In 30 seconds: Rising long-term Treasury yields have crushed bond ETFs by over 60% since 2020, while analysts debate the best inflation hedges and warn that the US fiscal deficit may require an adjustment of 5.5% of GDP to stabilize debt. Analysis of Chinese state commercial bank balance sheets reveals $2.5 trillion in FX assets and complex capital flow dynamics that challenge mainstream narratives about the scale of private outflows from China. US equities continue hitting new highs with strong Q2 earnings and rising EPS estimates, while the swearing-in of new Fed Chair Kevin Warsh draws historical comparisons to the 1987 market crash. Ongoing US-Iran nuclear negotiations are pushing Brent crude below $100 per barrel, while uncertainty remains over Strait of Hormuz transit relief and the timeline for any deal.
The 30-Year Treasury Yield closed at 5.06% on 2026-05-22, down 5 bp on the day. That is a long way from 0.8% in March 2020, which was its all-time low. If you bought the longest duration bond ETF at that peak in March 2020, you are now sitting on a drawdown of roughly 60%, which is the kind of number that makes people reconsider whether "safe haven" means what they thought it meant. The fiscal backdrop is not reassuring. The US fiscal and debt position is reminiscent of Brazil circa 2000. The structural primary deficit would need to improve by about 5.5% of GDP in order to stabilize US public debt levels. Here is the reflexivity problem: nothing is ultimately more inflationary than rates going up on a government that cannot afford to have rates go up on it. The demand side is not helping either. Global central banks stopped buying USTs on net in Q3 2014, removing a structural bid from the market. Gold: $4,523.20. Since Q4 2021, stocks have risen in dollar terms but fallen when priced in gold — which is a polite way of saying equities have been running in place when measured against something that cannot be printed. Portfolio construction is adapting. One approach levers the 60/40 portfolio 1.2x using SPX futures for some of the equity allocation, producing a worst drawdown of 24% over the last 10 years, compared to 31% for a 90/10 portfolio. The DS Beta drawdown at 1.4x leverage is 7%. Investors have long relied on an implicit guarantee that central banks and governments will step in to shield them from prolonged, unsettling market volatility.
There is a popular genre of China analysis that goes roughly like this: compare the current account surplus to the change in official reserves, call the residual "private outflows," and arrive at some suitably alarming number. The problem is methodological. With China you have to pull out the state banks to get an accurate picture (they count as 'private' outflows if you just look at reserves). If you skip that step, the state banks' foreign asset accumulation gets misclassified as private outflows, and your estimate will be way off. The balance sheets themselves are enormous. Chinese state banks carry a large FX balance sheet, and it's weighted heavily toward USD and HKD. When China's state banks are sitting on $2.5 trillion in FX assets, the mechanics of how those balances move — and how they get counted — matter enormously for reading capital flows accurately. Chinese exporters started to move funds onshore, hence the rise in 'Settlement', and that led to an increase in outflows via the state banks (most of the bond outflow is from the banks). Meanwhile, China has been masking the states' role by consciously not adding to its reserves, which means anyone who just uses reserves v the current account or something similar to estimate private outflows will be way off. It is just a mistake.
The S&P 500 closed at 7,473.47 on 2026-05-22, up 0.3727% on the day. The rally has been broad enough that the S&P 500 equal-weight hit a record closing level last week. If you are looking for reasons to feel good about this, 12-month EPS estimates are up 14% YTD, which means stocks are cheaper now than they were at the start of the year. Earnings are growing faster than prices, which is the polite way for a market to go up. The current 8-week rally has returned 17.3%. The closest historical analog is the 8-week rally in 1997, which gained 17.4%. After that 8-week streak ended, stocks were up another 22% a year later. Stocks have never been lower a year later after an 8-week win streak that gained at least 12%. You can decide for yourself how much comfort to take from a sample size that fits on a napkin. Jerome Powell saw the fourth-best overall return and third-best annualized return using the S&P 500. The best annualized return was under Volcker, which is the kind of fun fact that makes you wonder what exactly we mean by "best." On the single-stock front, Nvidia net profit margin hit 71% in Q1, a record high. A decade ago that figure was 12%. No company in history has had as much pricing power as Nvidia does today, fueled by its continued dominance in the AI chip market. A 59 percentage point margin expansion over a decade is less a business model than a force of nature.
Brent crude is trading well below $100 a barrel, with the broader complex dropping 6% in a single session. The deal timeline continues to slip. There are claims of Iran letting vessels pass over the past 24 hours, but those reports were not picked up in Bloomberg's monitoring — a discrepancy worth treating with caution. Independent tracking shows 3-7 a day dark-transit-inclusive passages over the past week, while officially reported Hormuz passage figures claim ~30+/day — likely because those higher numbers include much smaller vessels. Even in a severe Hormuz disruption scenario, the available toolkit — Chinese import cuts, Saudi/UAE bypass pipelines, and OECD SPR releases — is larger than often assumed.
Here is what your weekly spend looks like right now.
Gas (per gallon): $4.49, down 0.22% on the week
Groceries (CPI food at home): 345.20, up 0.49% on the month
Eating out (CPI food away from home): 348.35, up 0.50% on the month
Average hourly earnings: $37.41, up 0.16% on the month