Asia open: Trump-Xi summit disappoints, inflation fears fuel bond yield surge

• The Trump-Xi Beijing summit delivered limited concrete progress, disappointing markets that had hoped for broader trade and geopolitical breakthroughs, while renewed warnings over Taiwan tensions kept regional risk sentiment fragile.
• Rising inflation pressures and surging global bond yields reinforced fears that the Federal Reserve may eventually shift toward rate hikes rather than cuts, with the US 10-year Treasury yield climbing to 4.59%.
• The AI-driven equity rally is increasingly viewed as overconcentrated, with growing concerns that elevated valuations in semiconductor and AI infrastructure stocks could face pressure from rising yields and sector rotation ahead of NVIDIA earnings.
• Chart of the day: WTI crude’s minor bullish structure remains intact after a strong rebound from 20-day and 50-day moving averages, with key short-term support at $103.40/bbl.

• Trump-Xi Beijing summit concludes with limited progress: The highly anticipated two-day meeting between U.S. President Donald Trump and Chinese President Xi Jinping concluded in Beijing with few concrete agreements. While pledging a three-year “strategic stability” truce, Xi issued his bluntest warning yet on Taiwan, stating it could lead to “clashes” and create a “highly dangerous situation”. On trade, China agreed to purchase only 200 Boeing jets, well short of the 500 investors expected.
• Gundlach and Wall Street warn of Fed rate hikes: DoubleLine Capital CEO Jeffrey Gundlach warned that stubborn inflation and a commodity boom could force the Federal Reserve to implement interest rate hikes rather than cuts. This aligns with a growing chorus on Wall Street, which is pricing out 2026 rate cuts entirely, shifting expectations toward tightening as the Fed’s preferred inflation gauge runs at more than double its target rate.
• Global bond yields surge, threatening stock rally: Global bond yields marched higher over the weekend, with the U.S. 10-year Treasury yield climbing to 4.59%. A steep rise in yields may start to pose a direct valuation threat to the global equity market rally, with the magnificent rallies seen in semiconductor, AI infrastructure-related equities since the end of March 2026.
• Goldman warns AI-fueled market rally overconcentrated: Goldman Sachs cautioned that the AI-driven stock surge powering the S&P 500 to repeated records is morphing into “one big trade,” exposing investors to heightened systemic risk. Concurrently, J.P. Morgan data revealed that AI-related industries now command more than half of the total S&P 500 weight.
• Bill Ackman builds hefty stake in Microsoft: Pershing Square revealed a contrarian core position in Microsoft. Famed investor Bill Ackman is betting against the popular market trade of selling software firms to buy chipmakers, arguing that Microsoft’s enterprise software suite remains deeply embedded and insulated from AI rivals.

• Vanishing rate cuts and tightening Fears: Persistent inflation, driven heavily by energy and commodity shocks, has completely upended the global monetary outlook. Investors are rapidly moving from a “higher-for-longer” stance to actively positioning for potential rate hikes under incoming Fed Chair Kevin Warsh.
• Geopolitical friction and supply-chain vulnerabilities: The U.S. war in Iran and the ongoing closure of the Strait of Hormuz continue to impose structural inflation constraints on the global economy. While the physical ceasefire holds, the lack of a diplomatic breakthrough keeps WTI and Brent crude elevated near $105-110/bbl.
• Extreme equity concentration in the AI supercycle: With the AI ecosystem now exceeding 50% of the S&P 500’s weight, the market’s technical structure is highly sensitive to thematic rotation or an options market correction.

Equities: Wall Street pulled back ahead of the weekend, with the S&P 500 closing lower at 7,409, putting a pause to its prior 6-week of weekly gains with a loss of -0.4% for the week of 11 May. Tech shares led the decline as investors re-evaluated software vs. hardware valuations.

Fixed Income: Bond markets experienced heavy selling. The U.S. 10-year Treasury yield climbed to 4.59%. Long-term UK bond yields climbed to their highest levels since 1998 on fiscal deficit concerns due to political instability within the ruling Labour Party’s leadership.

FX: The U.S. Dollar retained broad structural strength as rate cut expectations evaporated. The Japanese Yen and British Pound remained defensive against greenback dominance as both ended with a weekly loss of 2.3% and 1.3%.

Commodities: WTI and Brent crude oil surged 3% on last Friday to settle at $109.48-105.86/bbl due to the ongoing closure of the Strait of Hormuz [cite: 8]. Spot Gold corrected lower by 2.4% to settle at $4,540/oz under pressure from higher global bond yields.

• Stock markets & supply chains: High energy import costs continue to pressure regional growth, with India’s stock market down around 10% YTD. In South Korea, Samsung Electronics and its labor union are scheduled to resume high-stakes pay negotiations today to avert a threatened 18-day strike that could disrupt global memory chip supplies. S&P 500 and Nasdaq 100 E-mini futures extended their losses to 0.6% to 0.7% in today’s Asia opening session at this time of writing.
• Currencies: The Indian Rupee was flagged as Asia’s worst-performing currency due to the crude oil price shock. The offshore Yuan weakened in line with other regional currencies after China’s summit talks concluded. Xi’s blunt language regarding Taiwan leaves the regional complex highly sensitive.
• Regional policy actions: To combat currency depreciation and macro strains, the Indian government has initiated emergency solutions, including tightening controls on gold imports and cracking down on domestic fuel consumption.

1. CN House Price Index, Retail Sales, Industrial Production (Apr) – 10:00 am SGT Impact: USD/CNH, Hang Seng Index, ChinaA50, AUD/USD
2. Trailing impact of U.S. 10-Year bond yield above 4.59% Impact: US Treasuries, growth stocks, USD, Gold.
3. Market positioning ahead of Nvidia Q1 earnings release on Wednesday, 20 May Impact: US semiconductor stocks, Nasdaq 100, S&P 500

After a retest on its 20-day and 50-day moving averages on Monday, 11 May 2026, the West Texas oil CFD (a proxy of the WTI crude oil futures) surged by 9% to hit a two-week high.

The current minor uptrend from its 6 May 2026 low remains intact within a medium-term sideways range configuration since the 9 March 2026 high of $119.54 (see Fig. 1).

Watch the $103.40 key short-term pivotal support, and a clearance above $108.20 sees the next intermediate resistance coming in at $112.84 before the medium-term range resistance of $116.56/119.54.

However, a break and an hourly close below $103.40 invalidates the bullish tone for another round of choppy minor corrective decline towards the next intermediate supports at $100.25 and $97.40 (also the area of the 20-day and 50-day moving averages).

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