Monthly Market Compass: May 2026
Global rates are spiking, with US Treasuries getting turbulent. The AI boom is funding itself with debt. The rest of the economy is deteriorating underneath it. How long can one hold up the other?
Hello again, and welcome to our Monthly Market Compass for May 2026. These chart-heavy market summaries go out at the beginning of each month.
These notes are not investment advice and are for informational purposes only. Always do your own research. Sources can be found below each graphic.
As usual, we divide these monthly notes into several sections: an introduction and inflation section, an economy section, a liquidity section, a Fed-focused section, a geopolitics and commodities section, a crypto section, which is followed by an equities section. A market conclusion follows these sections. Enjoy!
Introduction and Inflation:
Welcome back for a new month!
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We pick up where we left off last month.
Gold reserves at Central Banks continue to move higher against USD denominated assets - this both from the deterioration of USD Bond holdings, and the sideways movement of gold prices and rising gold purchases by central banks.
That said, the USD is being used more than ever:
Bond markets world-wide have been in a downturn recently, with rates spiking.
Japan:
Europe has had some recent frothy days:
US 30 Yr Rates are near decade highs:
And just earlier this week we saw a fight break out in 30yr US Treasuries:
The rest of the US yield curve has also seen some upward movement on rates:
If oil is going to lead US Treasuries, then there’s a long way to go.
All of this while global debt levels continue to move higher:
In summary, most of the world has long term rates that look higher today than before the GFC:
What does this all mean for inflation? If commodities are any hint we are likely to see quite a bit of further upward movement on CPI:
But much of the non-commodities, non-AI related economy is seeing falling prices:
Nevertheless, US long term inflation expectations are surging:
The fear that has not left us yet is that we are reliving the 1970’s inflation story, with the worst immediately in front of us:
