Vacation time! We will be back on June 10.

1. The move in the US 10-year yield is nearing the pain threshold for the stock market.

The bond markets do not like Trump’s tax bill.

Wednesday’s botched 20-year Treasury auction reignited the sell-off in long-end U.S. rates and ripped a fresh hole in US equity markets.

With the “Big, Beautiful” tax bill lumbering through Congress and deficit math spiralling, the market’s message was simple: no more free rides— pay the premium or bust.

The dollar couldn’t find a bid despite the yield surge, which tells you everything: this isn’t a growth story—it’s a credit story.

Regardless of the letters any credit rating agency assigns to U.S. paper, Washington is becoming a fiscal disaster zone, and markets don’t buy the “cost-neutral” spin from the White House. The bill’s arithmetic is fantasy, and everyone knows it. Traders are no longer debating if the U.S. deficit is ballooning—they’re trying to price just how ugly it could get.

2. European stocks get support from earnings.

Resilient first-quarter earnings delivery in the face of tariff chaos is supporting the bull case for European stocks.

The reporting season produced increased sales and improved margins across most sectors, with earnings growth running at 5% year-on-year, defying consensus expectations for a 1.5% decline, according to Bloomberg Intelligence. CEOs struck a broadly confident tone as they discussed the tariff storm, focusing instead on prospects for trade deals.

The respectable numbers and optimistic words are prompting upgrades from some Wall Street strategists. “Just weeks ago, Europe saw ‘recessionary’ EPS revisions amid heightened macro/policy uncertainty,” say Citigroup strategists led by Beata Manthey.

“However, Stoxx 600 companies have delivered surprisingly ‘normal’ results throughout the first quarter reporting season, with a historically typical share and size of earnings beats.” For the Citi strategists, the market has passed peak uncertainty over earnings and the reporting season supports further outperformance by cyclical stocks. Peers at Goldman Sachs last week raised estimates for EPS growth to 0% in 2025 from a decline of 7%, and now see a gain of 4% in 2026, after predicting no increase. The Goldman team cited good first-quarter earnings and better economic prospects in Europe. German fiscal stimulus and lower interest rates are additional tailwinds.

3. The Conference Board Leading Economic Index (LEI) is at the lowest level in 11 years!

This is the biggest drop since the Great Financial Crisis in 2008 and has never been seen outside of recessions. The “LEI” is a predictive tool that anticipates—or "leads"—turning points in the business cycle by around seven months.

4. India’s midcap stocks are beating their bigger peers in earnings’ growth, as their local focus largely shields them from global tariff risks.

National Stock Exchange Nifty Midcap 150 Index corporations saw profits rise 21.4% in the fourth quarter compared to a 4.3% increase from Nifty 50 Index companies, analysts from brokerage Elara Capital wrote in a note.

Smaller, more domestically oriented companies are holding up better than larger stocks amid the global trade war, they said. The data indicates that India’s earnings pool has begun to deepen, and the higher risk premium attached to the nation’s smaller stocks may have started to shrink.

It also strengthens the view that India is transforming its companies as they shun chronic inefficiencies to deliver profit for investors. “Midcap earnings outperforming those of larger peers sets the stage for smaller stocks, especially government-linked companies, to create huge wealth for investors,” said Sumeet Rohra, a fund manager at Smartsun Capital Pte. in Singapore.

5. China’s R&D.

Beijing is racing ahead in advanced technology, including in robots, satellites and AI—and in some cases is catching up with the U.S. China's spending on research and development has tripled since leader Xi Jinping took office in 2012, and nearly rivals the U.S. in purchasing power-adjusted terms.

Not a subscriber yet?