Market Report.
🧭 Trump manages to drag NATO, at least into the debate. NATO is in early discussions about a potential mission to protect and escort commercial ships through the Strait of Hormuz if Iran does not fully reopen the waterway by early July 2026. The idea has backing from several member states but no unanimous consensus has been reached yet.
🎖️ Supreme Allied Commander General Alexus Grynkewich confirmed the option is being considered but stressed that no formal military planning has started. He noted that political direction must come first, with formal planning only after that decision.
📅 The issue is expected to be discussed at the NATO summit in Ankara on July 7 and 8. Some European countries were previously reluctant due to escalation risks, but mounting economic pressure from high oil prices, inflation, and fertilizer shortages is changing calculations. The Gulf region supplies about 30 to 35 percent of world urea, making the blockade a direct hit on global agriculture.
⚓ The near-total blockade started around late February 2026 when the United States and Israel launched coordinated airstrikes on Iran. Iran retaliated by mining the strait, attacking merchant vessels, imposing fees of over a million dollars per ship, and restricting passage to friendly nations only.
🏛️ Meanwhile, US senate Advances War Powers Resolution on Iran.
🗳️ The US Senate voted 50-47 on Tuesday to advance a resolution that would force President Trump to end military operations against Iran or obtain explicit congressional approval. This is the first time such a measure cleared a procedural hurdle after seven previous failed attempts since the conflict began.
👥 Sponsored by Senator Tim Kaine, the joint resolution directs the president to remove US armed forces from hostilities within or against Iran unless Congress declares war or passes a specific authorization. The 60-day War Powers clock for the initial strikes expired on May 1, but Trump maintained that a temporary ceasefire had terminated active hostilities, allowing operations to continue.
⚖️ While the resolution is largely symbolic and faces an almost certain Trump veto and likely House roadblock, it signals growing unease within the GOP over the open-ended conflict. Concerns include the more than 29 billion dollar cost so far, the near-blockade of the Strait of Hormuz, the oil-price shock, and surging bond yields.
🔁 The vote marks a turning point in Republican willingness to defy the White House on war powers, fueled by economic fallout and raw politics like Cassidy’s post-primary switch.
⚠️ Russian message to NATO?
🔥 Russia has launched a large-scale three-day nuclear forces exercise from May 19-21, 2026. The drills coincide precisely with President Vladimir Putin’s two-day visit to Beijing for high-level talks with Chinese President Xi Jinping.
🧨 Moscow frames the exercises as training to prepare and use nuclear weapons “in the event of a threat of aggression.” The drills involve more than 64,000 troops, nearly 200 missile launchers, 140 aircraft, 73 surface ships, and 13 submarines.
🚀 Activities include practice launches of nuclear-capable ballistic and cruise missiles from land, sea, and air platforms. There will also be coordination of strategic nuclear forces and simulated responses to an enemy nuclear strike.
📣 The drills send a message to the West and NATO, reminding adversaries of Russia’s nuclear arsenal — the world’s largest — and to deter deeper Western involvement in Ukraine.
🌍 Putin is physically outside Russia for much of this high-profile nuclear exercise, underscoring that the drills are a deliberate strategic signal.
🛢️ Putin’s Beijing Visit: Russian gas that went to Germany will now go to China.
✈️ Russian President Vladimir Putin is in Beijing today (May 20, 2026) for talks with Chinese President Xi Jinping.
🔗 He is pushing hard to advance the long-stalled Power of Siberia 2 natural gas pipeline project. The pipeline would run from Russia’s Western Siberia/Yamal fields through Mongolia into northern China.
💰 For Russia, the project is a critical new revenue stream after Europe slashed gas imports. For China, it provides secure, pipeline-priced gas less exposed to volatile LNG tanker routes — especially important with Strait of Hormuz disruptions.
⚖️ However, the final commercial contract has been stuck mainly over gas pricing. Russia wants a European-style market-linked formula while China has driven a hard bargain for discounts. Other sticking points include construction timelines, financing, and exact route or capacity.
Despite the memorandum, no construction has begun yet.
🎯 Iran conflict and resulting energy-market chaos give Moscow leverage. For Russia, Gazprom desperately needs new markets as European sanctions and reduced demand hurt revenues. China already buys massive volumes of discounted Russian oil, and pipeline gas would deepen the “no-limits” partnership.
💳 US’s debt is becoming heavier.
📈 The yield on the US 30-year Treasury bond surged to 5.20 percent on Tuesday, its highest level since July 2007. This marks a sharp increase in a global bond selloff driven by fears that the Iran war energy shock will keep inflation sticky and force central banks to hold or raise rates.
📊 The 30-year yield is a critical barometer for long-term inflation expectations, mortgage rates, and corporate borrowing costs. Unlike shorter-term yields, it reflects investor worries about inflation persisting for decades.
🔗 The surge is directly tied to the Iran war and the near-total closure of the Strait of Hormuz since early March 2026. US April inflation data showed consumer prices rising 3.8 percent year-over-year and producer prices jumping 6 percent, with energy costs up 17.9 percent annually. The price pressures are broad, hitting gasoline, food, airfares, and shelter.
🌐 The selloff is global, with European and Japanese bond yields also climbing as markets price in a higher-for-longer rate environment everywhere. Markets now assign a 37 percent chance of at least one Fed rate hike later in 2026 under new Chair Kevin Warsh, a dramatic shift from earlier expectations of cuts. Higher long-term yields raise borrowing costs across the economy and risk creating stagflation, with the US national debt nearing 39 trillion dollars.
⚖️ Warsh is having a hard time with his new job at the Fed.
🔥 Surging long-term bond yields are intensifying political and economic pressure on Federal Reserve Chair Kevin Warsh in May 2026, just days after he took office.
🧾 Warsh is facing his first major test as new Chair, with markets moving from pricing in two cuts by year-end to a 37–42% chance of at least one hike in the second half of 2026.
📉 Higher yields are tightening financial conditions automatically — mortgage rates at 6.75%, corporate borrowing costs rising, and the dollar strengthening. Internal projections, leaked in recent briefings, now show core PCE possibly staying above 3% through 2027 unless policy tightens.
🗣️ Donald Trump, fresh off his IRS settlement, has criticized the Fed publicly for “failing to crush inflation.”
⚔️ Warsh faces a pincer movement: markets demanding tighter policy on one side, and the White House and Congress watching closely on the other. Warsh, viewed as relatively hawkish and market-savvy from his prior Fed governor days, is now under intense scrutiny.
🧭 Warsh has set up an unusual “listening tour” with regional bank presidents to gauge the impact of higher yields on credit availability.
❓ Is the war in Ukraine spreading?
🛩️ A suspected Ukrainian military drone carrying explosives crashed in Lithuania near the village of Samane, close to the Latvian and Belarusian borders. Estonia became the first NATO state to shoot down one of the wayward drones, an event met with celebratory coverage. The incidents have deepened the crisis that began with earlier drone strikes on a Latvian oil facility.
🕵️ Russia’s Foreign Intelligence Service SVR, published an official statement asserting that Ukraine has deployed drone units to Latvian military bases including Adazi, Celia, Lielvarde, Daugavpils, and Jekabpils. The SVR claims Kiev plans to launch strikes on Russia directly from Latvian territory to reduce flight times and increase effectiveness.
📌 The SVR communique explicitly stated that the coordinates of decision-making centers on Latvian territory are well known and that Latvia’s NATO membership will not protect accomplices of terrorists from just retribution.
🏭 The oil terminal struck earlier by a Ukrainian drone is being permanently shut down due to security concerns and losses. The entire Latvian government collapsed after the initial incident, with the prime minister resigning and the defense minister fired.
🔍 A Reuters report revealed U.S. plans to shrink forces available to NATO during crises. Analysts theorize that Trump may be deliberately decoupling from NATO to allow a contained Russia-Europe war that would devastate both sides without triggering U.S. involvement, leaving America as the last man standing.
Corporate News.
💻 NVIDIA will release its fiscal first-quarter 2027 results after the market closes on May 20. The conference call is scheduled for 2 p.m. Pacific Time, 5 p.m. Eastern Time. This is the most anticipated earnings event of the year.
📈 Analysts forecast revenue of about 79.1 to 79.2 billion dollars, roughly 80 percent higher than a year ago. Data center revenue from AI chips is expected to exceed 70 billion dollars. Adjusted earnings per share are projected at around 1.77 to 1.78 dollars, more than double the prior year level.
📊 Options markets imply a potential move of roughly 6.5 percent in the stock on Wednesday. That translates to a possible swing of around 350 billion dollars in market value based on the report and guidance.
Market View.
📉 US stock markets are starting to show potential bearish patterns. Mini S&P 500 futures continue to weaken, currently trading below 7,400 points, which could trigger further bearish patterns if these levels are lost. The Nasdaq 100 is forming similar chart patterns, with risks emerging below 29,000 points—it is currently trading at 29,025 points.
💵 The US Dollar Index (DXY) continues to push higher, challenging new highs and currently standing at 99.35 points. This is putting pressure on various currency pairs. EUR/USD continues to fall and is now at risk of dropping below 1.16. Meanwhile, USD/JPY could experience upward movements in the coming sessions, potentially surging towards 160.50 or higher; it is currently trading at 158.95.
🇩🇪 In Europe, DAX 40 futures are attempting to hold the 24,400-point level, while Euro Stoxx 50 futures are trading at 5,850 points.
🥇 Gold futures continue to decline due to the strength of the dollar, having lost support at $4,500 per ounce and currently trading at $4,475.
🛢️ Oil remains elevated, with Brent crude spot prices trading above $110 per barrel.
� Bitcoin fell to around $76,500 in recent hours but has since rebounded to $77,300.
