Markets made new highs again. The S&P 500 rose +5.2% to close around 7,580 and the Nasdaq added +10.5%, with AI and semiconductors once more out in front. For all the noise, the VIX drifted down to its lowest reading since January.
The Iran conflict moved closer to an off-ramp. A tentative 60-day memorandum to reopen the Strait of Hormuz, lift the US blockade and begin nuclear talks took shape late in the month, though a final-week exchange of US strikes and Iranian missiles fired towards Kuwait left it unsigned, with Trump’s approval still pending at month-end.
Oil came off the boil. Brent eased to around $91 from April’s $126 intraday peak as a deal came into view, though it held well above its pre-conflict average.
The bill for the oil shock arrived. April CPI, released on 12th May, came in at 3.8% year-on-year, the highest since May 2023, with energy responsible for more than 40% of the increase. Kevin Warsh inherited the Fed chair just as the case for 2026 cuts evaporated; markets now price roughly a 35% chance of a hike by year-end.
Gold marked time around $4,495/oz, broadly flat on the month and still some way below January’s $5,595 peak. Real yields remain the obstacle; the structural case, to our view, is unchanged.
Round in Circles
This weekend sees the Formula 1 circus arrive in Monaco, a race celebrated less for overtaking than for the near-impossibility of it: the cars file through the same narrow streets at considerable speed and, more often than not, finish in roughly the order they started. Markets spent the month of May doing something similar. For all the action, US strikes on Iran, a new Fed chair, an inflation print flirting with a four-handle, and the most closely watched earnings report of the quarter, the running order barely changed. American technology stayed in front, the index lapped its way to fresh records, and the VIX sank below 16 – its lowest level since January. In April we observed that the macro backdrop and markets were pulling in opposite directions. In May the gap closed a little, but the equity market’s composure was once again the main event.
A deal, largely negotiated
Last month we wrote about a ceasefire in name only, a document Iran reinterpreted on an almost daily basis while the Strait of Hormuz stayed shut in all but theory. May brought something closer to substance, if not yet to signatures. The low point came mid-month, when President Trump pronounced the truce “on life support” after an “unacceptable” Iranian counter-proposal. The mood then improved sharply. By the 23rd he was describing a deal as “largely negotiated”, and the outline of a 60-day memorandum followed: the Strait to reopen with no tolls and its mines cleared, the US to lift its blockade of Iranian ports and let Iran sell oil again, and both sides to spend the window negotiating over the nuclear file.
True to the pattern of the past three months, the path did not run smooth. The final week brought US “defensive” strikes in southern Iran and (intercepted) Iranian ballistic missiles fired towards Kuwait, and the agreement slipped back into the familiar limbo of texts exchanged and dismissed. At month-end the negotiators had reportedly settled terms, but neither side had signed, and a question long deferred, what to do with Iran’s stockpile of enriched uranium, had finally forced its way to the top of the agenda. Markets, true to their own pattern, read the glass as half full: oil fell, equities held, and the TACO trade was handed another win. As we write, Trump is demanding the stockpile be destroyed and has yet to give his approval, leaving the bigger question unanswered: if and when those sixty days begin, will they produce a durable settlement, or merely a better-organised stand-off.
“Markets, true to their own pattern, read the glass as half full: oil fell, equities held, and the TACO trade was handed another win.”
Priced for Perfection
Beneath the serene index level performance, the year’s leadership stayed strikingly narrow. Semiconductors did much of the work, the Philadelphia index now up around 60% for the year. Nvidia’s results on 20th of May were the clearest read yet on the AI build-out: record revenue of $81.6 billion, up 85% on a year earlier and ahead of expectations, with data-centre sales of $75.2 billion, up 92%. Yet the shares slipped on the day, a sign of how much good news is already in the price.
Continued optimism in the sector is understandable: earnings have been strong and the spending behind the AI theme is real and well funded. But the leading names are priced for continued perfection, and with a handful of AI hardware stocks doing most of the work, there appears little room for disappointment from the names carrying the index.
The ‘S’ word, revisited
In April we discussed the stagflation spectre; May produced the evidence for at least half of it. The CPI release confirmed that the oil shock has reached the till: headline inflation of 3.8%, core of 2.8%, energy doing most of the damage, and petrol back near $4.50 a gallon, up around 50% since the conflict began at the end of February. Real wages slipped, consumer sentiment sat close to record lows, and the Cleveland Fed’s nowcast pointed to a May reading nearer 4%. Growth is softening rather than buckling, but the direction of travel on prices is unhelpfully clear.
This is the in-tray Kevin Warsh has inherited as Fed chair. A man with a reputation for favouring lower rates now confronts inflation marching towards 4% and a labour market still on its feet, which is about as awkward a welcome as monetary policy can arrange. The market has drawn the obvious conclusion: cuts this year have effectively gone, some forecasters have pushed the first move into 2027, and a non-trivial chance of a hike is now in the price. Treasury yields rose accordingly, with the 10-year crossing the 4.5% mark, before easing somewhat towards month end. The June meeting, and whether longer-term inflation expectations stay anchored, is the next test.
“The market has drawn the obvious conclusion: cuts this year have effectively gone, some forecasters have pushed the first move into 2027, and a non-trivial chance of a hike is now in the price.”
Europe holding the line
Europe had another solid month, the indices close to records and defence still leading, helped late on by Ukraine’s ratification of a c.€90 billion EU loan package. The bigger story for the region, however, was monetary: with the oil shock now in the prices, the ECB is expected to hike in June and September, a sharp turn for a bank still cutting a year ago. With the bank now tightening into an energy shock that is already weighing on growth, and markets pricing as many as three hikes this year, the risk is that policy adds to the squeeze rather than relieving it.
The UK is in a similar bind, with one dissenting voice. The Bank of England’s latest decision was an 8-1 hold at 3.75%, and markets had begun to lean towards a hike. The IMF disagreed, raising 2026 growth to 1.0% and arguing the Bank need neither hike now nor rule out cuts: holding should still return inflation, peaking just below 4% this year, to target by end-2027 if energy falls as expected. With the next call on 18 June, markets will soon have an indication of whether the bank has heeded the IMF’s advice.
A fragile calm
On the surface, May was a calm month: equities at records, oil lower, volatility subdued, a peace deal seemingly within reach. Underneath, remarkably little was actually settled. The Iran framework is unsigned and its hardest questions unresolved, inflation is accelerating rather than fading, the Fed is boxed in under new management, and the leadership that has carried the year sits on valuations that leave no margin for error. Our assessment is unchanged: it is precisely in this sort of environment, where the calm is genuine but the range of outcomes stays wide, that diversification across return drivers earns its keep. Equities have rewarded portfolios handsomely this year. Pairing that exposure with strategies that can perform when the script is rewritten, discretionary macro and diversified multi-strategy among them, and selectively insuring against sharp selloffs, strikes us as the sensible way to travel into a summer with more than one way of surprising us.
“On the surface, May was a calm month: equities at records, oil lower, volatility subdued, a peace deal seemingly within reach. Underneath, remarkably little was actually settled.”
If you have any questions about the themes discussed in this article, please do not hesitate to get in contact with us: info@bedrockgroup.com
Important Legal Information
For Professional or Institutional Investors Only. Certain statements included within constitute ‘forward-looking statements.’ These statements, which may include words like ‘believes,’ ‘expects,’ or similar expressions, are subject to numerous risks and uncertainties. Actual results may differ materially.
The content of this document has been prepared by Bedrock S.A., Bedrock Monaco SAM, and Bedrock Asset Management (UK) Ltd. (jointly, hereafter, “Bedrock”).
The information and opinions contained in this document are for background information and discussion purposes only and do not purport to be full or complete. No information in this document should be construed as providing financial, investment or other professional advice.
The information contained herein is intended for the sole use of the recipient and may not be copied or otherwise distributed or published without the express consent of Bedrock. Although the information contained herein has been established by Bedrock based on or by reference to sources, documents and systems it believes to be reliable and accurate, Bedrock does not guarantee its accuracy or completeness and assumes no responsibility for any losses that may arise from the use of this information. The views and opinions expressed herein are based on current market conditions and are subject to change without notice. No representation is made that any forecast or projection will be realised.
Information included in this document is intended for those investors who meet the definition of Professional Client under the Swiss FinSA regulation as well as Professional Client or Eligible Counterparty under the UK Financial Conduct Authority.
Confidentiality
This presentation and the information contained herein are confidential. Each copy of this presentation is addressed to a specifically named recipient and shall not be passed on to a third party. By its acceptance hereof, the recipient agrees to keep the presentation and its contents strictly confidential and may not disclose or divulge any information contained herein to any other person. This presentation cannot be published, copied, reproduced or distributed in any manner whatsoever. The recipient will use this presentation for the sole purpose of obtaining a general understanding of the business, operations and financial performance of Bedrock in order to make a decision as to whether the recipient should proceed with a further investigation of the Funds and this investment opportunity. Bedrock reserves the right to request the return of this presentation at any time, without the retention of any copies by the prospective investor.
Investment Risks
The value of all investments and the income derived therefrom can fluctuate due to market movements and you may not get back the amount originally invested. In the case of overseas investments, values may vary as a result of changes in currency exchange rates. This may be due, in part, to exchange rate fluctuations in investments that have an exposure to currencies other than the base currency of the portfolio. Past performance is no guide to or guarantee of future performance. Investments in fixed income carry risks including credit risk, interest rate risk, and liquidity risk. The value of investments can go down as well as up, and you may not get back the full amount invested.
Limitation of Liability and Indemnity
Bedrock expressly disclaims liability for errors or omissions in the information and data contained in this document. No representation or warranty of any kind, implied, expressed or statutory, is given in conjunction with the information and data. Bedrock accepts no liability for any loss or damage arising out of the use or misuse of or reliance on the information provided including, without limitation, any loss of profits or any other damage, direct or consequential. You agree to indemnify and hold harm less Bedrock and its affiliates, and the directors and employees of Bedrock and its affiliates from and against any and all liabilities, claims, damages, losses or expenses, including legal fees and expenses arising out of your access to or use of the information in this presentation, save to the extent that such losses may not be excluded pursuant to applicable law or regulation. Any opinions contained in this presentation may be changed after issue at any time without notice.
Copyright and Other Rights
The copyright, trademarks and all similar rights of this presentation and the contents, including all information, graphics, code, text and design, are owned by Bedrock.
As the artificial intelligence theme evolves through 2026, market leadership is shifting beyond infrastructure toward adoption and monetisation. In this article, Bedrock’s Head of Investment Advisory, Helena Eaton, explores how semiconductor momentum, rising disruption risks, and early productivity gains are shaping positioning. Looking ahead, the next phase of the AI cycle will likely be driven by selectivity, broader demand, and measurable economic impact.
Bedrock advisors have been named in the 2026 Spear’s 500 Wealth Management Index, placing them among a select group recognised for excellence in advising high-net-worth and ultra-high-net-worth clients.
Sharing insights from our recent event with The Beam Network, this article explores the evolving shift in female principalship and reflects on what it means for women to lead with wealth today.
