The Bond Market Opened the Week. Oil Followed. Nvidia Reports Wednesday.

The bond selloff accelerated again Monday morning. The 10-year Treasury yield reached 4.63%, its highest level in 15 months. The 30-year climbed to 5.159%, levels not seen since 2007. Global bond markets moved together. Japan’s 10-year yield hit its highest since 1996. German yields touched a 15-year high. UK gilts stayed near late-1990s extremes.

Oil added another layer of pressure.

A drone strike caused a fire near the UAE’s Barakah nuclear facility overnight. Saudi Arabia intercepted three drones entering from Iraqi airspace. Brent crude briefly touched $112 before settling near $110.

Markets partially stabilized after Iran confirmed negotiations with the U.S. are continuing through a Pakistani mediator. But futures remained negative. Dow futures lost 300 points. S&P futures fell 0.3%.

The biggest shift came from rates expectations.

Markets now price a 54% probability of at least one Fed rate hike by year-end. A week ago that probability was below 1%.

Nvidia (NVDA) reports Wednesday. It is the only event this week capable of interrupting the macro repricing now moving through markets.

The Signal

The bond market is forcing equities to acknowledge the inflation regime underneath the AI rally. Nvidia Wednesday is the final test before macro fully takes control.

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The strike near the UAE nuclear facility marks the most significant infrastructure escalation since the conflict began. The UAE said it reserves the right to respond. Saudi Arabia issued its own warning after intercepting drones from Iraqi airspace.

The physical energy system is tightening independently of diplomacy.

The U.S. exported a record 14.2 million barrels per day in late April to offset Gulf disruptions. Gulf Coast diesel inventories are now 19% below prewar levels. Cushing, Oklahoma inventories are approaching operational stress levels. National gasoline prices reached $4.51 Sunday. California diesel climbed to $7.42.

The U.S. now faces a direct conflict between two objectives: stabilizing global supply and protecting domestic consumers.

The market is beginning to accept that both cannot happen simultaneously.

September Brent futures crossed above $100. December contracts reached new highs. The curve now prices shortages extending through the summer.

The G7 finance ministers met in Paris Monday to discuss Hormuz and critical raw materials. European officials called reopening the Strait a top priority. That reflects urgency, not progress.

Energy Signal

The inventory system has been deteriorating since February. The expansion toward nuclear infrastructure suggests escalation is broadening faster than supply can recover.

At the start of 2026, markets expected multiple rate cuts. Today they price no cuts and better-than-even odds of a hike.

Warsh inherits CPI at 3.8%, PPI at 6%, oil above $100, and a bond market already tightening financial conditions aggressively.

His first Fed meeting arrives June 16-17.

The problem is structural. Warsh wants lower rates and a smaller balance sheet. Inflation prevents the first. The bond market complicates the second.

Reducing the Fed’s $6.7 trillion balance sheet while long-term yields are already surging risks pushing borrowing costs even higher.

China’s overnight data added another warning.

Retail sales rose just 0.2% versus 2% expectations. Industrial production missed forecasts. Property investment fell 14% year over year.

The global economy is slowing at the same moment energy inflation is accelerating.

Wednesday brings Powell’s final FOMC minutes alongside Nvidia earnings. Both hit at 2 p.m.

Macro Signal

Warsh inherits a market already pricing tighter policy. The question is whether the Fed eventually validates what bonds already believe.

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The company is expected to contribute 12.5% of total S&P 500 earnings growth this quarter, still the largest single contribution in the index. Analysts expect earnings per share of $1.75, up 116% year over year.

But the AI trade is already showing strain.

Bank of America (BAC) warned semiconductor stocks are displaying bubble-like dynamics. Goldman Sachs noted positioning has become unusually unstable. Hedge funds are heavily concentrated in AI hardware exposure.

The issue is not whether AI demand is real. It is whether valuations can hold at 4.63% on the 10-year.

Memory chips are becoming the cycle’s biggest pressure point. Micron (MU), Samsung, and SK Hynix are now in the most profitable stage of the cycle. Historically that is also when reversals begin.

Meanwhile, new infrastructure players continue emerging.

Nebius (NBIS) reported nearly $400 million in quarterly revenue, up from $25 million eighteen months ago, driven by Meta (META) and Microsoft (MSFT) contracts. Cisco (CSCO), 

Nvidia(NVDA), and Nebius all point to the same trend: AI infrastructure spending remains relentless.

At the same time, investors are rotating toward “HALO” names: heavy assets, low obsolescence.

ExxonMobil (XOM) and FedEx (FDX) are both up roughly 30% year to date as investors seek businesses less vulnerable to AI disruption and rising rates. That is two forces compressing the same software names simultaneously: bond yields raising the discount rate on future earnings while AI disruption removes the growth premium that justified those earnings in the first place.

Capital Signal

The AI trade still has powerful earnings momentum. But the bond market is compressing the margin for disappointment to almost zero.

BTC fell more than 5% over the past week as yields surged and inflation fears intensified. Ether dropped 10% to $2,129.

The liquidation wave was severe.

More than $563 million in crypto longs were liquidated over 24 hours. Ether accounted for $244 million. Bitcoin represented another $160 million. Short liquidations totaled just $65 million, showing how crowded bullish positioning had become before the inflation shock.

The Clarity Act advancing through the Senate Banking Committee remains the strongest long-term regulatory tailwind for the sector. But regulation cannot offset macro tightening in the short run.

Reports show Iran’s largest crypto exchange processed at least $2.3 billion since 2023 using Tron and BNB Chain infrastructure. Both networks are tied to figures connected to Trump family-backed crypto ventures.

Regardless of legal exposure, the story complicates the politics around final Clarity Act passage.

At the same time, institutional infrastructure keeps advancing.

Elliptic raised $120 million to build AI-powered crypto compliance systems. The company’s thesis is straightforward: machine-speed finance now requires machine-speed regulation.

Meanwhile, Bitcoin Depot (BTM) filed for Chapter 11 bankruptcy after regulatory pressure destroyed the economics of crypto ATMs.

That contrast matters.

Weak compliance-driven business models are failing. Institutional infrastructure continues scaling.

The Verdict

Bitcoin lost $77,000 support as macro pressure intensified. The Clarity Act remains a structural positive. But rates, yields, and inflation are still the dominant drivers of price.

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The market spent seven weeks assuming the AI rally could overpower the macro environment underneath it.

Monday challenged that assumption directly.

The 10-year yield rose to 4.63%. The 30-year moved above 5.1%. Oil reached $110 after attacks on critical infrastructure. Rate hike odds jumped from near zero to 54% in one week.

Gold is down despite war and inflation because real yields are rising faster than fear.

Kevin Warsh begins his first week at the Fed without room to cut. China’s economy is slowing. Domestic inventories are tightening. Bitcoin is below $77,000 after clearing out leveraged longs.

Now everything turns to Wednesday.

Nvidia earnings. Powell’s final FOMC minutes. The most important AI company in the world and the final communication from the previous Fed regime arriving in the same hour.

The AI trade and the inflation regime are colliding in the same market.

This week decides which one leads the next move.