The S&P 500 (Index: SPX) continued rising during the trading week ending on Friday, 15 May 2026, clocking several new record high closes during the week that was. The index however retreated from those new highs on Friday, but still closed at 7,408.50, up a little over 0.1% above its previous week's close.

Friday was the day inflation fears came roaring back for the U.S. economy, erasing two days worth of gains for the index in the process and taking expectations of rate cuts entirely off the table for 2026.

The CME Group's FedWatch Tool now anticipates no change in the Federal Funds Rate until 9 December (2026-Q4), when it now projects a quarter point rate hike, which is a big change from the previous week. Right now, it's not projecting much more than that increase, but the tool's bias going into 2027 has shifted toward expectations of more rate hikes.

QTR's Fringe Finance captured the Wall Street zeitgeist of the moment:

Lauren Hyslop, investment manager at Mattioli Woods, summarized the situation well in comments to CNBC: “Rising bond yields are once again imposing their will on markets, tightening financial conditions and sapping risk appetite across asset classes,” she said.

She added that investors are confronting the “uncomfortable reality of ‘higher for longer’ rates in the U.S., as stubborn inflation and surprisingly resilient growth push back any meaningful pivot to easing.” She also noted that a stronger dollar, fading expectations for liquidity support, geopolitical uncertainty, and fiscal concerns are all adding pressure simultaneously. That combination is particularly dangerous because it removes the easy narrative markets have relied on for months that rate cuts were inevitable and policymakers would remain quick to intervene.

The fact that the Fed is stuck between a 3.8% CPI and 6% PPI rock and a market-teetering-on-the-brink-of violently-pulling-back hard place was the core of yesterday’s concern. If the bond market starts to get violent, what options does the Fed have to start printing to buy bonds and do yield curve control with inflation already where it is? The central bank’s hands might be tied — and this is a scary (and somewhat unprecedented) thought....

Even so, the latest update of the alternative futures chart shows the trajectory of the S&P 500 remains within the redzone forecast range we forecast for it almost three months ago following the disruption of the Iran war geopolitical event.

The change from being biased to either holding rates steady or cutting rates is a global response to inflation pressures and the disruptions from the Iran war geopolitical event. The market moving headlines of the week indicate they are increasingly expected in the U.S., in Japan, and also in the Eurozone:

Monday, 11 May 2026

• Signs and portents for the U.S. economy:
• US home sales edge up in April but affordability remains a challenge
• Oil prices settle higher after Trump says Iran ceasefire "on life support"
• Inflation reading Tuesday expected to show prices at nearly a three-year high
• Bigger trouble developing in and out of China:
• China's marriages drop to decade low, deepening demographic concerns
• China's car sales drop for seventh month in April; exports roar
• China April exports rebound strongly, trade surplus widens ahead of Trump visit
• ECB minions thinking more about ditching their perfect monetary policy:
• ECB's Kocher sees rate move if inflation outlook does not improve
• ECB's de Guindos urges prudence on rates in parting shot - FT
• Wall Street ends slightly higher as U.S.-Iran resolution talks fizzle
• Wall St inches to higher close, AI fervor edges out Iran impasse

Tuesday, 12 May 2026

• Signs and portents for the U.S. economy:
• US annual consumer inflation accelerates amid broad increase in prices
• Core CPI heats up in April; headline CPI rises in line with consensus
• VIEW April CPI rises more than expected; bond yields climb
• Oil prices jump on latest US-Iran peace process impasse
• Fed minions get closer to having a new chief:
• Senate confirms Warsh to Fed Board, with Fed chair vote likely Wednesday
• Bigger trouble developing in China:
• China's US ethane imports hit record as Iran war cut rival feedstock supply
• China's commodity imports show Hormuz impact as oil slides, metals rise
• BOJ minions discussing plans for next rate hike, working to prop up Japan's currency:
• BOJ debated near term rate hike at April meeting, opening door to June move
• US, Japan agree excess FX volatility undesirable, Bessent says
• S&P 500, Nasdaq end lower as inflation, Iran tensions weigh
• Wall Street ended mostly lower after a hotter CPI print landed

Wednesday, 13 May 2026

• Signs and portents for the U.S. economy:
• US producer prices surprise with largest increase in four years
• Trump, Xi to weigh tariff cuts on $30 billion of imports in managed trade push
• Oil settles lower on US rate hike fears; investors watch Trump-Xi meeting
• Fed minions claim they want to get inflation down, perhaps even to their real target:
• Fed is 'dead serious' about getting inflation down, Kashkari says
• Background:
• What Is the Fed's Real Inflation Target?
• ECB minions expected to ditch perfect monetary policy and hike rates in June, starting to worry about AI cyberattacks:
• ECB to hike rates in June and at least once more on war-led inflation spike: Reuters poll
• ECB urges banks to quickly prepare for AI-assisted cyberattacks
• S&P 500, Nasdaq boosted by chips to record closing highs
• Wall Street ended mostly higher despite a hotter than forecasted PPI inflation print

Thursday, 14 May 2026

• Signs and portents for the U.S. economy:
• Trump lands in China for Xi summit with Nvidia CEO in tow
• CEOs join Trump in China where AI will take priority over trade deals
• Trade wars to extended truce: Analysts expect ‘stabilization’ in U.S.-China ties as Trump-Xi meet
• Xi asks Trump if U.S. and China can avoid ‘Thucydides Trap’ at high-stakes summit
• Explained: The ‘Thucydides Trap’ referenced at the Trump-Xi Summit
• Oil prices dip after Iran says dozens of vessels are crossing Hormuz
• Fed minions starting to think inflation may be problem for US economy; job opening for new minions opens up:  
• Inflation is most 'pressing risk' to US economy, Fed's Schmid says
• Fed Governor Miran submits resignation, throws support behind Warsh as new chair
• Deregulation could ease inflation pressures, Fed’s Miran says - CNBC interview
• BOJ minions getting super excited to hike Japan's interest rates:
• https://www.reuters.com/world/asia-pacific/boj-board-member-masu-calls-early-rate-hike-2026-05-14/
• Wall Street finished higher as the S&P 500 tagged 7,500
• Wall Street ends higher on tech rally; investors eye Beijing talks

Friday, 15 May 2026

• Signs and portents for the U.S. economy:
• US And China Agree To Establish Trade And Investment Boards As Trump-Xi Summit Delivers Modest Wins
• Trump Touts ‘Fantastic Trade Deals’ With China, but Details Are Scarce
• Trump says China to buy 200 Boeing jets, order could rise up to 750
• China signals tariff cuts, advances in farm market access after Trump-Xi summit
• Yields surge to one-year high as oil prices and inflation data rattle markets
• Next chief Fed minion's plan to reduce holdings of U.S. government debt to come up against government's need to borrow much more:
• US debt load could undercut Warsh's plan to shrink Fed balance sheet
• Bigger rate hikes developing in Japan:
• BOJ expected to raise rates to 1.0% in June, hike again in October-December
• S&P 500 holds weekly gains despite Friday selloff
• Wall Street ends lower on mounting inflation worries
• How SpaceX stacks up against some of the biggest US IPOs

The Atlanta Fed's GDPNow toolestimate of real GDP growth for the U.S. economy in the current quarter of 2026-Q2 rose to +4.0%, up from the +3.7% it projected a week earlier.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and bear who are shocked and scared by a news report that says 'INFLATION IS BACK, BABY!'"