US inflation jumps 6% year-over-year; Fed rate cuts delayed indefinitely

Hot inflationThe rate at which prices rise across an economy. data released late afternoon sent shockwaves through equity and crypto markets after the close. US producer prices jumped 6 percent year-over-year in April, the fastest climb since 2022, while core CPI beat forecasts. The culprit: energy costs spiking from the Iran war. The 10-year Treasury yield, which had been trading near 4.7 percent, surged to 5 percent, its highest level since July 2024. Bond traders are now repricing Fed policy expectations, erasing recently formed 'pivot' narratives and pricing in the possibility of rate holds extending well into late 2026. Goldman Sachs and JPMorgan strategists are circulating updated frameworks that push first-cut odds into Q4. Equities sold off sharply; the Nasdaq and S&P 500 both declined roughly 1.8 percent into the close, with growth and rate-sensitive tech stocks like NVIDIA and Tesla leading losses.

After-hours single-stock movers were dominated by energy repricing. Crude oil (WTI) climbed another 3.2 percent to 84.50 per barrel, while Brent surged 3.8 percent to 87.10. Gold spiked 2.1 percent to 2,341 per ounce as investors sought safe havens. The US Dollar Index jumped 0.9 percent, reflecting classic risk-off flows. In contrast, Fervo Energy, a geothermal developer, popped 33 percent above its IPOInitial Public Offering - a company's first public sale of stock. price in today's $1.89 billion offering, signaling continued appetite for energy transition plays despite macro turmoil. Ford shares surged on a bullish Morgan Stanley call highlighting its energy storage business upside.

Crypto overnight: Bitcoin dipped 2.3 percent to 41,850 on inflationThe rate at which prices rise across an economy. shock, but altcoins are rotating sharply. XRP and Solana ETFs are pulling in heavy inflows while BTC and ETH face net outflows, signaling tactical rotation toward smaller-cap digital assets amid regulatory optimism. Asia desks will open to headline inflation shock across commodities; crude hovering near 87, gold bid at 2,340, and the DXYThe US Dollar Index — trade-weighted USD against EUR, JPY, GBP, CAD, SEK, CHF. index at 105.2. USDJPY is trading near 151.80, up 0.6 percent, as rate-cut delays boost the dollar carry tradeBorrowing in a low-yielding currency to invest in a higher-yielding one, pocketing the rate differential. unwind risk heading into Tokyo open.

The Iran war is the inflationThe rate at which prices rise across an economy. accelerant. The Strait of Hormuz saw oil flows collapse by nearly 30 percent (6 million barrels per day) in Q1 2026, according to the EIA, marking the lowest shipment levels since the 1990s. Saudi Arabia's output hit four-decade lows. Tanker diversions are straining logistics, and the energy crunch is bleeding into global supply chains; fertilizer, aluminium, and copper costs are all climbing. European and Asian bourses will struggle to find bid support with stagflation fears reigniting. The ECB's Philip Lane kept cards close to his chest on a June rate decision, but energy inflation will complicate any near-term easing. Australia, Japan, and South Korea equity desks face headwinds from commodities repricing and durationBond price sensitivity to interest rate changes. shock.

Overnight thesis: Watch for capitulation selling in durationBond price sensitivity to interest rate changes. tomorrow morning as Asia digests the 5 percent 10-year yield and reprices terminal rate expectations. Watch USDJPY and commodity FX crosses; AUD and CAD are vulnerable to crude weakness and growth repricing. Energy demand destruction fears are real; watch crude and natural gas for any further breaks lower that signal recession bets. Fed speakers (Barr and other governors) will be under intense scrutiny if they speak tomorrow, as markets hunt for any dovish signal to stabilize duration. Trump's tech CEO delegation to Xi in Beijing, announced alongside this inflationThe rate at which prices rise across an economy. shock, could provide a brief risk-on relief rally if trade tariff headlines improve, but macro backdrop is decidedly risk-off.