WS #15198

Global macro conditions have deteriorated sharply, marked by a historic bond market sell-off. US 10-Year Treasury yields have surged to a seven-session high of 5.31%, while UK gilt yields hit 6% for the first time since 1998. This is the worst quarter for US Treasuries since 1994, prompting a stark warning from the RBA regarding global bond volatility. The rising cost of capital is pressuring European equities, with the Euro STOXX 50 and Italian banks underperforming, and is driving a flight to safety that has kept Bitcoin trading in the $82,000-$85,000 range despite fading inflation-driven rallies. In the energy sector, the situation remains volatile. Brent crude has rebounded above $100 per barrel, driven by severe constraints in refined products and geopolitical tensions in the Middle East, which are currently in an escalation phase. However, crude shipments through the Strait of Hormuz have seen a modest rebound to 13.5 million barrels per day, and the EU Commission is coordinating potential strategic reserve releases to dampen the crisis. This creates a mixed environment for energy beneficiaries versus consumer and transport sectors. Corporate activity is dominated by a massive AI infrastructure financing deal: Broadcom is set to lend $42 billion to Anthropic for chip leasing, signaling a shift toward capital-intensive AI models. Meanwhile, Accenture reported a solid earnings beat, and Micron's long-term customer commitments have surged to $32 billion, reinforcing the AI hardware narrative. Conversely, McCormick beat EPS but lowered sales guidance, reflecting persistent consumer pressure from input costs.