Real yields are driving stocks

The US is celebrating a deal with Iran. While Iran says not so fast. Meanwhile, markets rally. Happy Memorial day!

After strong earnings and a notable rally in US stocks over the past few weeks, it has been the turn for the Eurostoxx 50, which has printed an almost 5% climb in 5 days. A deal with Iran (absolutely unconfirmed for now) and lower oil prices would bring back the much needed gas and jet fuel, and inflation fears would fade.

Our Agentic intelligence Cartesio is confirming that lower real yields in Europe (on the back of fading inflation pressures) seem to be behind EU stock market gains after the peak in stress from the Iran war - see top chart.

US gains are instead broadly explained by the consequence of a strong earnings season and AI developments - it’s risk-on, as measured by synchronous and compressing credit spreads in fixed income.

You can keep an eye on what is driving which asset and why on our Cartesio app, daily.

Fixed income investors, watch out. While stocks are taking some oxygen from the scenario of an open Hormuz strait, lower oil prices and thus lower inflation pressures in the short term, bonds will not be out of the woods.

Many different elements, including booming debt numbers and AI Capex-related bond issuance, will continue to put pressure on yields (to go higher).

If you are passionate about geopolitics, you might have followed the news that the US is moving its Nimitz air carrier towards Cuba, while the island strangled by a total lack of oil imports after Venezuela’s Maduro has been “removed” from power by the Trump Administration.

The US President has revived the old-school policy of trying to control oil to bring enemies to the negotiating table somehow. As a consequence, someone else has been doing their homework.

The excitement arounds stocks is not due only to (possible) geopolitical developments. Investors have also been excited by NVIDIA results among all, with a solid +85% YoY revenue growth, beating absolutely anyone’s expectations.

If you believe that AI adoption is just at the beginning, the profit opportunities ahead are…..vast. And do not worry too much about expensive prices. Given the expected earnings from semiconductors and the AI sector in general, the Nasdaq is floating on the upper side of fair value.

Given the current risk on environment, Pantarai ADAPT has been flying inside the remits of its mandate (+8% since inception with 8% vol). New charts coming soon.

Latest portfolio here to 22 May 2026.

Speak soon

Nico