WS #7404

The dominant market narrative remains the Strait of Hormuz closure and its inflationary oil shock, which is now being partially offset by US and Chinese actions. Capital Economics warns that global oil inventories could reach critical levels by end-June, setting the stage for Brent at $130-140/bbl. However, CNBC reports that US export surges and Chinese import cuts have plugged ~70% of the supply gap, preventing an even larger price spike. This counter-signal dampens the pure bearish oil thesis but does not eliminate it. Meanwhile, US 30-year Treasury yields hit 5.12%, the highest since before the 2008 financial crisis, spooking equity markets and triggering a broad selloff in growth and chip stocks. The bond selloff is being driven by inflation fears, with BofA warning CPI is nearing a market pain point. Incoming Fed Chair Kevin Warsh faces an early test as yields become 'unhinged.' The Trump-Xi summit produced no concrete deals on chips or Iran, disappointing markets and weighing on semiconductor names. On the geopolitical front, Iran's Foreign Minister stated that all vessels except those from nations at war can transit the Strait, a slight de-escalation, but the UAE categorically rejected Iranian allegations and reserved military rights, keeping tensions high. Ukrainian drones struck a key Russian refinery, adding supply-side pressure. Apple (AAPL) is showing a MAG7 carve-out: a large dark pool order of 1.5M shares ($451.85M) and social sentiment suggesting rotation out of bonds into AAPL, pushing it toward all-time highs, contradicting the broader tech selloff. The Fed terminated enforcement actions against UBS and Credit Suisse, a minor positive for financials. Overall, the macro picture is one of stagflationary pressure from oil and bonds, with selective tech strength in AAPL.