IGA Capital: Weekly Economic Brief

Joshua Hawley
May 11
4 min read

Date: May 11, 2026

Subject: Market Resilience Amid Geopolitical Volatility and Fed Transition

Executive Summary

Wall Street maintained its bullish momentum last week, with the S&P 500 securing its sixth consecutive week of gains. Despite heightened naval tensions in the Middle East, markets were buoyed by a "blowout" earnings season and resilient U.S. labor data. While Treasury yields experienced significant intraday volatility driven by oil price fluctuations, a stable quarterly refunding announcement from the Treasury Department helped soothe duration concerns. All eyes now turn to the incoming Fed leadership and this week’s critical inflation data.

Equity Markets & Earnings

Equities reached record highs as corporate profitability proved more durable than anticipated.

Performance: The S&P 500 rose 2.3%, while the Nasdaq 100 surged 4.5%, marking its strongest six-week rally since 2009.
The AI Engine: Semiconductors continue to lead the charge. The SOX index saw double-digit gains, fueled by Micron and Intel as AI-driven demand remains insatiable.
Earnings Surprise: Q1 profits for S&P 500 firms are up 27%—more than double the 12% forecast. This outperformance suggests the private sector is successfully navigating energy price shocks stemming from the Iran conflict.

Geopolitical Landscape: U.S.-Iran Tensions

The "monthlong ceasefire" remains precarious following naval clashes in the Strait of Hormuz.

Naval Conflict: Iran’s IRGC targeted three U.S. Navy ships last week, prompting U.S. retaliatory "love taps" on Iranian facilities. The U.S. Navy also disabled four tankers attempting to break the current blockade.
Diplomatic Efforts: President Trump’s strategy prioritizes the immediate reopening of the Strait of Hormuz, deferring nuclear negotiations. Markets are currently awaiting Iran's formal response to the latest peace proposal.

Fixed Income & The Federal Reserve

Treasuries saw a "round-trip" week, ending with yields largely stabilized after an early-week spike.

Yield Action: The 10-year Treasury closed at 4.36%. Early week fears of $110/bbl Brent crude pushed yields toward 4.46% (10yr) and 5.03% (30yr) before peace optimism and stable auction guidance triggered a midweek rally.
Labor Data: April’s Non-Farm Payrolls (NFP) surprised to the upside with 115k jobs (vs. 65k expected). However, a slight tick in the unemployment rate to 4.34% allowed bond markets to hold their gains.
Fed Transition: The Senate votes Monday on Kevin Warsh to succeed Jerome Powell. Warsh inherits a fractured FOMC where hawkish dissent is rising. Markets have largely priced out near-term cuts, with futures now leaning toward a "higher-for-longer" stance through late 2026.

Economic Calendar & Key Data

This Week’s Watchlist (May 11 – May 15)

Date	Indicator	Significance
Mon 5/11	Existing Home Sales	Real estate momentum check.
Tue 5/12	CPI (Apr.) & 10yr Auction	Critical inflation reading and $58BN supply test.
Wed 5/13	PPI (Apr.)	Gauging corporate input price pressures.
Thu 5/14	Retail Sales	Consumer health assessment.
Fri 5/15	Industrial Production	Manufacturing sector health.

Next Week Preview: FOMC Minutes, S&P Global PMIs, and U. of Mich. Consumer Sentiment.

Implied Fed Funds Rates

The market is currently pricing in a flat-to-upward trajectory for rates over the next 12 months:

Current Implied Rate: 3.634%
June 2026 (Mid-Year): 3.619%
December 2026: 3.648%
June 2027: 3.691%

Commodities Spotlight: Energy & Metals

Commodity markets remain the primary transmission mechanism for geopolitical risk, with energy prices exhibiting extreme sensitivity to the shifting diplomatic tide in the Middle East.

Energy: The "Strait of Hormuz" Premium

Energy markets saw a volatile "round-trip" last week as the blockade of the world’s most vital oil chokepoint continues to dictate pricing.

Crude Oil: Brent crude spiked toward $110/bbl early in the week following Iranian attacks on U.S. Navy vessels. Prices retreated midweek to settle near $104/bbl on peace proposal optimism, but the floor remains high. Saudi Aramco CEO Amin al-Nasser warned Monday that the current "energy supply shock" is the largest the world has ever witnessed, with nearly 1 billion barrels already lost to the conflict.
Natural Gas: European prices (Dutch TTF) have climbed to €45/MWh as the receding prospect of a swift resolution weighs on regional sentiment.
Fertilizers: A critical secondary effect of the maritime standoff is a 14% jump in fertilizer prices this month. The UN has warned of a looming humanitarian crisis if shipments remain trapped behind the blockade.

Metals: Gold’s New Floor & Industrial Divergence

Precious Metals: Gold continues to act as the ultimate hedge. Spot prices are holding firm above $4,700/oz. While down from the record $5,400 peak seen earlier this year, central banks—led by the PBoC (China)—are aggressively "buying the dip," effectively setting a hard floor for the metal.
Industrial Metals: Performance is split by supply-side vulnerability. Aluminum prices have surged due to damaged production facilities in the conflict zone, while Copper has lagged as traders weigh the potential for a global growth slowdown caused by high energy costs.

Agriculture: Stable but Strained

The World Bank’s agricultural index has remained surprisingly stable, falling roughly 6% year-to-date. Sharp declines in beverage prices (cocoa and coffee) have offset modest gains in grains. However, the surge in fertilizer costs is expected to exert significant upward pressure on food prices heading into the 2027 harvest cycle.

Strategic Note: The Bloomberg Commodity Index (BCOM) rose 24% in Q1 2026, outperforming all other major asset classes. For IGA Capital clients, commodities currently represent the most effective "uncorrelated" hedge against the ongoing inflationary "higher-for-longer" narrative.

Contact Information

If you have any questions regarding these market developments or would like to discuss a specific loan request, please reach out to me directly. joshua@iga.capital