• Driver:Crude oil's +4.2% surge drove cross-asset repricing. Breakevens fell 5 bp, signaling supply-shock read rather than demand-driven inflation fears.
• Cross-asset:Commodities rallied hard while equities and crypto softened. Credit spreads tightened modestly. USD weakened 0.2%, gold firmed near $4,717.
• Sector rotation:Consumer Defensive led (+0.4%). Utilities (-2.1%) and Real Estate (-1.7%) lagged, pressured by elevated long-end yields (US 30Y at 4.98%).
• Forward bias:US Michigan Sentiment Friday and CN trade data Saturday are key catalysts. Expect choppy range-trading with commodity volatility spilling over.

The mega-cap cohort split 4-of-9 green, with MSFT and NVDA leading at roughly +2.1% each while AMD and INTC lagged badly, down 3.6% and 3.0% respectively. The semis divergence is notable: NVDA rallied while the broader SOXX index cratered over 3%, suggesting idiosyncratic positioning rather than a sector-wide bid. AAPL and GOOGL were near-flat negatives, leaving the cohort's net contribution modestly positive but narrow.

US equities closed broadly lower, with the S&P 500 off 0.45%, the Dow down 0.67%, and the Russell 2000 bearing the brunt at -1.73%, signaling clear risk-off rotation away from small caps. SOXX dropped 3.3%, the session's worst print among major benchmarks, even as a handful of mega-cap semis bucked the trend. The Nasdaq held up relatively better at -0.24%, cushioned by strength in MSFT and NVDA. VIX eased slightly to 17.23 despite the red tape, hinting the selloff lacked panic conviction. Overseas, the Nikkei surged 5.6% in a standout session while the FTSE slid 1.4% and emerging markets (EEM) lost 1.2%, painting a mixed global picture.

Nominals drifted lower across the curve, with the 2Y and 10Y each shedding 2 bp and the 30Y declining 4 bp, steepening the long end modestly while the 2s10s spread held at +50 bp. The move was driven by falling inflation expectations rather than real-rate relief: 10Y breakevens compressed 5 bp to 2.42% while the 10Y TIPS real yield actually ticked up 1 bp to 1.96%, a combination that reads as the market pricing cooler inflation against still-firm real borrowing costs. Credit spreads tightened marginally (HY OAS -2 bp to 275, IG OAS -1 bp to 78), suggesting risk appetite in corporate credit remains intact despite the equity softness.

Energy markets sent conflicting signals, with WTI crude rallying over 4% while Brent fell nearly 5%, a rare and wide divergence that may reflect regional supply or contract-roll dynamics. Precious metals caught a bid as gold added 0.5% to $4,717 and silver outperformed at +3.1%, consistent with the modest decline in nominal yields and breakevens.

Crypto pulled back in line with broader risk assets, with BTC down 1.3% to $80,216, ETH off 2.0% to $2,298, and SOL relatively resilient at -0.3%. BTC dominance held firm at 58.4%, and total market cap shed 1.3% on the day. Perpetual funding rates are negative for both BTC (-1.7% APR) and ETH (-1.9% APR), indicating short positioning is paying longs, a setup that can fuel squeezes if sentiment shifts. The Fear and Greed index sits at 47 (Neutral), reflecting neither capitulation nor complacency. Spot ETF inflows remained positive but modest at $46M for BTC and $12M for ETH, providing a thin floor under prices.

Public-company BTC treasuries now aggregate nearly 1.23 million BTC (5.86% of supply, worth roughly $98.4B), while ETH holdings represent 5.94% of supply at $16.4B. Spot ETF flows stayed constructive across all three assets on the day (BTC +$46M, ETH +$12M, SOL +$21M), and the seven-day BTC tally of +$1.7B stands out as a strong accumulation clip even as spot prices softened. The persistent bid from ETF channels contrasts with the negative perp funding, suggesting structural demand from allocators while leveraged traders lean short.

The week's marquee risk cluster lands Monday through Thursday: April CPI prints (core MoM, headline MoM and YoY) drop May 12, followed by PPI MoM on May 13 and Retail Sales MoM on May 14, totaling 10 high-impact macro releases in seven days. Inflation data will be the primary catalyst, especially given today's 5 bp compression in breakevens and the market's apparent lean toward disinflation. On the earnings side, MCD reports today (May 7) as the lone mega-cap name on deck this week.

U.S. Macro Releases — FMP economic calendar (filtered)

Earnings — mega-cap reports drive index direction