Daily Market Outlook, May 13, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — AI Carries the Tape, Gilts Watch Westminster

Asian equities are again choosing AI optimism over geopolitical risk, with MSCI Asia Pacific up 0.6% as technology and semiconductor names lead. South Korea surged 5% to a record high, reinforcing its role as one of the cleanest regional expressions of AI infrastructure demand, while a regional chip gauge also hit a fresh peak after the Philadelphia Semiconductor Index’s record close. US futures are steady after Wall Street’s latest highs and Europe looks set for a quiet open. The catch is breadth: the rally remains heavily concentrated in AI-linked names, and Nintendo’s near-10% drop on rising chip-cost warnings is a useful reminder that the AI story is not universally margin-accretive.

The macro backdrop is less benign than the equity tape suggests. Brent is back above $105/bbl after Trump rejected Iran’s latest proposal, effectively extending the disruption around the Strait of Hormuz and rebuilding the energy-risk premium. That has pushed the 10-year Treasury yield up 4bp to 4.39%, strengthened the Dollar across majors and weighed on gold despite the geopolitical backdrop, as markets lean into the higher-for-longer rates implication. The key inflation question is whether the current situation remains a fuel shock or broadens into a second-round price impulse. For now, US CPI at 3.8% y/y, up from 3.3%, was slightly hotter than expected but not a disaster: motor fuel is doing the heavy lifting, while pass-through into core goods still looks muted.

That said, the Fed will not be entirely relaxed. Core services ticked up 0.3ppts to 3.3% y/y, giving the hawkish side of the FOMC something to push against, particularly with oil still elevated. But the broader labour and demand backdrop remains fragile enough to complicate a purely hawkish read. Employment gains outside health and education continue to moderate, and weak pricing power in other parts of the basket may be one reason energy pass-through has stayed contained. With the incoming Fed Chair perceived to have a structural easing bias, this CPI print is not strong enough to break the market’s medium-term easing narrative – but it is enough to keep near-term duration uncomfortable.

The UK remains the clearest idiosyncratic risk for the European session. The King’s Speech and State Opening of Parliament may impose a temporary pause on the Labour leadership battle, but it does not remove the risk premium sitting in gilts or GBP. Thirty-year gilt yields have already traded just above 5.80%, and comments from Burnham-supporting MP Paula Barker that bond “markets will have to fall into line” on progressive spending will not reassure investors worried about fiscal slippage. Wes Streeting’s meeting with Starmer ahead of the 11.30am speech and the 2.30pm Commons debate on the legislative programme are the key political markers. For markets, the warning signal is simple: if sterling struggles even as gilt yields rise, investors may be treating the extra yield less as compensation and more as sovereign risk.

Overnight Headlines

• Trump: Stopping Iran’s Nuclear Plan Outweighs Economic Pain

• US DefSec: Trump Does Not Need Congress To Restart Iran Strikes

• Iran’s Kharg Oil Shipments Show First Prolonged Halt Since Start Of War

• Chinese Oil Supertanker Seen Attempting Strait Of Hormuz Exit

• China And US Agree On Opposing Hormuz Tolls, State Dept Says

• Trump Says Trade, Not Iran, Will Be Priority In Summit With Xi

• Bessent Arrives In S Korea For Trade Talks With China’s He

• Ahead Of Summit, China: Ready To ‘Crush’ Any Taiwan Independence Bid

• Senate Confirms Warsh, With Fed Chair Vote Likely Wednesday

• Bond Bears Reload Fed Rate Hike Wagers On Stubborn Inflation

• Goldman Sees Dollar Strength As Energy Shock To Keep Rates High

• ECB Rate Hikes Increasingly Likely, Nagel Tells Handelsblatt

• Japan’s Current Account Surplus Hit Record High In March

• Japan’s 20-Year Bond Yield Rises To 1997 High On Inflation Woes

• OECD Sees Japan Raising Interest Rates To 2% By End-2027

• New Zealand Near-Term Inflation Expectations Highest Since 2023

• UK PM Starmer’s Peril Sets Up Stranger-Than-Ever King’s Speech

• Nvidia Says CEO Jensen Huang Is Joining Trump’s China Trip

• Anthropic In Talks To Raise $30B At $900B Valuation

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

• EUR/USD: 1.1500 (EU1.23b), 1.1900 (EU1.15b), 1.1700 (EU1.02b)

• USD/JPY: 157.00 ($1.89b), 159.50 ($1.77b), 137.50 ($1.39b)

• AUD/USD: 0.7100 (AUD1.18b), 0.7200 (AUD945.8m)

• USD/BRL: 4.8750 ($570m), 5.1000 ($554.9m), 5.3425 ($377m)

• USD/MXN: 17.25 ($835.9m), 17.40 ($637.2m), 17.35 ($567.1m)

• GBP/USD: 1.3430 (GBP491m), 1.3225 (GBP390.6m), 1.3500 (GBP330m)

• EUR/GBP: 0.8675 (EU1.51b)

• USD/CNY : 6.8500 ($408.8m)

• USD/CAD: 1.3875 ($900m), 1.3520 ($329m)

CFTC Positions as of May 8, 2026: 

• Equity fund speculators have made some notable adjustments recently, reducing their net short position in the S&P 500 CME by 6,871 contracts, bringing the total down to 389,571. Meanwhile, equity fund managers are feeling more optimistic, increasing their net long position in the S&P 500 CME by 14,772 contracts, now totaling 1,013,955.

• In the realm of Treasury futures, speculators have also been active. They've cut their net short positions in CBOT US 5-year Treasury futures by a significant 100,106 contracts, now standing at 1,421,299. The CBOT US 10-year Treasury futures saw a reduction of 23,868 contracts in net short positions, which now sits at 815,269. The CBOT US 2-year Treasury futures experienced a trim of 35,934 contracts, leaving a net short position of 1,673,329. Additionally, speculators reduced their net short position in CBOT US UltraBond Treasury futures by 34,850 contracts to a total of 259,435. However, there was an increase in the net short position for CBOT US Treasury bonds futures by 59,287 contracts, bringing it to 172,942.

• In the cryptocurrency market, Bitcoin's net long position has reached 1,441 contracts. 

• On the currency front, the Swiss franc has a net short position of -34,521 contracts, while the British pound's net short position is -63,908 contracts. The euro is showing strength with a net long position of 32,202 contracts, whereas the Japanese yen holds a net short position of -61,738 contracts.

Technical & Trade Views

SP500

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 7340 Target 7460

• Below 7290 Target 7200

DXY

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 98.85 Target 99.50

• Below 98.50 Target 96.12

EURUSD 

• Daily VWAP Bearish

• Weekly VWAP Bullish

• Above 1.1785 Target 1.1850

• Below 1.1750 Target 1.16

GBPUSD 

• Daily VWAP Bearish

• Weekly VWAP Bullish

• Above 1.3445 Target 1.3885

• Below 1.34 Target 1.3320

USDJPY 

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 160 Target 161

• Below 159 Target 152

XAUUSD

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 4600 Target 5000

• Below 42700 Target 3600

BTCUSD 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 79k Target 86k

• Below 78k Target 76k