Daily Summary: Markets Hold Steady Ahead of Nvidia Earnings

US markets remained subdued with the US500 down 0.2%, US100 flat, and US30 down 0.3% as traders awaited Nvidia's Q1 2026 results after the bell, with expectations for $43.1B revenue and $0.89 EPS representing massive year-over-year growth.

Nvidia's earnings carry outsized importance for the entire AI trade, with options markets pricing a 6% post-earnings move in either direction for the $3.3 trillion chipmaker, as investors focus on Blackwell chip production ramp-up and China revenue impact from trade restrictions.

Treasury yields climbed with 10-year yields rising 5 basis points to 4.49% ahead of a $70 billion five-year note auction, while weak demand at Japan's 40-year bond sale highlighted global debt market stress amid ongoing fiscal concerns.

Oil prices surged over 2% with WTI crude jumping to $62.16 and Brent to $64.36 on supply disruption fears after Trump threatened new Russia sanctions and banned Chevron from Venezuelan oil exports, ahead of Saturday's crucial OPEC+ meeting.

OPEC+ established new production baseline mechanisms for 2027 while sources indicated Saturday's meeting may approve another 411,000 bpd output increase for July, continuing the group's gradual unwinding of production cuts despite recent price weakness.

Retail earnings showed mixed signals with Macy's beating profit expectations despite cutting full-year guidance due to tariff impacts and consumer spending moderation, while Abercrombie & Fitch surged on strong results and raised outlook.

Fannie Mae and Freddie Mac shares soared after Trump announced plans to take the mortgage giants public while maintaining government guarantees, with shares hitting highest levels since 2008 as the administration seeks to end their conservatorship.

German automakers in tariff negotiations with the Commerce Department, seeking export credits and investment pledges to soften potential import duties, with BMW, Mercedes-Benz, and Volkswagen hoping for a June deal.

New Zealand cut rates by 25 basis points to 3.25% citing global tariff uncertainties, while Australia's CPI came in slightly hot at 2.4% YoY, and Japan's central bank worried about JGB yield volatility amid weak bond demand.

Fed minutes due later today expected to reinforce officials' cautious approach to monetary policy amid tariff uncertainty, with Minneapolis Fed President Kashkari advocating for steady rates until inflation impact becomes clearer.

Market positioning remains defensive despite recent rebounds, with Barclays noting mutual fund inflows stalled in May while systematic buyers and low volatility could drive further equity gains, as $7 trillion sits in cash funds awaiting deployment.