PPI Shock Sends Treasuries Into a Tailspin as Big Tech Powers Markets to Fresh Highs

Market Overview

U.S. producer inflation came in hotter than expected, triggering another sharp selloff in long-duration Treasuries and pushing yields to multi-year highs. The 30-year Treasury auction yield surged above 5% for the first time since the 2007 financial crisis, underscoring mounting reflation concerns across the market.

Despite intensifying inflation pressure, investor positioning remains heavily concentrated in mega-cap technology stocks. Supported by relentless buying in AI-related names, both the S&P 500 and Nasdaq closed at fresh record highs again just one day after their previous peaks. However, late-session profit-taking weighed on small caps and the Dow Jones Industrial Average, highlighting a market increasingly dependent on a narrow group of core technology leaders for upside momentum.

Asset Performance Diverges

■ Mega-Cap Tech & Semiconductors:

The Philadelphia Semiconductor Index surged roughly 2.6%, fully recovering Tuesdays losses. NVIDIA climbed to a fresh all-time high of $225.83, pushing its market capitalization closer to $5.5 trillion. Strong earnings continued to attract aggressive inflows, with Cisco soaring more than 17%, while AI cloud newcomer Nebius jumped 15.7%. Tesla also posted solid gains, closing up 2.7%.

■ Bonds & Foreign Exchange:

Treasuries remained under heavy pressure, with the 10-year U.S. Treasury yield climbing above 4.47%. Renewed expectations for additional Federal Reserve tightening helped lift the U.S. Dollar Index by 0.21%. The move above 5% in long-end Treasury yields is being viewed as a significant warning signal, suggesting long-term financing costs have returned to levels last seen during the 2007 credit cycle.

■ Precious Metals & Commodities:

Gold retreated toward the $4,700 level under pressure from a stronger U.S. dollar. Silver displayed exceptionally volatile price action, briefly breaking above $89 intraday. Crude oil entered a consolidation phase after rallying nearly 7% over the previous two sessions, though ongoing tensions between the U.S. and Iran continue to provide strong downside support for energy prices.

■ Cryptocurrencies:

Rising rate expectations cooled overall risk appetite. Bitcoin fell back below the $80,000 threshold, while Ethereum also moved lower, reflecting how elevated bond yields continue to pressure valuations across non-yielding risk assets.

Key Themes Ahead● U.S. April PPI Surges

U.S. April Producer Price Index data showed annual inflation accelerating to 6.0%, while monthly PPI rose 1.4%. Both readings marked the strongest gains since 2022, with PPI now rising for eight consecutive months on a month-over-month basis.

Higher energy and transportation costs continued to fuel inflationary pressure, while services inflation climbed to a four-year high. Markets are currently pricing in roughly a 50% probability of one additional Federal Reserve rate hike in 2026.

● Long-Term Treasury Selloff Intensifies

The U.S. Treasurys latest 30-year bond auction marked the first issuance since August 2007 with a coupon rate reaching 5%. For the second consecutive auction, the 30-year sale tailed, meaning the awarded yield exceeded the pre-auction market yield, a classic sign of weakening investor demand. Bid-to-cover ratios also fell to their lowest level in six months.

Key Events to Watch (GMT+8)

20:30 (US)

• Initial Jobless Claims for the week ending May 9

• April Retail Sales MoM

• April Import Price Index MoM

22:00 (US)

• March Business Inventories MoM

Overnight | 01:00 (US)

• 2026 FOMC voter and Beth Hammack, President of the Cleveland Fed, delivers opening remarks during an online discussion on central bank independence.