Public Markets 3 Days

Last updated: May 12, 2026, 8:30 PM ET

Public Markets: Inflation Pressures and Geopolitical Shocks

Persistent inflation fears drove Treasury yields higher as accelerating U.S. consumer prices, particularly in the energy sector, lowered expectations for Federal Reserve rate cuts this year, prompting renewed bearish bets among bond traders. The energy shock, linked to the ongoing conflict in the Middle East, has severely strained global supply, with Iran’s main oil export terminal seeing its first prolonged halt since the war began. This tension is reflected in forecasts, where the EIA now expects global oil inventories to drain by 2.6 million barrels daily in 2026, a sharp increase from its prior estimate of 300,000 barrels, keeping energy stocks attractively priced despite the crisis.

Energy Markets & Global Supply Chains

The conflict in the Middle East continues to choke fuel shipments, putting significant stress on China’s manufacturing heartland and forcing private refiners there to seek government approval to reduce processing rates. Globally, supply chain stress gauges are flashing red again, mirroring pandemic peaks due to the energy crisis, while India has been forced to secure phosphate fertilizer at prices nearly 40% above pre-war rates. In response to high demand for electricity driven by AI buildout, American Electric Power is raising $2.6 billion via a stock sale, even as US power prices climb 61% faster than general inflation.

Corporate Finance and IPO Activity

Investor appetite for risk is evident in the primary market, where energy developer Fervo Energy successfully priced its US IPO above the marketed range, raising $1.89 billion after an early upsizing this week. Similarly, AI chipmaker Cerebras Systems is guiding investors that its offering will price above the initial high mark, signaling strong demand for foundational technology plays. In contrast, the corporate debt market shows caution; KKR Private Credit Fund recorded a $560 million loss, prompting the firm to inject $300 million to shore up the fund amid climbing loan defaults, a concern also reflected by evaporating retail fundraising for similar credit vehicles.

Deals, Activism, and Corporate Strategy

In the M&A arena, Brown-Forman decisively rejected a $15 billion all-cash takeover approach from Sazerac at $32 a share, indicating the Jack Daniel’s maker believes its standalone value exceeds the offer. Meanwhile, activist investor Ananym Capital is pressing BWX Technologies to leverage its nuclear reactor manufacturing capacity for commercial applications, seeking a strategic pivot. Elsewhere, Dream Finders Homes submitted a $704 million cash-and-stock bid for Beazer Homes USA, while UK fintech Wise Group debuted its shares on Nasdaq, aiming for exposure to the larger US investor base.

Tech Sector Dynamics & Regulatory Scrutiny

The AI boom continues to create market divergence, leaving major Chinese technology firms like Tencent and Alibaba behind as investors favor pure-play AI stocks. This focus on AI is leading to new financial instruments, as the CME plans to launch futures contracts based on the future rental price of GPU computing power. Regulatory scrutiny intensified on the tech sphere as GOP-led House Oversight Committees launched investigations into Sam Altman’s business dealings ahead of OpenAI’s potential IPO, following reports published by the Wall Street Journal. In advertising, YouTube is emphasizing AI-powered bundles for large advertisers during its upfront presentations.

Global Macro and Currency Moves

Goldman Sachs projects further dollar strength, attributing this to the persistent energy price shock keeping yields elevated amidst resilient underlying economic growth, a view supported by rising Treasury yields . This outlook contrasts with Japan, where the yen saw an abrupt but temporary gain during U.S. Treasury Secretary Scott Bessent’s visit, though Japan's Finance Minister confirmed continued coordination with the U.S. on currency monitoring. Across the Pacific, S&P Global Ratings downgraded Mexico’s outlook to negative from stable, citing weak fiscal results and escalating debt burdens.

Corporate Performance and Industry Woes

The squeeze from high input costs is evident across sectors; Brazilian meatpacker JBS saw its first-quarter profit slide to $220.6 million from $500.2 million a year prior due to rising cattle costs , while Brazil now faces a trade risk as it was omitted from the EU’s list of authorized animal product suppliers. In the US, building materials distributor US LBM Holdings reported an 82% earnings drop due to soaring operating expenses and softening demand. Meanwhile, Under Armour posted a loss as revenue declines in North America negated gains achieved internationally.

Market Infrastructure and Geopolitics

The fallout from the Iran conflict is complicating high-level diplomatic engagement, casting uncertainty over the planned summit between Presidents Trump and Xi. While the U.S. intelligence community assesses that Iran retains substantial missile capabilities along the Strait of Hormuz, President Trump deemed Iran’s response to a peace proposal "TOTALLY UNACCEPTABLE". Amid these tensions, the Pentagon has raised the estimated cost of the Iran war to $29 billion, while hedge fund CFM opened a Shanghai office as its assets surpassed $27 billion, following peers into the Chinese market.

Regulatory Shifts and Consumer Markets

UK regulators have intervened in the jewelry market, ruling that synthetic stones cannot be advertised using the term ‘diamond’ in isolation, a move welcomed by natural diamond producers. In the US retail space, Walmart is laying off or relocating approximately 1,000 corporate employees as it consolidates global tech and product teams. In health and wellness, Hims & Hers reported a first-quarter loss as the costs associated with its strategic pivot toward branded obesity drugs increased faster than anticipated.

Political and Social Developments

Political maneuvering continues in the US, where South Carolina lawmakers halted redistricting efforts amid internal Republican worries that carving up the district of Representative James E. Clyburn, the state’s sole Democrat, could prove politically damaging. Furthermore, the US government agreed to temporarily pause a lawsuit related to a proposed immigrant detention facility in New Jersey while conducting an environmental impact review. In other news, the passing of former NBA player Jason Collins, the first active gay player, was acknowledged, referencing his landmark 2013 declaration in Sports Illustrated.