AFS Markets Blog: Morning 05/11/2026

• Meanwhile in markets, where have energy prices gone? Down, that’s d*mn sure. Brent crude is now down nearly 20 percent over the past week and – at $94 a barrel – is trading at its lowest level since early September;

• Brent is not alone. European natural gas prices have fallen nearly 15 percent over the past week – hitting their lowest level in almost a month – while European diesel futures are down around 10 percent;

• As far as we can tell this morning, there have been no concrete breakthroughs in peace negotiations (talks haven’t broken down either). Instead, the hangover from Tuesday’s midterm elections is really starting to hit. Overnight, President Trump admitted that Republicans had “largely lost because of Iran”, and he was not alone in coming to that realization. Republican Presidential hopefuls have come out of the woodwork to kick off the blame game, with heir apparent VP JD Vance also citing Iran and the US-Israel relationship as reasons for the electoral drubbing – a result that has seen betting odds on him becoming the next President of the United States plummet. Nevertheless, Trump remained Trump, insisting that he still believed the war was worth it and that it would end when he wanted it to. But with Democrats set to take control of Congress – and the power of the purse – pressure from both inside and outside the White House to bring the war to an end is only mounting;

• Shifting to broader market commentary, bonds have rallied on the back of the decline in energy prices, although moves remain relatively contained. UST yields are down 1–3bps this morning, while Bund yields are flat to 3bps lower, extending their weekly decline to 6–10bps. French OATs have opened slightly lower this morning ahead of another day of protests and strikes. Nevertheless, at 153bps, Le Spread remains close to its lowest level in over a week. The broad dollar has continued to slide this morning and is now down nearly one percent over the past week;

• Moving to equities, S&P 500 futures are slightly in the red this morning, but Nasdaq futures are taking a proper whooping, with losses of around one percent. We are seeing broader weakness across the AI trade, with the Kospi leading the decline in Asia and our own AI index – comprising hyperscalers and chipmakers – now at its lowest level since July. The expansion of data centers is increasingly under threat, with Democrats – and some Republicans – lining up to slow down or even halt the buildout that has fueled record profits across the semiconductor sector. Speaking at an event overnight, Meta President Dina Powell McCormick acknowledged that building data centers will become harder, although she tried to downplay the risk by suggesting that many politicians would prefer to negotiate rather than abandon data center projects altogether;

• Looking ahead, it’s set to be a central bank heavy day today: the Bank of England and Czech National Bank are expected to hike rates by 25bps today, while the Norges Bank is set to hold its rates steady. On top of that, we have a wide selection of ECB and Fed speakers to keep us entertained. And, as it’s Thursday, we’ll also get our weekly fixing of US jobless claims – a nice amuse bouche ahead of Friday’s October labor market report.

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