Iran Deal Hopes Rise Again

For the week ending 22 May 2026

As of midday Friday, global equities remained near record high territory after recovering from midweek selling pressure as global bond yields and oil prices temporarily spiked. The yield on the US 10-year Treasury note ended the week little changed at 4.58% after briefly reaching 4.68% midweek before de-escalation hopes in the Mideast rose again. Similarly, the price of a barrel of West Texas Intermediate crude oil fell this week to $97.75 from $104.50 a week ago after rising close to $109.50 early in the week. Volatility, as measured by futures contracts on the Cboe Volatility Index (VIX), fell to 19.4 from 21.4.

MACRO NEWS

Trump calls off strikes amid Iran negotiations

Axios reported Wednesday that Qatar, Saudi Arabia, Turkey and Egypt have been working over the last several days to bridge the gaps between the US and Iran. The site reported that US President Donald Trump told Israeli Prime Minister Benjamin Netanyahu that the mediators are working on a “letter of intent” to be signed by both the US and Iran that would formally end the war and launch a 30-day negotiation period on issues like Iran’s nuclear program and reopening the Strait of Hormuz. On Thursday, Secretary of State Marco Rubio said that there were signs of progress in negotiations but that he wasn’t overly optimistic. Iran continues to insist on both maintaining its stockpiles of highly-enriched uranium and retaining control over the Strait of Hormuz, but officials indicate that the differences between the two sides have narrowed this week. A top Pakistani envoy is set to visit Tehran on Friday for further talks; Pakistan has served as the main go-between the US and Iran throughout the conflict.

Mega IPOs in the pipeline

SpaceX formally filed its public prospectus on Wednesday, paving the way for a mid-June initial public offering. The IPO is expected to raise between $75 and $80 billion at a valuation potentially north of $1.7 trillion. OpenAI is also reportedly preparing a confidential IPO prospectus to target an early September launch. The firm is said to be planning to raise about $60 billion at a valuation of around $1 trillion. Both companies are expected to be listed on Nasdaq and will likely be included in the Nasdaq 100 Index 15 trading days after their public debuts.

Warsh takes Fed helm

Kevin Warsh was sworn in as the 17th chair of the US Federal Reserve on Friday at the White House, the first chair since Alan Greenspan in 1987 to be sworn in there. Warsh is expected to reform the use of the Fed’s balance sheet as a policy instrument and reshape the central bank’s communications strategy. Ahead of the ceremony, President Trump expressed confidence in Warsh and said he would leave interest rate decisions to him. “I’m going to let him do what he wants to do,” Trump said. “He’s a very talented guy, he’s going to be fine, he’s going to do a good job.” Just ahead of the ceremony, Fed Governor Christopher Waller, one of the more dovish FOMC members, said that he supports removing the easing bias from the Fed’s policy statement and that inflation is not headed in the right direction,

QUICK HITS

Preliminary May global purchasing managers’ indices show that economic activity slowed outside the US while holding steady in the States. The US manufacturing gauge hit its highest level in four years. The data show input prices are rising significantly faster than output prices, suggesting a margin squeeze may be coming.

Economic activity in China was weaker than expected in April, with retail sales, industrial production and property investment all undershooting economists’ forecasts.

Japan’s economy grew faster than expected in Q1 at an annualized 2.1%.

Unemployment in the United Kingdom hit 5% in March while wage growth slowed. Inflation came in lower than expected in April, rising 0.7% from the month before and 2.8% year over year. Month over month, retail sales fell 1.3% in April, a much steeper than expected slowdown. The data helped halt the slide in the UK gilt market and prompted investors to dial back Bank of England rate hike expectations.

Canadian CPI came in lower than expected in April as well, gaining 2.8% year over year. Economists had expected the rate to rise 3.1%.

The European Union finalized the text of its US trade deal this week ahead of a July deadline from the US. The European Parliament and EU countries must now vote to ratify the finished text.

ADNOC CEO Sultan Ahmed Al Jaber said this week that a new pipeline in the United Arab Emirates that will bypass the Strait of Hormuz is about 50% complete.

The French parliament approved the appointment of Emmanuel Moulin to lead the Bank of France.

UK Prime Minister Keir Starmer has postponed a planned 5 pence per liter increase in fuel duty until the end of the year as part of a package of measures intended to cushion households from the financial fallout of the Iran war.

The minutes of the April FOMC meeting show that a majority of participants noted that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%, and many preferred removing the easing bias from the FOMC’s policy statement.

According to Bloomberg, five Middle Eastern countries have formally rejected Iran’s establishment of the Persian Gulf Strait Authority to control transit through the Strait of Hormuz. In a letter to a global shipping watchdog, Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates said commercial and merchant vessels shouldn’t engage with the PGSA or cross the waterway using a route designated by Iran.

The European Commission said Thursday that it now expects eurozone growth in 2026 at 0.9%, down from the 1.2% rate it forecast in November, and trimmed its prediction for 2027 growth to 1.2% from 1.4%. Inflation is forecasted to rise to 3.0% from 2.1% last year, also higher than the 1.9% it anticipated in November. Price growth in 2027 is seen at 2.3%, higher than the 2.0% it previously predicted.

The US has unsealed murder charges against former Cuban leader Raul Castro. The indictment relates to the Cuban military shooting down civilian planes flown by the humanitarian group Brothers to the Rescue in 1996, when Castro was serving as Cuba’s defense minister.

EARNINGS NEWS

With about 94% of the constituents of the S&P 500 Index having reported, blended earnings per share (which combines reported data with estimates for those that have yet to report) rose an astounding 28.4% compared with the same quarter last year, according to data from FactSet. Blended sales rose 11.6% over the same period. Nvidia reports next Wednesday.

THE WEEK AHEAD

Monday: US markets closed for Memorial Day

Tuesday: US Case-Schiller homes price index, Conference Board Consumer Confidence

Wednesday: N/A

Thursday: US Q1 GDP, durable goods orders

Friday: US trade balance; Canada GDP

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Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research.