Good morning,
 
Welcome back from the long soggy holiday weekend. At least we return to a New York City that is buzzing after the Knicks completed the sweep of the Cavs and punching their ticket to the NBA Finals for the first time since 1999. Speaking of, markets are partying like it’s 1999. Last week the S&P 500 extended its weekly winning streak to 8 weeks ending up ~1% amidst hopes for a diplomatic resolution in the Middle East. The equal-weight version of the index and small cap indices outperformed ending the week up ~2.5%, recouping a good portion of the previous week’s losses, helped by a reversal in yields in the back half of the week. Despite Nvidia pulling back after earnings on Friday the NYSE Semiconductor index was up >2% of Friday and up >5% for the week reversing >10% from the week’s lows. Within the S&P 500 healthcare, Utilities and REITs led to the upside ending the week up >3% with the last two helped by a couple of mega M&A transactions.
 
Iran remained the focus over the weekend with the administration continuing to point to progress in deal negotiations. Axios reported the potential deal would include a 60-day ceasefire extension, an opening of the Strait, some sanction waivers and continued negotiations around the nuclear program. Some of the optimism has been tempered after the US conducted “self-defense” strikes overnight targeting missile launch sites and mine laying boats. S&P futures are up ~0.7% but are about 25pts off of yesterday’s high. Oil prices are trading down ~4% from Friday’s close but have also retraced some of its initial move. After closing at ~$104.25 on Friday, ICE Brent is hovering below its 50d ma ($99.75) after trading down to ~$96 yesterday.
 

 
Treasury yields are down just under 10bps across the curve (also a couple of bps off the lows). This morning Case Shiller Home prices will be released followed by consumer confidence after the open, which comes on the heels of a sharp decline in the U of Mich. Sentiment survey on Friday. This afternoon there will also be a $69B 2yr auction. The key economic data this week is on Thursday including PCE, personal income/spending and durable goods orders.
 
Government Yields

• US 2yr -7bps to 4.05%, 5yr -9bps to 4.18%, 10yr -9bps to 4.48%, 30yr -8bps to 5.01%
• USD index: -$0.14 to $99.05

European indexes are mostly lower this morning, giving back some of the sharp gains on Monday following the “largely negotiated” Iran peace news over the weekend. The UK’s FTSE 100 is outperforming, up 0.4% after being closed yesterday along with several other markets in the region. Energy is under pressure with oil lower as are semi equipment names (ASML -2%) and industrials broadly, while miners are higher and banks are mixed. The ECB is likely to revise inflation expectations higher at its next meeting in June. The ECB is likely to also raise rates at its June meeting according to Governing Council member Kocher, unless an Iran peace deal is achieved. The EU is reported to be close to fining Google “high hundreds of millions of euros” for violating the Digital Markets Act. Spain’s PPI accelerated from 3.1% in March to 8.3% in April.
 
Chinese markets were mixed overnight following Monday’s trading when Hong Kong was closed but the remaining indexes saw solid gains (Shanghai +1%). The Hang Seng was flat as it returned from a holiday. Semiconductor names saw solid gains in a catch-up trade with mainland shares. Semis rose sharply on Monday (SMIC +15%, Cambricon +7%) on news that Huawei developed a breakthrough in chip design to compete with TSMC. Markets continued to digest Beijing’s crackdown of offshore equity trading, which began Friday, DeepSeek made a 75% discount to its flagship AI model (V4-Pro) permanent. In economic data, Foreign Direct Investment (FDI) fell 10.3% y/y in April, more than the 7.3% decline in the prior month. South Korea gained over 2% overnight after being closed Monday as well. Japan ended modestly lower overnight after the Nikkei jumped ~3% on Monday following the weekend’s Iran headlines.
 

 
Brent crude fell 7% on Monday, dropping below $100/barrel to ~$96. However, follow-up reports of US strikes in the Strait on Monday saw oil bounce off those lows, currently up 3% today to around $99.  Despite the move in oil gold was relatively contained, gaining 1% on Monday and falling a similar amount today as it remains rangebound. Silver was up ~3% but has given back those gains this morning as well. Bitcoin traded down to ~$74k and its 50d ma at its lows over the past 24hr but bounced to ~$77.5k before pulling back to ~$77k currently. ETH continues to trade rangebound ~$2100k.
 

 
 
Earnings:
Pre-Market: AZO, CSW, SKY
After-Market: BOX, MOD, SMTC, ZS 
Pre-Market (Wed): ANF, BBWI, CPRI, DKS, DY, MNRO, P
     
Economic Data:
US:

• Chicago Fed National Index: 0.14 vs prior -0.15
• 9:00 S&P Case Shiller

• 10:00 Consumer Confidence
• 10:30 Dallas Fed Index
• 1:00 $69B 2yr auction

Global:

• China FD (Sun)I: -10.3% prior -7.3%
• Spain PPI: 8.3% prior 3.1%