Memorial Day Edition.
Markets are closed today.
The macro drama, unfortunately, is still fully employed… and will set the tone when trading resumes on Tuesday.
Three stories quietly developed over the long weekend — and together they explain almost everything investors are suddenly nervous about heading into June:
→ oil
→ inflation
→ bond yields
Which, increasingly, are all becoming the same story.
The story ⇩
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Story 1 · Oil
On Sunday evening, oil futures fell sharply 4.6% after signals emerged that Washington and Tehran are in the final stages of a framework that would set the stage for peace negotiations and reopen the Strait of Hormuz.
Brent crude fell below $100 after closing on Friday above $103.
West Texas Intermediate fell similarly from above $96 to around $92.
Markets immediately started removing part of the “war premium” baked into oil prices since February. Since then, the global market has lost roughly 1 billion barrels of oil supply — the largest supply shock on record, per the IEA.
The issue?
Investors have now seen enough “almost deals” to know better than to fully trust this one yet.
Iranian state media already hinted the framework could still collapse over frozen assets and sanctions disputes.
In other words: oil falling quietly improves the entire macro backdrop.
If it lasts.
!!! Watch Brent crude Tuesday morning.
a Below $95 and markets may start believing inflation pressure is finally cooling off again.
b Back above $100?
Wall Street goes straight back into stress mode.
Story 2 · Tariffs
After the Supreme Court struck down blanket tariffs earlier this year, the government started refunding import duties back to companies.
At first it was small. Now it is turning into a flood.
Customs and Border Protection has already withdrawn roughly $17 billion in May alone — versus just $3 billion during all of April.
The total refund exposure now sits near:
→ $166 billion
And that money is starting to flow back into:
→ retailers
→ import-heavy companies
→ consumer-facing businesses
Walmart already said some of the refunds may go toward price cuts.
Other large retailers are making similar plans. The cash injection is real and immediate for companies with large import books — consumer discretionary and retail names are the direct beneficiaries.
Costco reports earnings Thursday.
!!! Watch for any commentary on tariff refund timing and how management plans to deploy it.
What it means for the deficit?
$166 billion flowing back out of government coffers adds directly to the deficit — at the exact moment the Iran war is already pushing borrowing costs higher. It compounds the bond story below.
Markets now have a new question:
!!! Does refunding tariffs help consumers cool inflation… or does injecting more money back into the system keep inflation hotter for longer?
That answer matters a lot for bonds.
Which brings us to the problem Wall Street suddenly cannot ignore anymore.
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Story 3 · Bonds
The 30-year Treasury yield just hit its highest level since 2007.
Before the US-Iran conflict began, the 10-year Treasury yield sat at 4%.
It now stands at 4.58%.
The CBO’s baseline for this year was 4.13%. Every basis point above that translates into more interest on roughly $36 trillion in debt.
At 4.58% for the remaining four months of the fiscal year, the US adds approximately $8 billion in extra interest. If yields stay here through all of fiscal 2027, that rises to $30 billion.
Producer prices just posted their hottest reading in four years.
And suddenly traders are starting to reconsider the entire rate-cut narrative again.
That creates a problem for stocks.
Because this rally has been powered partly by the idea that:
→ inflation cools
→ rates eventually fall
→ AI spending continues
→ valuations stay elevated
Higher yields challenge that entire chain.
And unlike stock investors, bond investors tend to be brutally literal.
They care less about narratives. More about math.
Every percentage point higher in yields increases borrowing costs:
→ for consumers
→ for corporations
→ for the government itself
Which is why Wall Street is suddenly staring at the 10-year Treasury like it contains classified information.
The irony? All three stories connect back to the same thing.
A real Iran deal could lower oil.→ Lower oil could cool inflation. → Cooling inflation could calm bonds.→ Calmer bonds could give stocks room to keep climbing.
That is the optimistic chain reaction bulls are hoping for right now.
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Sincerely,
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Short Week. Heavy Data.
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