Bonds enter the danger zone 🚨

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Stocks ripped Wednesday as oil and yields cooled on Iran negotiation hopes.

Then Nvidia printed and Walmart guided light, and futures slipped back. Today's tape is a tug-of-war between an AI complex that needs to digest the biggest earnings report on the calendar and a bond market that just spent two days dancing on the line.

Let’s get into it 👇️ 

💰️ Nvidia reported $81.6 billion in Q1 FY27 revenue (up 85% year-over-year and roughly $2.8 billion above the $78.8 billion consensus) and guided second-quarter revenue to about $91 billion, well above the Street. Data center revenue hit a record $75.2 billion (up 92% YoY), the board hiked the dividend 25-fold to $0.25 a share and authorized $80 billion in new buybacks. Despite the clean beat-and-raise, the reaction was muted. Shares hugged the flatline premarket Thursday (classic sell-the-news).

🚀 SpaceX publicly filed its long-awaited IPO prospectus Wednesday, seeking to raise up to $80 billion at a $1.7 trillion valuation, which would make it the largest IPO in history by a factor of three. Full-year 2025 revenue grew roughly 33% to $18.7 billion against a net loss of $4.9 billion, with Starlink generating more than two-thirds of sales and posting $1.2 billion in profit last quarter. Shares will list on Nasdaq under ticker SPCX.

🛒 Target snapped a four-quarter streak of negative comparable sales with a Q1 blowout, reporting $25.44 billion in revenue (up 6.7% YoY) and $1.71 in adjusted EPS (versus consensus of $24.66 billion and $1.35). Comparable sales grew 5.6% against a 2.4% estimate, with digital up 8.9% and store traffic up 4.7%. Management lifted its full-year sales growth target to about 4%, double the prior 2% guide, and now expects EPS at the upper end of its $7.50–$8.50 range.

🤝 The minutes from the Fed's April 28-29 meeting, released Wednesday at 2 PM ET, revealed a noticeably more hawkish committee than the post-meeting statement implied. The majority said additional policy firming would likely be appropriate if inflation kept running above 2%, and "the vast majority" warned progress toward target could be slower than expected. The meeting itself had four dissents — the most since 1992 — three hawkish, one dovish.

🛢️ Oil tumbled Wednesday as President Trump told reporters his administration is in the "final stages" of negotiations with Iran, with Brent crude sliding 5.63% to close at $105.02 and WTI dropping toward $99. The leaders of Qatar, Saudi Arabia, and the UAE told Trump serious talks are underway, though a senior U.S. official told Axios that Iran's latest counterproposal is "insufficient" for a deal. The Pentagon is positioned for a "large scale assault" if negotiations collapse.

💼 Intuit announced Wednesday it will lay off 3,000 employees (roughly 17% of its global workforce) alongside a Q3 FY26 print that beat (non-GAAP EPS $12.80, up 10%) but came with a softer full-year revenue guide. CEO Sasan Goodarzi told CNBC the cuts had "nothing to do with AI" and were about streamlining, even as Intuit deepens multi-year compute commitments with Anthropic and OpenAI. The company is closing its Reno and Woodland Hills offices. Shares fell about 12.6% premarket.

🏠️ April housing starts beat expectations at a 1.465 million annualized rate (well above the 1.41 million consensus) but the headline masked a sharp 9.0% drop in single-family starts that was offset by a 10.3% jump in the more volatile multi-family bucket. Building permits rose 5.8% month-over-month to 1.442 million on a 21.8% pop in multi-family permits, while single-family permits fell 2.6%. With the 30-year mortgage rate pushing 6.75%, the single-family slowdown is the data point that matters.

The 30-year Treasury yield ripped to 5.197% on Tuesday (its highest level since July 2007) before backing off to roughly 5.12% on Wednesday as oil prices slid 5.6% on Iran negotiation progress.

The 10-year touched 4.69% at Tuesday's peak.

HSBC strategists wrote in a note that "U.S. Treasuries are now firmly in the Danger Zone — the level of 10Y UST that tends to put pressure on virtually all asset classes," while Interactive Brokers chief strategist Steve Sosnick called it a "yellow alert" for investors.

The Bank of America fund manager survey landed in the middle of it: 62% of managers said the 30-year is more likely to break above 6% than fall below 4%, and bond positioning sits at net -44% underweight — the most bearish on bonds since June 2022.

Long yields at these levels do real damage.

The 30-year fixed mortgage pushed near 6.75% this week, refinance rates crossed 7%, and Treasury borrowing costs at 5%+ make every future deficit projection look worse.

The FOMC minutes released Wednesday from the April 28-29 meeting showed a Fed that's leaning more hawkish (meaning more comfortable holding rates high) with the majority saying additional policy firming would be appropriate if inflation stays above 2%.

What to watch: 

1. Whether the Iran-driven oil relief sticks. If Brent stays sub-$110 and crude inventories keep drawing, the inflation panic eases and yields drift lower.

2. The May Personal Consumption Expenditures (PCE) print on May 28 (the Fed's preferred inflation gauge) which lands one week from Kevin Warsh's first FOMC meeting on June 16-17.
   

3. The 30-year auction calendar: with foreign demand softening and the deficit running hot, weak auctions are how yields punch through the 5.20% line for real. Equities can live with 5% long yields. They start breaking around 5.5%.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.