Insights 
VT 
US indices closed with the Dow Industrial Average remaining unchanged. Reports surfaced that Canada and the US discussed terms on economic and security matters, while Canadian consumer spending stayed stable in May.
Crude futures rose by 4.88% to $68.15. The US sold 10-year notes at 4.421%, slightly less than anticipated. Major European indices mostly ended lower, and US oil inventories decreased by 3,644K versus the 1,960K expected. Oil prices rose as Trump expressed doubts about the Iran deal, and tariffs could remain at 30% for China.
Canada And US Economic Indicators
Building permits in Canada fell by 6.6% in April, contrary to predictions of a 2.0% increase. The US May core CPI increased by 2.8%, less than the expected 2.9%. Trump affirmed the completion of the China deal, set to supply rare earths for six months. The US maintained a 55% tariff collection from China, with some tariffs potentially rolling forward.
US headline CPI grew by 2.4% annually, in line with some predictions but below consensus. US yields and the USD declined, with yields falling by 6 basis points for the 2-year and 5.2 basis points for the 10-year. The USD was mixed against various currencies.
Concerns about Middle Eastern security escalated oil prices, with crude reaching its highest since April 3. Gold prices also increased due to safe-haven demand amidst market volatility.
Yields crept lower after soft inflation data, with both headline and core readings undershooting consensus. This gentle miss on CPI added weight to the view that pricing pressures may not rise quite as quickly as previously feared. As a result, Treasury markets rallied modestly, giving bonds a bid and pushing the short end of the curve flatter still. Rate expectations eased further—not dramatically, but enough to suggest a slower walk toward tightening than many had pencilled in even a fortnight ago.
Geopolitical And Commodity Market Dynamics
Oil’s strong rally tilted attention toward geopolitics once again. The sizeable drawdown in inventories gave the initial push, but it was the renewed doubt over negotiations with Iran, as well as firm messaging around trade barriers, that really moved markets later in the session. There is a growing sense that these themes aren’t short-term distractions but rather ongoing sources of pricing tension. It’s not just about supply, it’s also who’s controlling it, and what rhetoric surrounds their policy position.
The move in gold wasn’t explosive, but it was telling. The metal firmed as investors reached for safety—not out of panic but as a hedge amid multiple uncertainties sitting just under the surface. Particularly as cross-asset volatility remains compressed, there’s a view that any uptick in stress could broaden quickly.
Gains in crude futures were not isolated from this broader narrative. Commodity traders responded to both stockpile figures and political risk, bidding up energy contracts as anticipation grew that key producers may face near-term disruptions. It’s no longer solely a demand story; structural frictions in supply chains have seemingly taken the spotlight.
Meanwhile, the recent dip in building permits data north of the border suggests that caution has returned to property markets, at least temporarily. That drop, flipping expectations on their head, could weigh on construction-related equity names and also lead to adjustments in rates expectations if the trend persists. It doesn’t scream weakness, but it does whisper hesitance.
The auction of 10-year notes in the US passed without any major issue, though the yield tailed softer than forecasted. This may indicate that buyers are becoming more sensitive to forward guidance around inflation rather than focusing purely on nominal levels. Takeaway here is the appetite for duration remains intact, particularly when real returns hold steady despite choppy nominal prints.
Foreign exchange reflected the complexity rather than clarity. The dollar moved inconsistently across pairs. This inconsistent behaviour isn’t surprising—it’s what tends to happen when the data sends conflicting messages, as it has here: soft-core inflation but tight employment, cautious tone from policymakers yet resilient consumer metrics. Markets rarely get handed a clear direction under such conditions; instead, we are seeing a patchwork of reactive trades and opportunistic positioning.
As part of this, European indices broadly pulled lower, unable to shake the drag of weaker growth readings and persistent trade anxieties. Sentiment has not collapsed, but it feels laboured, with little on the near horizon offering an immediate source of optimism.
The energy space, however, provided a pocket of momentum—not just for oil itself, but for related equities, particularly those levered to US production. It’s the third week in five where we’ve seen demand for oil-linked exposures outpace broader sectors.
It’s worth noting that metals—typically quiet—had an interesting session too, with risk aversion supporting gold but less impact felt in industrials like copper, which held firm even as broader risk-off moves developed. That divergence suggests positioning in safe-haven assets without a full-scale rejection of cyclical commodities, a nuance that’s worth tracking in days ahead.
We remain alert for short-term dislocations in implied volatility metrics across rate and commodity markets. Pricing does not currently reflect wider dispersion in possible outcomes—something we see changing rapidly if geopolitical risk escalates or if the next round of economic data diverges again from forecasts.
Keep an eye on relative rate spreads after the CPI data, particularly the 2s10s curve, which remains a reliable barometer of forward sentiment in fixed income. We’ve seen it flatten further—not dramatically, but purposefully—and that’s been one of the cleanest expressions of market caution without a risk-off panic.
