US futures slumped on Monday amid renewed concerns around surging bond yields, high inflation, and rising Covid-19 cases in China. Contracts on the technology-heavy Nasdaq 100 were down 0.8% by 7:15 a.m. in New York, with S&P 500 futures slipping 0.4% and Dow futures falling 0.2% after the French election revealed an outcome largely as expected with Macron facing Le Pen in the second round in two weeks...

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... and as 10Y yield soared as high as 2.78% overnight, up almost 10bps on the day and the highest since 2019, with US yields briefly rising above China's 10Y for the first time since 2010, before reversing some of the move.

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European stocks dropped and Asian stocks stumbled led by a drop in Chinese stocks which were spooked by the latest Covid outbreak on the mainland, as well as elevated factory-gate prices and regulatory concerns in the technology sector. Oil retreated on risks to demand from China’s lockdowns, as Iran said the 2015 nuclear deal is in the “emergency room.” The Bloomberg dollar index extended its streak of gains to an eighth day, the longest since March 2020, as money markets raised Fed hike wagers, sending Treasuries and U.S. stock futures lower.

“Today, the mantra for many investors is ‘Don’t fight the Fed when it is fighting inflation,’” Ed Yardeni, president of Yardeni Research, wrote in a note. “We agree with that, but it’s not as bearish as it sounds” in part because accumulated excess liquidity and an inflation boost to earnings are props for stocks, he added.

The biggest highlight of the overnight session was Twitter stock, which tumbled as much as 5% in premarket trading after Elon Musk decided not to join the board of the social media platform...

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... before erasing most losses on speculation Musk could mount a takeover of the social media platform

Among other notable premarket moves, U.S.-listed Chinese stocks Nio Inc. and Li Auto Inc. declined as the electric vehicle makers halted production and warned of delivery delays amid a rising Covid-19 caseload and stringent lockdowns in China. American depository receipts of other Chinese stocks also fell. Bank stocks are slightly higher in premarket trading Monday as the U.S. 10-year yield extends gains for a seventh straight day to hit about 2.76%. In corporate news, Wall Street’s dealmaking boom likely came to an abrupt halt amid the war in Ukraine and a global shift toward rising interest rates. Here are some other notable premarket movers:

• Donald Trump-tied social media blank check company Digital World Acquisition (DWAC US) jumps as much as 17% in premarket trading. Stock has been hit by competition concerns around Musk’s association with Twitter.
• SailPoint (SAIL US) gained 27% premarket as the Financial Times reports that Thoma Bravo will pay $65.25 a share for the firm, citing two people with direct knowledge of the details.
• Lowe’s (LOW US) CFO Dave Denton’s departure is an “incremental negative” for the home-improvement company, but an overweight view on the shares is still “firmly intact,” according to Wells Fargo.
• Citi says Wells Fargo’s balance sheet stands out among U.S. banks as it upgrades to buy, in note moving to “sidelines” with downgrades for several firms including BNY Mellon (BK US) and Citizens Financial (CFG US).

Last week, the S&P 500 snapped a three-week winning streak, as signs of slowing economic growth were compounded by hawkish signals from the Federal Reserve. Focus now turns to inflation figures for March due tomorrow morning, with economists expecting consumer prices to have risen 8.4% from a year ago, the fastest annual rate since early 1982, according to a Bloomberg survey.

“While we advise investors to build up portfolio hedges and tilt toward value stocks to manage a rising rate environment, our base case is for stocks to move higher,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “We continue to see areas of particular equity value for longer-term investors in 5G, robotics, and smart mobility.”

For those who missed it, French President Macron (27.6%) and far-right Le Pen (23.4%) are set for a run-off in the presidential election on April 24th and all major candidates aside from far-right candidate Zemmour have called for a vote against Le Pen. Furthermore, an IFOP poll showed that Macron would win the second round with 51% of the vote, while Ipsos and Opinionway polls showed Macron would win with 54% vs Le Pen at 46% in the second round, according to Reuters. French Election Poll, second round (i.e. run-off): Macron 55% (prev. 54%) vs Le Pen 45% (prev. 46%), Opinionway-Kea partners poll.

Meanwhile, German Foreign Minister Annalena Baerbock said Ukraine needs more military support, including heavy weapons, as Ukraine reported Russian missile attacks and said it expects Russia to widen its offensive in the east this week. Some other notable developments out of Ukraine:

• Russian President Putin is believed to have set himself four weeks to achieve some sort of a victory in Ukraine before the big Russian “Victory Day” holiday on May 9th, according to The Times on Friday. There were also reports in Axios that the May 9th Russian holiday will be a pivotal and dangerous deadline.
• Russian Ministry of Defence alleged that Kyiv is preparing a mass murder of civilians in Luhansk with support from the West, according to Sputnik.
• Russian Republic of Chechnya head Kadyrov said there will be an offensive not only on Mariupol but on other Ukrainian cities including Kyiv, according to Reuters.
• Ukrainian President Zelensky discussed with German Chancellor Scholz anti-Russian sanctions, as well as defense and financial support for Ukraine. German Chancellor Scholz called for Russia to immediately pull its troops back and said that European borders must remain untouched, while he added that those who committed war crimes must be held responsible and that it is right Germany supplies Ukraine with defense weapons which it will continue doing so, according to Reuters.
• White House National Security Adviser Sullivan said Russia’s systematic targeting of civilians in Ukraine constitutes war crimes and that Russia’s new commander in charge of the Ukrainian invasion, General Dvornikov, will author crimes and brutality against Ukrainian civilians. Sullivan added that they will get Ukraine the weapons it needs and are in talks with European allies about reducing dependence on Russian oil, according to Reuters.

Most European cash equity indexes are in the red but climb off the worst levels. Euro Stoxx 50 drops as much as 1.2% before fading the move. The Stoxx 600 Index was down 0.5% as investors focused on an uncomfortably tight race for the French presidency. Technology and auto stocks underperformed. CAC 40 outperformed, rising as much as 0.9% following the weekend’s election. Tech, consumer-discretionary, and auto names are the worst Stoxx 600 performers; banks and insurance outperform. Here are some of the biggest European movers today:

• Societe Generale shares soar as much as 8.2% after the lender agreed to sell its Russian Rosbank unit, removing a major worry for investors.
• Rheinmetall AG rises as much as 7.2% after the U.K. exercised an option in a 2019 contract to order another 100 Boxer wheeled armored vehicles.
• Toll-road operators Vinci gains as much as 3.6% and Eiffage as much as 3.0% amid optimism that the pro-business President Emmanuel Macron will manage to beat nationalist Marine Le Pen in an April 24 run-off of French elections; Le Pen pledged to renationalize the country’s highways if elected
• French stocks rise more broadly, with BNP Paribas gaining as much as 4.1%, Veolia +4.2%, and oil giant TotalEnergies +3.5%
• Wood Group rises as much as 16% after the energy services firm said it sees its FY21 underlying results in line with expectations. Jefferies upgraded the stock to hold.
• Nokian Renkaat slumps as much as 13% after saying new sanctions imposed on Russia by the European Union will have a significant impact on sales and production.
• Boliden drops as much as 7.5% after announcing adjustment plans for its Aitik mine totaling SEK5b over the next two years.
• European luxury and sports-apparel stocks, including Moncler and Puma, fall as China’s largest Covid outbreak in two years continues to spread. LVMH drops as much as -2.3%; Puma -3.8%, Moncler -5.5%

Meanwhile, the credit derivatives market ruled Russian Railways JSC to be in default after missing an interest payment last month. Russia said it would halt bond sales for the rest of the year and take legal action if sanctions force it into sovereign default.

Asia-Pac stocks fell as Covid-19 cases climbed in Shanghai and a key U.S. Treasury yield rose to a milestone. The MSCI Asia Pacific Index slid as much as 1.5%, with tech shares among the biggest decliners as the 10-year yield touched 2.77% to exceed the equivalent rate on Chinese debt for the first time since 2010. China’s CSI 300 was among the region’s worst-performing indexes as Shanghai reported more than 26,000 daily infections Sunday and official data showed that factory-gate and consumer prices both jumped more than expected last month. China’s tech shares took an additional hit from the country’s new guidelines on removing data monopoly at platform companies, dragging the Hong Kong equity gauge. On a positive note, data released Monday showed that China’s credit expanded faster than expected in March. Still, most benchmarks across the region, excluding Pakistan’s and Australia’s, traded lower.

“It looks like another test of nerves all around, with a confluence of growth concerns, a more aggressive Fed, and high inflation from supply disruptions,” said Wai Ho Leong, a strategist at Modular Asset Management. Investors are becoming increasingly uneasy about Asia’s growth prospects as China maintains its Covid-Zero policy and regulatory drive at a time when Russia’s war on Ukraine is a burden on global forecasts and driving up input costs. The MSCI Asia gauge is back to trading at levels seen in mid-March. Nomura strategists cut their end-2022 target for the MSCI Asia ex-Japan index over the weekend by about 11% to 820, citing earnings risks from elevated inflation, a hawkish Federal Reserve, and the lockdowns in China. “Overall actual earnings for 2021 full-year/interims have broadly come in below market expectations, with more misses than beats,” Nomura strategists including Chetan Seth wrote in a note.

Japanese equities dropped, dragged by technology shares amid ongoing concern over the impact of the Federal Reserve’s plans to tighten U.S. monetary policy. Electronics makers and telecoms were the biggest drag the Topix, which fell 0.4%. Fast Retailing and SoftBank were the largest contributors to a 0.6% loss in the Nikkei 225. The yen weakened 0.5% to around 125 per dollar.

Indian stocks fell, led by software exporters, ahead of the start of the March-quarter earnings season for companies later in the day. The S&P BSE Sensex slipped 0.8% to 58.964.57 in Mumbai, while the NSE Nifty 50 Index declined 0.6% to 17,674.95. Software exporter Infosys Ltd. retreated 2.7% to a one-month low. It was the biggest drag on the Sensex, which saw 25 of its 30 stocks trading lower.  Ten of the 19 sectoral sub-indexes compiled by BSE Ltd. declined, led by a gauge of information technology companies.  Earnings for India’s top companies start Monday with Tata Consultancy Services Ltd., Asia’s largest software services provider, scheduled to announce results.  “The 4Q earnings season is quite significant as it comes on backdrop of the scorching inflation conditions,” said Prashanth Tapse, an analyst at Mumbai-based Mehta Equities Ltd. “The theme of the day revolves around TCS results and investors will focus on the management commentary -- primarily on future outlook, attrition rates, and deal momentum.”

In rates, Treasuries extend losses with yields cheaper by up to 6bp across the front-end and belly of the curve into the early U.S. session. 10-year yields trade around 2.75% after topping at YTD high near 2.78%. Bear-flattening move also seen in EGBs with gilts lagging as BOE policy tightening is further priced into the front-end. U.S. auctions are front-loaded this week starting with $46b 3-year note sale at 1pm, followed by $34b 10- and $20b 30-year offerings Tuesday and Wednesday. bunds lag by an additional 3bp in the sector, gilts by 2bp; front-end and belly-led losses flatten the Treasury 5s30s curve by ~1bp on the day. WI 3-year yield of around 2.815% is above auction stops since November 2018 and more than ~100bp cheaper than last month’s result. Bund yields rose, slightly underperforming Treasuries as central bank tightening wagers surged, while French bonds outperformed bunds with President Macron and his nationalist rival Le Pen set to face off in the final round of the French election. Peripheral spreads tighten with long-end Italy outperforming. Semi-core tightens to Germany with the 30y Bund/OAT spread narrowing below 75bps.

In FX, the Bloomberg dollar index extended its streak of gains to an eighth day, the longest since March 2020, rising 0.1% as the greenback strengthened against most of its Group-of-10 peers; the yen and commodity currencies were the worst performers while the euro was the best. The euro rose above $1.09 after earlier giving up an Asia session advance. The pound hovered while gilts followed Treasuries lower. The U.K. economy grew less than expected in February after industrial production and construction shrank. The 0.1% expansion followed a robust 0.8% gain in January. The Aussie and kiwi edged lower with iron ore and crude oil. Australia’s longer-maturity bonds dropped, sending 10-year yields above 3% for the first time since 2015, as markets priced in a faster pace of global policy tightening. Prime Minister Scott Morrison’s Liberal National coalition is currently trailing the opposition Labor Party in opinion polling after announcing a federal election for May 21 on Sunday. Yen slipped to 125.44 per dollar, its weakest level in almost seven years on the back of higher U.S. yields. Bonds fell amid a lack of support from the Bank of Japan’s purchases.

Bitcoin remains under pressure and in proximity to the overnight sub-USD 42k low. Elon Musk tweeted that the Twitter Blue subscription price should probably be about USD 2/month and suggested: "maybe even an option to pay in Doge?".

In commodities, crude futures remain around Asia’s worst levels. WTI drops over $2.5, back onto a $95-handle, Brent trades near $100. Spot gold rallies, snapping through $1,950/oz. Most base metals are under pressure, with LME nickel and aluminum down over 2%. 

There is nothing on today's economic calendar; Bostic, Bowman, and Evans are among the Fed speakers scheduled to talk.

Market Snapshot

• S&P 500 futures down 0.6% to 4,454.75
• MXAP down 1.4% to 173.61
• MXAPJ down 1.6% to 574.89
• Nikkei down 0.6% to 26,821.52
• Topix down 0.4% to 1,889.64
• Hang Seng Index down 3.0% to 21,208.30
• Shanghai Composite down 2.6% to 3,167.13
• Sensex down 0.4% to 59,183.91
• Australia S&P/ASX 200 little changed at 7,485.19
• Kospi down 0.3% to 2,693.10
• STOXX Europe 600 down 0.7% to 457.91
• German 10Y yield little changed at 0.77%
• Euro up 0.3% to $1.0912
• Brent Futures down 2.3% to $100.40/bbl
• Gold spot up 0.4% to $1,955.50
• U.S. Dollar Index little changed at 99.78

Top Overnight News from Bloomberg

• President Emmanuel Macron’s team painted Marine Le Pen as “an ally of Vladimir Putin” on Monday as they began a campaign offensive that will run over the next two weeks ahead of a final vote.
• Despite Russia’s invasion jeopardizing the euro zone’s pandemic rebound, policymakers are more worried about the conflict stoking already-lofty energy costs -- as they underlined last month by agreeing to speed up their removal of years of stimulus
• The Bank of Japan lowered its assessment of the largest number of regional economies since the start of the recovery in a move likely to support continued stimulus even as global peers raise interest rates.
• Russia will halt bond sales for the rest of the year and take legal action if sanctions force it into a default on its debt, according to the country’s finance minister
• China’s largest Covid outbreak in two years continues to spread despite an extended lockdown of Shanghai’s 25 million people, weighing on a fragile economy and straining global supply chains
• Federal Reserve Bank of Cleveland President Loretta Mester said she’s confident that the U.S. will avoid a recession as the Fed tightens policy, though the inflation rate will probably remain at more than 2% into next year.

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were mostly cautious amid the higher yield environment and COVID-19 woes in China. ASX 200 attempted to buck the trend helped by strength in gold-related stocks and the top-weighted financial sector, while M&A newsflow and campaigning ahead of the May 21st election provided mild tailwinds. Nikkei 225 was subdued after failing to retain the 27,000 status despite the recent currency weakening. Hang Seng and Shanghai Comp underperformed with Hong Kong pressured by weakness in tech and with the mainland suffering from COVID-19 concerns after a fresh record number of daily infections in Shanghai.

Top Asian News

• China Said to Limit Sales by Some Funds as Stocks Slide Again
• BOJ Lowers View on Biggest Swath of Economy Since Recovery Start
• China’s Credit Growth Rebounds After Lunar New Year Break
• China Three Gorges Said to Plan Up to $2b Dollar, Euro Bond Sale

European bourses are mixed, Euro Stoxx 50 -0.1%, with benchmarks well off lows in a choppy and yield-driven morning. The CAC 40 +0.7% is the notable outperformer amid the first round of the French election where incumbent Macron came out on top; albeit, polls between him and Le Pen for the run-off are tight. Stateside, US futures are subdued, and given the rate environment, the NQ -0.7% lags its peers, ES -0.3%.

Top European News

• Russian Railways in Default on Bond Payment, Credit Panel Rules
• Le Pen Branded Putin Ally as Macron Fights Populist
• U.K. Economy Slows as Supply Chain Delays Hold Up Car Makers
• European Stocks Waver on China Covid Spread, French Uncertainty

FX:

• Buck off best levels ahead of Fed speakers later today and US CPI data on Tuesday, as DXY slips back below 100.000.
• Yen continues to underperform as BoJ reiterates its easy policy stance and only expresses concern about its rate of decline not level, USD/JPY up to a fresh 2022 high near 125.50.
• Euro relieved to see French President Macron emerge ahead of Le Pen after round one, EUR/USD reclaims 1.0900+ status.
• Aussie undermined by risk aversion and more resilient Kiwi pre-RBNZ, Loonie contains oil-related losses ahead of BoC on Wednesday; AUD/USD sub-0.7450, AUD/NZD under 1.0900 and USD/CAD pivoting 1.2600 as 200 DMA caps upside again.
• Nokkie hit by Brent decline and sub-forecast Norwegian inflation data, EUR/NOK near top of 9.5630-9.4695 range.

Fixed Income

• Yet another dead cat bounce for bonds as the bear run continues, with T-notes down to 119-17 and the 10-year yield topping 2.75% in advance of more Fed rhetoric.
• Bunds probe Fib resistance at 76bp to open scope for a higher retracement level at 81bp ahead of the ECB on Thursday.
• Gilts labor just above 119.00 before UK jobs and earnings tomorrow and inflation on Wednesday.

Commodities

• WTI and Brent are pressured to focus on the COVID situation in China, specifically Shanghai City
• Currently, the benchmarks lie near session troughs of USD 95.20/bbl and USD 99.79/bbl respectively, as Brent lost the USD 100/bbl handle after slipping from earlier highs of USD 103.30/bbl.
• White House Press Secretary said she is unaware of the US considering an easing of oil sanctions on Venezuela, while the White House said it is continuing to consider a gas tax holiday, according to Reuters.
• Kuwait raised May crude prices to Asia to record levels, according to Reuters citing the pricing document.
• Spot gold is bid and derived impetus from a break of USD 1950/oz, lifting to session highs of USD 1959.40/oz; though, still around USD 5/oz shy of late-March highs.

US Event Calendar

• Nothing major scheduled

Central Bank speakers

• 09:30: Fed’s Bostic Makes Opening Remarks at Fed Listens Event
• 09:30: Fed’s Bowman, Waller Give Remarks at Fed Listens Event
• 12:40: Fed’s Evans Discusses Economy and Monetary Policy

DB's Henry Allen concludes the overnight wrap

As we go to press this morning, the main weekend news comes from France’s presidential election, where Sunday’s first-round results mean that President Macron is set to face off against Marine Le Pen in two weeks’ time, marking a repeat of the run-off in 2017. Relative to the polls going into the first round, it looks like good news for President Macron, whose score of 27.6% (based on preliminary results from the Interior Ministry) was above the 26% in Politico’s polling average, and also above the 24%, he won in the first round 5 years earlier. Marine Le Pen came in second place with 23.4%, but that was roughly in line with her polling rather than above, even if it surpassed the 21% she won in 2017’s first round.

The fact that Macron’s lead was wider than the polls had indicated saw the Euro immediately bounce +0.72% as trading reopened last night, but since then it’s pared-back nearly all those gains to be up just +0.03% at $1.088. Those moves follow a -1.50% decline for the Euro last week as the polls narrowed, as well as a noticeable underperformance in French assets. Indeed, by the close on Friday the spread of French 10yr yields over bunds had widened to 55.5bps, which is its widest level in over two years, so that’ll be one to keep an eye on as the race develops over the next two weeks. Furthermore, the CAC 40 has underperformed the broader STOXX 600 for 8 consecutive sessions now, and last week it shed -2.04%, which was well beneath the STOXX 600’s +0.57% gain.

Of course, all attention will now turn to the second round on April 24, and the big question for that will be where the supporters of the defeated first-round candidates go. The largest group is the 22% who voted for the far-left Jean-Luc Mélenchon, who came in third place behind Macron and Le Pen. Indeed, he was only 1.4% behind Le Pen and a place in the second round based on preliminary results. He didn’t give an active endorsement to either candidate but did say that voters shouldn’t cast a single vote for Le Pen. Otherwise, there was the far-right Éric Zemmour in fourth place with 7.1%, who endorsed Le Pen, whilst the center-right Valérie Pécresse in fifth place with 4.8% endorsed Macron. We did get some further polls for the second round after voting concluded yesterday, which continued to point to a much tighter race than Macron’s 66%-34% victory in 2017. The narrowest from Ifop put Macron ahead by just 51%-49%, but two others from Opinionway and Ipsos both had him ahead by a larger 54%-46% margin. For those after more reading on the election, see Marc de-Muizon’s guide from last week for more information (link here)

Overnight in Asia, Chinese stocks are leading losses across the region, with the Shanghai Composite (-2.06%) and the CSI (-2.85%) both losing significant ground as the nation’s inflation figures surprised on the high side. PPI for March came in at +8.3% y/y (vs. +8.1% expected), whilst CPI was up +1.5% y/y (vs. +1.4% expected). Those inflation numbers come amidst continued Covid outbreaks in China, with state media CCTV reporting yesterday that the southern city of Guangzhou would suspend in-person classes for schools from today due to the virus. And in turn that’s contributed to a further fall in oil prices this morning, with Brent crude down -2.28% to $100.44/bbl, which itself comes on the back of two consecutive weekly declines. Other indices including the Hang Seng (-2.49%), Nikkei (-0.70%), and Kospi (-0.48%) are similarly lower this morning, as are futures including those on the S&P 500 (-0.58%) and the DAX (-0.74%). That comes against the backdrop of a continued bond selloff given concerns about monetary policy tightening, with 10yr Treasury yields gaining +6.9bps this morning to reach 2.769%, its highest levels since early 2019.

Looking forward now, it’s an eventful calendar for markets this week ahead of Easter, with Thursday’s ECB meeting set to be one of the main highlights. At their last meeting in March, the ECB adopted a more hawkish position than had been expected by confirming a faster reduction in their asset purchases. That’s set to see APP purchases fall from €40bn in April to €30bn in May and then €20bn in June, with the possibility of ending purchases altogether in Q3. Since then, however, inflation has accelerated by even more than the consensus expected, with the flash CPI estimate for the Euro Area at +7.5% in March, which is the highest since the formation of the single currency, and up from +5.9% in February.

In terms of what to look for this time round, our economists write in their preview (link here) that they’re not expecting much change to the ECB’s message. Instead, they think that when the new staff forecasts are available in June, they’ll announce that APP purchases will end in July, ahead of liftoff in the policy rate in September, so an underlying direction of travel that’s becoming clear. Their view is that the risks are tiled towards a more hawkish, rather than a less hawkish tone though, and as a reminder, our economists changed their call last week to expect a more aggressive ECB exit given the deteriorating inflation outlook, and now see the terminal rate reaching 2% by end-2023, which is 250bps higher than at present.

Staying on that central bank theme, another big highlight this week will be the release of the US CPI data for March on Tuesday, which is the last one the Fed will get ahead of their meeting in early April. That comes amidst heightened speculation that the Fed could move by 50bps at the next meeting, and futures are pricing in an 88% chance of a 50bps move as we go to press this morning. Our US colleagues have released a preview ahead of the release (link here), and they’re expecting that the monthly gain in headline CPI of +1.3% will push the year-on-year rate up to +8.6%, which hasn’t been seen since 1981. That said, they think that March is likely to be the peak in the year-on-year rates for both headline and core since the base effects from last year’s surge in used car prices will begin rolling off in the April data.

Elsewhere this week, we’ll start to see the Q1 earnings season get going, with releases from a number of US financials, among others. They include JPMorgan Chase and BlackRock (both on Wednesday), ahead of reports from Citigroup, Morgan Stanley, Goldman Sachs and Wells Fargo (on Thursday). But overall, it’s still fairly quiet on the earnings front with just 15 companies in the S&P 500 reporting, and it’ll only really ramp up the following week with 68 of the index reporting, and then 181 in the week after that. Our equity strategists published their preview of the Q1 earnings season last week (link here), and they write that a variety of drivers point to continued solid sequential earnings growth in Q1, and they look for slightly above average beats.

To recap last week now, the bond selloff continued apace after minutes from the March Fed and ECB meetings confirmed that both central banks want to tighten policy to deal with inflation running at multi-decade highs. That saw investors' price in an increasingly aggressive pace of monetary policy tightening over the rest of the year, which led 10yr Treasury and bund yields to move up +31.8bps (+4.2bps Friday) and +15.2bps (+2.6bps Friday) respectively over the week. Real yields did most of the work, with real 10yr treasury yields gaining +25.2bps (+0.1bps Friday) on the back of impending policy tightening. Indeed, the 10yr real yield ended the week at a 2-year high of -0.18%, having gained around +90bps over the last month alone.

European equities were resilient to the jump in rates, with the STOXX 600 picking up +0.57% (+1.31% Friday). But French equities underperformed as the polls narrowed ahead of yesterday’s election, with the CAC falling -2.04% (+1.34% Friday). Meanwhile, the S&P 500 posted its first weekly loss in a month, down -1.27% (-0.27% Friday), and tech stocks saw even bigger declines, with the Nasdaq down -3.86% over the week, whilst the FANG+ index shed -5.19%.

Finally, Brent crude futures continued their slide last week, falling -1.54% (+2.19% Friday) to $102.78/bbl. But other commodities put in a stronger performance, with copper (+0.78%), gold (+1.14%), wheat (+6.81%), and corn (+4.59%) all seeing advances over the week.