⚠️US equities ended May on a historic note, but the rally is showing signs of instability:

The S&P 500 rose +5% in May, capping a 9th consecutive week of gains, its longest weekly winning streak since December 2023, and a +20% surge from its March war-driven lows.

Meanwhile, SPX call options volume hit a record high with calls accounting for ~70% of all options traded, a level of speculative activity that has rarely been seen in modern markets.

WTI crude fell -17% in May, its worst monthly decline since April 2025, as repeated ceasefire headlines fueled hopes of a Hormuz resolution, though the Strait remains largely closed and physical markets are still tight.

Treasuries ended the week higher, trimming some of their monthly losses, as falling oil prices eased near-term inflation fears, though short-end yields are still up ~15 basis points on the month as rate hike odds remain elevated.

Gold held near ~$4,600 and the US Dollar ended May modestly higher, while Bitcoin declined to a $73,000 handle, weighed down by a 3-week streak of ETF outflows.

Beneath the surface, single-stock volatility remains elevated while the VIX sits near its lowest level since January, an unusual and unstable combination that historically leaves markets highly sensitive to shocks.

Performance this WEEK:

S&P 500 +1.4%
Nasdaq +2.4%
Russell 2000 +1.8%
Dow Jones +0.9%
US 10-year Treasury yield -12 bps
Bitcoin +0.1%
Bank Index +0.7%
VIX -8% front mth VIX futures -10%
US Dollar Index -0.3%
Gold +1.2%
Silver -0.0%
WTI Crude Oil -10%

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