pace of AI compute spending and the differentiation within the technology sector.
• EchoStar spectrum deal approved: The FCC approved the $40B sale of EchoStar's wireless spectrum to AT&T and SpaceX — a landmark deal reshaping US telecoms infrastructure capacity.
• UK gilt yields spike to 2008 levels: 10-year gilt hit 5.11%, 30-year hit 5.80% — the highest in 18 and 28 years respectively. Political uncertainty (70+ Labour MPs calling for PM Starmer's resignation) and sticky inflation are driving the sell-off. This level of gilt stress bears close monitoring.
• Trump–Xi summit imminent: Asia-Pacific markets closed with limited moves but an underlying bid tone, with investors positioned for a positive outcome from the upcoming high-stakes US–China summit. The Shanghai Composite rose +0.67% to 4,242, near its 52-week high.
• BOJ holds at 0.75%, next move watched: The BOJ left rates unchanged at April 28 meeting despite dissent; OECD projects 2.0% policy rate by end-2027. With the JGB 10Y at 2.55% (1997 highs), markets are pricing in the end of ultra-low Japanese rates.

Looking Ahead

Central banks / speeches (next 1–5 days): - Fed speakers expected this week following the hot PPI print — hawkish re-pricing of rate expectations likely. - BOJ: next meeting to be watched for any acceleration of rate hike signalling, particularly if JPY continues to weaken and inflation broadens. - ECB: deposit rate at 2.00%, curve well-behaved. Watch for comments on rate path given energy-driven inflation. - BOE: SONIA at 3.73% — UK gilt stress may force BOE communication on policy trajectory.

Economic releases (next 5 trading days): - US April CPI has already been released for the month; watch for May preliminary readings. - UK labour/inflation data: given gilt stress, any upside surprise in UK CPI or wage data could accelerate the gilt sell-off. - China trade / industrial data: ahead of the Trump–Xi summit, Chinese macro data will be scrutinised for negotiating position signals. - Japan CPI and GDP: BOJ decision timeline depends on Japanese inflation sustaining above 2%.

Geopolitical: - Trump–Xi summit: the binary event of the month. Markets are positioned for a positive outcome; downside risk from a breakdown is significant for China, EM, and global trade. - Iran conflict developments: ongoing energy price driver; any escalation or ceasefire would materially move oil and inflation expectations.

Earnings: - Q1 2026 earnings season is in its later stages; notable upcoming reporters include major US retailers (key for consumer spending read-through given hot PPI) and tech mega-caps with AI capital expenditure announcements.

Sources: FRED (Federal Reserve Bank of St. Louis) — DGS series, DFEDTAR series, BAML credit spreads, DEXUSEU, DTWEXBGS, CPIAUCSL, CPILFESL, UNRATE, PAYEMS, DFII10, DFF, VIXCLS, SP500, ECBDFR, IUDSOIA. ECB Yield Curve API (data-api.ecb.europa.eu), observation date 2026-05-12. yfinance MCP — all global equity index levels, ETF P/E proxies, and commodity futures prices, retrieved 2026-05-13 (intraday/last session). Web search sources: Japan 10Y JGB · UK Gilt yields · BOJ policy rate / CNBC · OECD BOJ outlook · Market news / TheStreet · FX rates / HDFC.