Good morning. It was a subdued start to the week yesterday. The S&P finished marginally higher and traded in a 30 point range. The SOXX semis ETF broke an 18-session streak of gains, still having a much better year than the Red Sox and White Sox. Comm Services, Financials and Tech led while Staples, Discretionary (Dominos earnings) and Real Estate lagged. Iran news flow was similarly subdued, outside of the latest Iranian proposal, of which President Trump has expressed skepticism and Sec. State Rubio said was not acceptable. Last night a WSJ article said OpenAI missed its revenue and users targets and that CFO Sarah Friar expressed her concerns about the company’s ability to pay its future compute contracts. The AI basket is under pressure in the pre-market (CRWV, ORCL, AMD, AVGO, MVL down ~4% or more). Around 7am ET global equities weakened further as crude and yields climbed higher. S&P and Russell futures are down 0.6% but modestly off their lows, while the Dow is holding up with Coca-Cola’s 4% gain in the pre-market supporting the index.

Treasury yields are bear flattening (2y +5bp, 30y +2bp), moving higher along with their global counterparts. Yesterday saw both 2y and 5y auctions tail (0.1bp and 0.5bp, respectively). It was the 11th straight tail for the 5y. There’s a 7y auction today. The US Dollar Index is moving higher but off its best levels when it challenged the 50d ma. ADP weekly employment rose 39.25k, below last week’s 54.75k but a still a solid print. Home prices growth fell from last month and came in below estimates, continuing their downward trend.

Brent crude (+3%) is near its overnight highs with the June contract trading ~$111. Energy Secretary Chris Wright said the US will announce historic agreements with Europe today. Not part of those announcements was news that the UAE is leaving OPEC as of May 1. While the decision is not out of the blue, it comes at a very interesting time in the energy markets.