A +6% PPI and the Nasdaq printed a record anyway.
April PPI ripped +6.0% YoY — biggest 12-month print since December 2022 — and the equity market responded by adding another half-percent. The S&P closed at 7,444.25 (+0.58%, fresh ATH), the Nasdaq at 26,402.34 (+1.20%, fresh ATH); the Dow lagged at −0.14% on rate-sensitive financials. The long-end bull-flattened: 30-yr fell 18 bps to 5.02%, 10-yr off Tuesday’s 1-year high to 4.47%. Warsh was confirmed Fed Chair 54–45 — the closest modern-era margin — and takes the desk tomorrow when Powell exits. AMAT and Walmart report after the close.
+6.0% YoY
Apr PPI · headline
biggest since Dec '22 · core +4.8%
7,444.25
S&P 500 (Wed close)
+0.58% · fresh ATH despite PPI shock
26,402.3
Nasdaq (Wed close)
+1.20% · tech absorbed the inflation
5.02%
US 30-Yr
−18 bps · long-end bull-flattened
Tech absorbed the PPI shock outright.
April PPI for final demand rose +6.0% YoY — the biggest 12-month gain since December 2022 — and on the print, futures opened lower across the complex. By the close, the Nasdaq was +1.20% and the S&P +0.58%, both at fresh records. The mechanical explanation is rotation: rate-sensitive financials and small caps gave back, growth/AI names did the absorbing. The harder explanation is that the curve told a more nuanced story than the headline. The 30-year actually fell 18 bps to 5.02% (off Tuesday’s intraday peak above 5.20%); the 10-year pulled back 11 bps to 4.47% as Wednesday’s Warsh confirmation pulled flight-to-quality buying back into duration. Bull-flattening on a hot PPI day is unusual — it says the bond market is hedging recession risk inside the inflation print.
The Fed-chair handover became official mid-afternoon. Warsh confirmed 54–45 — the closest modern-era margin for a Fed Chair (Powell’s 2018 was 84–13) — with only Pennsylvania Democrat John Fetterman crossing party lines. Powell’s term ends today; Warsh sits at the desk tomorrow. The new Chair inherits a market pricing a sustained oil shock, June Sept-cut OIS at 27% from 55% a week ago, and an Iran ceasefire still on “massive life support” per Trump’s framing. After-the-close earnings today are the chip-and-consumer cross-read: Applied Materials reports for the AI cap-equipment thesis, Walmart for the consumer-resilience story heading into Q2.
Long-end bull-flattened; equities ground higher.
Every equity index green outside the Dow; yields lower across the curve as Warsh-confirmation flight-to-quality bid found duration; the dollar softer; commodities mixed. The cleanest single-asset read is the 30-year −18 bps — the steepest one-day bull-flatten since the FOMC week in mid-March.
+6.0%
Apr PPI · headline
YoY · biggest since Dec '22 · core +4.8%
7,444.25
S&P 500 (Wed close)
+0.58% — fresh ATH despite PPI
26,402.34
Nasdaq (Wed close)
+1.20% — tech absorbed the inflation
5.02%
US 30-Yr
−18 bps — long-end bull-flattened
fresh ATH · tech absorbed the +6.0% PPI shock outright
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modest fade · no fresh Iran escalation overnight
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held above 5% but flattened back · 10-yr off Tue's 1-yr high
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Note: yield-down = green, yield-up = red (bond-price convention).
dollar softened with the long end · BTC + EUR firmer
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The chip-gap that AMAT's print is about to test.
Chart of the Day
The 20-point gap the Lens has been calling out.
YTD total return for the AI-semiconductor complex, split into chip designers (NVDA, AMD, AVGO, MU, MRVL) and AI cap-equipment (TER, KLAC, AMAT, LRCX, ASML). Designers average +31% YTD; equipment names average +11%. That gap is the picks-and-shovels trade we've been promoting — and AMAT's Q1 print after today's close is the first earnings test of the thesis.
Sources: Bloomberg, Yahoo Finance. YTD total returns through Wed 13 May close; group averages are simple arithmetic means. AMAT reports today; LRCX and KLAC over the next two weeks.
What carried the week's tape.
Fed
Warsh confirmed Chair 54–45 — closest in modern era
The Senate confirmed Kevin Warsh as the next Federal Reserve Chair in a near-completely-partisan 54–45 vote yesterday afternoon. Sen. Fetterman (D-Pa.) again the lone Democrat crossing party lines. Powell's term ends today; Warsh takes the desk tomorrow. The 30-year fell 18 bps on the day — flight-to-quality from the chair handover offsetting the +6% PPI print. First FOMC under Warsh: 16–17 June.
CNBC · NPR · WaPo · Al Jazeera · Wed 13 May
AI Capex
AMAT + WMT earnings tonight — the picks-and-shovels test
Applied Materials reports Q2 after the close — the most-watched cap-equipment print of the quarter and a direct read on whether the YTD performance gap between chip designers (avg +31%) and equipment names (avg +11%) closes upwards or downwards. WMT reports the same window; consumer-resilience read into the Q2 macro. Both stocks finished Wed +1–2% on hopes the Fed-handover bond rally extends.
Reuters · Bloomberg · CNBC · Wed 13 May
Geopolitics
Brent fade as no fresh escalation lands
Brent gave back 1% Wednesday to $107.22 as no new Iran-US developments hit the wires. Hormuz throughput stabilised at ~4.5 mb/d. The framing has shifted from Trump's "massive life support" comments Tuesday to a stalemate: neither bombing-bracket action nor concrete diplomatic progress overnight. Front-month vol still bid; the topside skew Vault flagged Monday remains the cleanest hedge against a weekend escalation.
CNBC · Reuters · Al Jazeera · Wed 13 May
GCC banks snapped back as the long end flattened.
The Vault thesis from Tuesday — that GCC banks would snap back on a dovish handover — got partially priced through yesterday. DFM banks sub-index closed +1.8%, ADX banks +1.5% as the 30-year fell 18 bps and the duration-risk premium in UAE/Saudi sovereign holdings eased. UAE 10-year eurobond spreads tightened back 4 bps; Saudi 5-yr CDS fell 3 bps. The credit market’s read is that Warsh’s confirmation reduces tail-risk on the chair handover even if the inflation print is hot — flight-to-quality buying came back into duration immediately after the vote.
Aramco gave back 0.8% as Brent eased; ADNOC −0.6%. The two sub-trades the Vault desk has been running — oil-linked equities and rate-sensitive banks — moved in opposite directions cleanly, which is exactly the carry-trade construction working as designed. Hormuz throughput edged up to ~4.5 mb/d on no fresh escalation overnight; the indicator stays RESTRICTED but the trajectory is now sideways for the first time since Iran’s rejection.
DFM banks (Wed close)
+1.8%
Best single-day since end-Apr
UAE 10-yr eurobond
−4 bps
First tighter day in three sessions
Hormuz throughput
~4.5 mb/d
Sideways for first time since rejection
Three reads into the handover.
A +6% PPI on a day the long end rallied 18 bps is a market doing two things at once. The earnings cross-reads tonight (AMAT, WMT) and Warsh’s first FOMC mid-June are the next two regime tests.
Trade 01
The bond market is hedging two regimes
A bull-flattener on a hot PPI day means the curve isn't pricing one outcome — it's pricing both. Short-end stays elevated on sticky inflation; long-end rallies on flight-to-quality + recession-risk insurance. The 2s30s tightened to 102 bps from 121 bps yesterday, and that's where the directional risk lives. If 2s30s collapses through 80 bps before Warsh's first meeting, the curve is telling you it's pricing a hard-landing more than an inflation spiral.
Trade 02
AMAT tonight is the cap-equipment unlock
The 20-point YTD gap between chip designers (+31%) and cap-equipment (+11%) has been the Lens trade since AMD's print. AMAT reports Q2 after the close — the consensus is for $7.1B revenue and $1.96 EPS; the watch is on order-book commentary on AI-fab tooling. A beat-and-raise narrows the gap; an in-line confirms the designers' multiples have run too far. Either way, the gap is closing this week.
Trade 03
Warsh's first signal is tomorrow's silence
The new Chair takes the desk Friday. There is no scheduled FOMC, no scheduled speech, no scheduled press conference — but the market will read the absence as signal. Vault expects no public communication until the 16–17 June FOMC; any deviation from that (a Trump rate-cut tweet that goes unrebutted, a soft Friday-evening note to the chair-emeritus) becomes the first day-one move. Rate vol stays bid into mid-June.