Good morning,
 
Yesterday markets celebrated Cinco de Mayo with a rally recouping Monday’s loss and then some as US military leadership said Monday’s Iran attacks were below the threshold of restarting major combat operations. The S&P 500 closed at a new all-time high up 0.8% while small and midcap indices were up ~1.5%. Semiconductors continued to lead to the upside with the NSYE Semi index up >4% bringing YTD gains to 60%, spoiler alert they are up sharply again this morning. Oil prices and Treasury yields both moved modestly lower.
 
It has been a wildly volatile overnight session as we’ve had a ton of Iran headlines. Apologies in advance for the blow by blow but have been putting this together as we go. Last night futures started to move higher after President Trump said Project Freedom would be paused as “Great Progress has been made toward a Complete and Final Agreement with the Representatives of Iran”. The gains were pretty muted until just before 5am this morning when Axios, which has lived up to the first two letters of its name during this conflict, broke a story that the US/Iran were close  to a one-page memorandum of understanding to end the war and set a framework for more detailed Nuclear negotiations. About an hour later the IRGC Navy also chimed in with some positive comments saying with the end of 'threats from aggressors' and in light of new procedures, safe and stable transit through the strait will be possible “. This helped to push futures to session highs and oil to session lows. However, since President Trump tempered some of the enthusiasm once again warning that there is a big stick if an agreement can’t be reached and telling the NY Post that it was “too soon” to start thinking about face-to-face talks. Right around the same time an Iranian official noted that the Axios text is just America’s wish list. Coming full circle (hopefully this is it) Axios has chimed in again noting that the US expects a response withing 48 hours on several key points. S&P futures are holding the bulk of the overnight gains but are about 25pts off the highs currently up 0.7% while R2K futures are up ~1%. Oil prices are down ~6% with ICE Brent currently trading ~$103.50 (LOD $96.75). Outside of the Iran headlines there have also been another strong round of earnings and a couple of AI related partnership/deal announcements helping to drive the upside.
 

 
This morning there was a strong ADP jobs survey which showed 109k jobs were added to the economy up from 62k last month driven primarily by services. The bulk of the job gains are happening at the barbells with small and large companies accounting for most of the hiring. The Treasury refunding statement was released at 8:30 holding auction sizes for 2-7yrs steady and saying it ”anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters”. Treasury yields are moving to the downside but have also come off the overnight lows currently down 4-8bps across the curve. The 2yr is down 8bps at 3.87% (LOD 3.84%). The USD index is holding just above the recent lows ~$97.50. Right around midnight there was another sharp rally in the Yen, presumably intervention related. It is up just over 1% vs. the USD at ~156.15¥/$.
 
Government Yields

• US 2yr -7bps to 3.88%, 5yr -8bps to 4.01%, 10yr -7bps to 4.36%, 30yr -5bps to 4.94%
• USD index: -$0.53 to $97.79

 
Japan remained closed for the holiday but both China and South Korea moved higher after reopening. The China Shanghai Composite was up >1% helped by an improvement in the services PMI. South Korea was the standout with Samsung rallying sharply and clearing the $1T market capitalization threshold after yesterday’s Apple news. European indices are moving sharply higher up >2% across the board with natural gas prices falling >5%.  
 
 
 
We discussed the energy complex above. Metals are moving sharply higher gold, copper and other precious metals are up >2% while silver outperforms up  closer to 5%. Ag is pulling back modestly. Crypto continues its move higher with Bitcoin and Ethereum both up ~1%, ~82k and 2.4k respectively. Altcoins are outperforming with the risk on move.
 

 
Very busy earnings/news day here are a couple of highlights.

• Multiple tech companies have continued to beat already very high expectations (sharply higher AMD, FLEX, VECO, SMCI, ALAB). LITE and ANET are both modestly lower despite great numbers.
• Anthropic committed to spending $200ml on Google Cloud over the next 5yrs. In addition, there was an Information report highlighting contracts involving Anthropic and OpenAI now make up around ~50% of the ~$2T in revenue backlog across Amazon, Microsoft, Google, and Oracle.
• Nvidia and Corning (+>15%) announce partnership to expand US manufacturing of optical connectivity solutions for AI infrastructure
• Uber (+>5%) after solid results

 
Earnings:
After Market: AEE, AGM, AMD, ANET, AIZ, BV, CBT, CC, CE, DOC, LEU, COMP, CTVA, COTY, CPNG, DVA, DVN, EA, EMR, EOG, EXEL, FOA, GIC, GNL, GXO, HL, IFF, J, KVYO, LCID, LDI, LITE, LUMN, LYV, MSTR, ONTO, OXY, PBI, PSTL, RPU, SOLV, SMCI, SWKS, UIS, VOYA, WK, WOLF
Pre-Market (Wed): APO, BCO, BWA, CDW, CLH, CVS, DIS, EXC, GPN, JCI, KHC, KMT MAR, NRG, NYT, OC, SN, SR, UBER, YOU
After-Market (Wed): ALB, APA, APP, ARM, ATO, AXON, BKD, BROS, CAPL, CF, CMP, CW, CXT, CODI, COHR, CPK, DASH, ES, FTNT, GNK, GT, HCI, HLI, HRB, HST, KTOS, MET, MUR, NVST, OBDC, PAYC, PRI, PTC. QGEN, RYN, O, TKO, TPL, WBD, WES, WHR, WTS, ZG
 
Economic Data:
US:

• Mortgage Apps: -4.4% w/w prior -1.6%
• ADP Employment Change: 109k vs. 99k cons., prior 62k
• Treasury Refunding Announcement
• 10:30 Oil Inventories
• 1:00 Fed Goolsbee
• 1:30 Fed Hammack

Global:

• China RatingDog Services PMI: 52.6 vs. 52.0 cons., prior 52.1
• South Korea Inflation: 0.5%/2.6% m.m/y.y vs. 0.5%/2.6% cons., prior 0.3%/2.2%
• India Services PMI (final): 58.8 prior 57.5
• EU PPI: 3.4% m/m vs. 3.3% cons., -0.6%
• EU Services PMI (final): 47.6 prior 47.4