• US Treasury yields rose across the board, with the 5y yield up 3 bp (0.78%), suggesting market sensitivity to inflation and economic data. • The UK and Japan 10y government yields surged 26.8 bp (+6.05%) and 23.5 bp (+11.14%), respectively, indicating rising international yield pressures amid geopolitical tensions. • Major equity indices moved higher, led by a 2.20% increase in Microsoft, as investors remained optimistic despite mixed economic signals. **Recommendations** • Shift into duration longs in US Treasuries, especially in the 5y to 10y range, as rising breakevens signal potential inflation risks. • Consider hedging equity exposure, particularly among mega-caps like Apple and Tesla, given their recent underperformance relative to the broader market. • Watch energy stocks into next week as crude prices rebound, supported by geopolitical tensions affecting supply forecasts. --- In today's session, the equity markets largely displayed a risk-on tone, bolstered by rising expectations of economic resilience despite mixed economic signals. Notably, Microsoft surged 2.20% following reports of strong internal demand and strategic partnerships, with analysts highlighting its cloud and AI solutions (Yahoo). The S&P 500 added 0.26% as gains in sectors like energy (+1.47%) and financials (+1.36%) offset declines in technology and industrials. In contrast, Apple fell 1.14% due to market concerns regarding ongoing supply chain issues, particularly given TSMC’s California plant updates (Yahoo). Today's economic calendar featured unexpected shifts, particularly in initial jobless claims, which fell to 207,000, better than the expected rise to 213,000 (Yahoo). This data reflects the tight labor market, confirming the Atlanta Fed GDPNow estimate of 1.31% for Q1 2026, indicating growth could remain stable despite recent inflationary pressures. However, the Philly Fed Manufacturing Index disappointed, coming in at just 10.3 compared to a prior 18.1, hinting at potential weaknesses in manufacturing amidst geopolitical uncertainties. US Treasury yields reflected a cautious optimism regarding inflation, with the 5y yield increasing by 3.0 bp to 3.90% and the 10y rising to 4.29%. This aligns with the rising 10y breakeven inflation rate, now at 2.39% (+2.0 bp), which suggests market participants are pricing in higher inflation expectations. In contrast, today's unusual moves spotlight the surge in UK and Japanese government yields, influenced by geopolitical tensions related to the Iran conflict, which is reshaping the landscape for global fixed income (Reuters). These notable movements indicate rising pressure on US yields as markets reassess the impact of external shocks on domestic fiscal policies. Market reactions to commodities were uneven. Brent crude bounced 3.24% to $98, supported by ongoing geopolitical risks impacting supply chains. Conversely, WTI crude dropped slightly by 1.53% to $89.89. Interest in energy stocks may rise, especially with firms like TotalEnergies flagging strong trading conditions (Reuters). Ahead of upcoming earnings reports from major companies and influential data points, investors should be on alert for any shifts in sentiment potentially influenced by energy price movements or policy statements from the Fed. Overall, the current macro regime classification leans towards a "Slowdown / Stable / Dovish" framework, suggesting cautious optimism as markets navigate through uncertain economic indicators and geopolitical risks. With the liquidity regime showing a deteriorating momentum—though with positive acceleration—it suggests tightening liquidity could challenge equity valuations going forward. Investors are advised to monitor economic indicators closely, particularly the upcoming industrial production figures, which may further dictate market sentiment.