Monthly Market Report – May 2026
Rumors, news and statements regarding an agreement between the United States and Iran were the constant theme throughout May. However, by the end of the month, no agreement had been formally established or finalized, while the Strait of Hormuz had already accumulated a total of 92 days closed.
Despite the cross-proposals exchanged during May, there are two points on which Iran refuses to compromise:
- Expressly renouncing its nuclear program – the United States’ proposals are limited to requiring an explicit renunciation of the development of nuclear weapons.
- Iran wants to maintain control of the Strait of Hormuz once the conflict ends. Toll systems and environmental taxes have been proposed, ideas that the USA firmly rejects.
May ended with comments from Trump himself regarding the imminent arrival of an agreement with Iran, which would include:
• Extension of the ceasefire for an additional 60 days.
• Iran’s renunciation of the development of nuclear weapons.
• Hormuz would reopen within 30 days after the removal of mines. No tolls would be imposed.
• The USA would lift the blockade on ships crossing Hormuz with origin or destination in Iran.
• Possible lifting of sanctions and release of frozen Iranian funds.
Following all these developments, oil prices experienced continuous declines throughout the month. The benchmark Brent crude barrel closed near $90 and fell by -19.26% on a monthly basis.
Fixed income markets followed the evolution of the conflict closely. Doubts remain regarding the impact of higher oil prices on inflation, which could lead to possible interest rate increases. The first half of May was particularly negative for bonds, reaching the highest yield levels in 2026.
The 30-year US benchmark reached a yield of 5.20%, a level not seen since 2007. Breaking through the 5% threshold generates nervousness in markets and within the US government itself. Debt servicing costs are currently the second-largest expenditure item in the US budget.
The uncertainty generated in the United Kingdom after the elections and the continuous fiscal programs in Japan caused sharp upward movements in their yield curves. The UK long-term yield reached its highest level since 1998, while the equivalent Japanese bond recorded its highest yield ever.
The second half of the month was positive for bonds, especially in Europe. The continuous comments about the arrival of an agreement between the USA and Iran resulted in lower crude oil prices and therefore reduced pressure on bond yields. The German 10-year bond, which reached a yield of 3.20% on May 19, ended the month below 2.95%.
Equity markets continue to overlook geopolitics and remain focused on technology related to artificial intelligence. Following an especially positive earnings season, Wall Street technology companies pushed indices to new all-time highs. By the end of May, the S&P 500 had achieved 9 consecutive weeks of gains, allowing it to close the month near 7,600 points. This represents a monthly return of +5.15% and a cumulative gain of +10.73% in 2026. The strength of the technology sector is even more evident in the Nasdaq index, which has accumulated a return above 20% this year.
European indices also posted positive performance, although more modestly. The Eurostoxx-50 gained +2.87% during the month and has accumulated +4.47% for the year. At the end of May, the US S&P 500 was outperforming the European Eurostoxx-50 by +6.26%.
At the macroeconomic level, the effects of the conflict are beginning to have a clear impact. In the United States, April inflation rose to +3.8% from the previous +3.3%. Meanwhile, consumer confidence levels continue to weaken due to rising gasoline prices. The University of Michigan Consumer Sentiment Index once again recorded an all-time low.