Morning Wrap (20.05.2026)

🌍 Geopolitics

• Iran / USA:  Trump stated on Tuesday that the US may be forced to strike Iran again — a day after he called off a planned attack following the receipt of an Iranian peace proposal. Iran, in turn, presented a proposal demanding war reparations and the withdrawal of US troops. The Strait of Hormuz remains effectively closed.

• Global diplomacy:  Xi Jinping is hosting Vladimir Putin in Beijing today — less than a week after Trump’s high-profile visit to China. Japanese Prime Minister Takaichi is wrapping up a summit in Seoul, Indian Prime Minister Modi is in Rome, and Hungarian Prime Minister Magyar is making his first foreign visit to Poland.

📊 The economy and central banks

• Fed: Governor Paulson (Philadelphia Fed) stated that the current policy is appropriate, but that the markets are right to price in further rate rises or a prolonged hold. In subsequent comments, she described the risks as “super-elevated” and explicitly put a rate hike on the table should growth exceed potential. The minutes of the Fed’s April meeting are being published this evening — marking the biggest split in the vote since 1992.

• ECB:  Kocher, the Chair of the Governing Council, stated on television that a rate hike at the June meeting (11 June) is inevitable if the Strait of Hormuz remains closed. Nagel noted that the ECB may be forced to act in June due to the energy shock caused by Iran.

• PBOC / China:  China’s central bank kept LPR rates unchanged for the 12th consecutive time (1-year: 3.00%, 5-year: 3.50%). The PBOC set the USD/CNY fixing at 6.8397, well above the market estimate of 6.8072. 

• United Kingdom:  The CPI report for April is published today — estimates suggest annual inflation will fall to 3.0% from 3.3%. The base effect stems, among other things, from an error in the Department for Transport’s 2025 data and sharp increases in water tariffs a year ago, though this does not alter the underlying inflationary trend. Governor Bailey is testifying today before the Treasury Committee of Parliament.

📉 Markets — general sentiment

• The yield on 10-year US bonds rose to a 16-month high of 4.687%, whilst 30-year bonds reached 5.198% — a level not seen since 2007. The global bond market is experiencing a sharp sell-off driven by inflation fears. Futures on European indices point to an opening of around -0.5%.

• Wall Street ended yesterday’s session under pressure: the S&P 500 (US500) fell by 0.06%, whilst the Nasdaq (US100) was virtually unchanged (+0.01%). European indices: DAX (DE40) -0.23% in pre-market trading, EU50 -0.35%, UK100 -0.31%.

🌏 Asia

• The Nikkei 225 (JP225) is down 1.6% today, the KOSPI is down 2%, and the MSCI Asia-Pacific ex-Japan index is down 0.7%. Asian indices are recording their fourth consecutive session of losses under pressure from rising bond yields.

• Chinese blue chips (CSI300) are down 0.4%, while the Hang Seng is down 0.7%. Samsung Electronics shares are falling after more than 47,000 workers announced a strike for Thursday following the breakdown of mediation talks in Seoul.

💱 Currencies

• Paradoxically, the JPY is currently the strongest major currency, yet USD/JPY is holding steady at 158.94–158.95 (just below the psychological level of 159), where the dollar has strengthened for seven consecutive sessions, reversing the yen’s appreciation following the intervention on 30 April.

• EUR/USD falls to 1.1599 — its lowest level since 8 April. GBP/USD stands at 1.3394. The dollar remains near 6-week highs against a basket of currencies (USDIDX: 99.29). The Australian and New Zealand dollars (AUD, NZD) and the Canadian dollar (CAD) are among the weakest currencies of the day.

🛢️ Raw materials

• Brent crude remains above $110/bbl ($111.07, -0.2%), whilst WTI stands at $103.69 (-0.28%). The private API report showed a fifth consecutive weekly decline in crude oil stocks of 9.1 million barrels, whilst petrol stocks fell by 5.8 million barrels. Today at 16:30 CET, the key EIA report is due, which may reinforce the narrative of tightening supply.

• In its bullish scenario, Citi forecasts Brent crude at $150 in the short term, pointing to the market’s underestimation of the risk of supply disruptions. It is worth noting, however, that two Chinese supertankers carrying 4 million barrels of Middle Eastern oil have left the Strait of Hormuz after more than two months of waiting — the first such movement in a long time.

• Gold is down 0.22% to around $4,471 per ounce — its lowest level since late March — under pressure from a strengthening dollar. Silver is up 0.31% at $73.83.

🏢 Companies

• NVIDIA (NVDA): Today after the close of trading on Wall Street — Q1 2026 results. Expected revenue: ~$79 billion (+80% y/y). Market options imply a swing of around $350 billion in market capitalisation.

• Target (TGT): Q1 results to be released before the market opens. Expected EPS: $1.46, revenue: $24.64 billion. The company is undergoing restructuring under new CEO Fiddlek; it has appointed a former Walmart director as head of supply chain. Shares have fallen by over 40% over the last five years, but are up 30% this year.

• Marks & Spencer (MKS.UK), TJX, Lowe's: Earnings reports today before the markets open in Europe and the US. Walmart (WMT) and Ralph Lauren (RL) will report tomorrow before the market opens.

₿ Cryptocurrencies

• Bitcoin is up +0.25% to around $77,005–$77,209. The movement is moderate against the backdrop of volatility in traditional markets — BTC is holding above $77k despite the global risk-off sentiment.

🔑 What are we waiting for today?

Today’s European session will be dominated by NVIDIA’s results following the close of Wall Street — a key catalyst for the entire tech and AI sector. Earlier, attention will focus on  UK CPI (around 08:00 CET), Governor Bailey’s testimony and the EIA report at 16:30 CET. In the evening, the Fed minutes  — markets will be looking for signals regarding the path of interest rates. With 10-year Treasuries at levels not seen for over a year and a tense geopolitical situation, Nvidia’s results may be the only factor capable of reversing the negative sentiment.