Inflation concerns grow

US equities reached a new all-time high last week despite inflation figures coming in higher than expected. President Trump’s visit to Beijing was the main focus for markets, especially given the large delegation of US CEOs accompanying the President. Trump and Xi Jinping agreed to establish a board of trade, one of several measures to promote “strategic stability” in US-China relations. US inflation (CPI) rose 3.8% in April, the highest since May 2023. The US Producer Price Index (PPI) increased 1.4% for the month, higher than the 0.5% forecast, much of the gain was due to higher energy prices.

UK equities also ended the week lower, amid renewed political uncertainty as Keir Starmer came under increasing pressure to step down following Labour’s local election losses. On the macro front, UK GDP remained resilient, expanding by 0.6% in Q1 versus Q4, in line with expectations. Meanwhile, in China, April inflation rose to 1.2%, exceeding the 0.9% forecast.

Last week's highlights

	CPI Inflation (12/05) – Rose 3.8% in April, the highest since May 2023. PPI Inflation (13/05) – Rose 1.4% for the month, higher than the 0.5% forecast. Much of the gain was due to higher energy prices.  Retail Sales (14/05) - Increased for the third month in a row.
	Germany ZEW Survey (12/05) - Economic Sentiment unexpectedly improved to in May, while it was expected to deteriorate further.
	Preliminary Q1 Gross Domestic Product (14/05) - UK GDP was resilient in Q1 and grew 0.6% compared to Q4, in line with expectations.  Industrial Production (14/05) -  Output in March fell 0.2% month on month, in line with market expectations.
	China CPI (11/05) – Inflation came in at 1.2% in April, exceeding economists’ estimate of 0.9% growth. Japan PPI Inflation (15/05) – Producer prices rose 4.9% from a year earlier in April 2026.

This week, investors in the US will receive minutes from the latest Fed meeting. In the Eurozone, inflation figures are due out as well as HCOB’s Manufacturing & Services PMIs. In the UK, markets will be focused on inflation and labour market data. Finally, in Japan, Q1 GDP data is set to be released.

What's on the radar

	S&P Global Preliminary Manufacturing & Services PMI (21/05) FOMC Meeting Minutes (20/05)
	Eurozone CPI (20/05) Eurozone HCOB Manufacturing & Services PMI (21/05) German Q1 GDP (22/05)
	UK Unemployment Rate (19/05) UK CPI (20/05)
	China Retail Sales (18/05) China Industrial Production (18/05) Japan Q1 GDP (19/05)

Chart of the moment - Long bond shaken, not stirred

Source: Bloomberg as of 15/05/26.

• US 30-year Treasury yields breached 5% in a $25 billion auction last week for the first time since 2007. In Japan, 30-year yields reached a record 4%. 
• UK 30-year yields also hit their highest level since 1998 as Keir Starmer faced growing pressure to step down.
• Long bond yields have been rising globally due to fiscal stress, sticky inflation, and energy uncertainty amid the ongoing Middle East conflict.
• Higher long-term yields mean tighter financial conditions, higher borrowing costs for households, governments and corporates, and more pressure on equity markets and growth.