Yields extend climb to YTD highs. Treasury yields continued to rise today as markets digested news from Iran and China. Reports emerged this morning that an Indian-flagged ship in the Strait of Hormuz had sunk following a drone strike, though it remains unclear who was behind the attack. Separately, President Trump kicked off his meeting in Beijing with Chinese Leader Xi Jinping, where Xi offered to help negotiate with Iran. The 2-year yield closed 4 bps higher at 4.02% while the 30-year yield closed 1bp lower at 5.03%. Meanwhile, the AI-technology rally continued in equities, with the S&P 500 and NASDAQ closing 0.77% and 0.88% higher, respectively.
Miran to resign from the Fed as Warsh is sworn in. Fed Governor Stephen Miran said that he plans to resign from his role once Kevin Warsh is officially sworn in as Fed chair, if not shortly beforehand. The decision is no surprise, as Miran was originally confirmed to fill the seat of Adriana Kugler, who resigned in August. In Miran’s resignation letter, he included a criticism of the Fed’s approach to gauging inflation and said that if the Fed “doesn’t adjust these errors, it will run unemployment higher than it has to, fighting fake rather than real inflation.” During his brief time at the Fed, Miran was dovish and voted in favor of rate cuts at every FOMC meeting, including several dissents.
Retail sales rise for third straight month. US retail sales increased 0.5% MoM in April, below March’s revised 1.6% gain but in line with forecasts. Consumer spending appears resilient, with retail sales increasing across nine of thirteen sectors. A strong stock market and larger-than-usual tax refunds may also be supporting spending. However, retail sales figures are not adjusted for inflation, meaning part of the increase could reflect higher grocery and gasoline prices, as food costs surged this month and gas prices reached their highest levels since 2022.
