Macro Pilgrim's Ledger | May 10, 2026

Markets hit records despite Middle East flare-up as softer jobs data fuels rate-cut hopes and oil volatility grips geopolitical tensions

Equities pressed to fresh records as a softer-than-feared April payrolls print and easing oil reignited the rate-cut narrative, while a renewed exchange in the Strait of Hormuz and the first Iranian attacks on the UAE since the April 8 ceasefire kept the geopolitical tape on edge.

The S&P 500 rose 2.3% on the week to close at 7,398.93, a sixth consecutive weekly gain and a fresh record close, while the Nasdaq Composite finished at 26,247.08 with the Nasdaq-100 advancing more than 5% on the week to lead the broader market. The Dow Jones Industrial Average lagged badly, gaining just 0.2% on the week to 49,609.16 as energy and industrial weakness offset the technology bid.

WTI crude futures settled at $95.42 per barrel, down sharply from the prior Friday’s $105 handle even as U.S. forces fired on two Iranian tankers and the UAE was hit by missiles and drones for the first time since the ceasefire. Gold reclaimed lost ground to settle near $4,715, up roughly 2.2% on the week, supported by the renewed Hormuz escalation and a softer dollar.

The 10-year Treasury yield closed the week at 4.38% as the front end caught a bid and the curve steepened modestly. The VIX finished at 17.08, a level several strategists flagged for its proximity to cyclical lows and the implied complacency around an unresolved Middle East conflict, with the 2-year and 30-year yields ending the week at 3.90% and 4.95% respectively.

“War is the continuation of politics by other means.”...Clausewitz

The Week That Was

Monday, May 4 was dominated by the most consequential geopolitical escalation since the April 8 ceasefire took effect. The UAE’s Ministry of Defence said its air defences engaged 12 ballistic missiles, three cruise missiles, and four drones launched from Iran, with one drone striking the Fujairah Petroleum Industries Zone and igniting a large fire that wounded three Indian nationals.

The attack came less than a day after President Trump announced Operation Project Freedom, a U.S. Navy mission to escort merchant ships through the Strait of Hormuz, which Iranian commanders had warned would constitute a ceasefire violation. On the data side, the Census Bureau’s Full Report on Manufacturers’ Shipments, Inventories, and Orders showed March factory orders rising 1.5%, well above the 0.5% consensus, with core capital goods orders excluding aircraft revised up to a 3.4% gain on the back of AI infrastructure and power-related capital spending.

Tuesday, May 5 was the data-densest day of the week. The ISM Services PMI for April registered 53.6, marking the 22nd consecutive month of expansion but slipping 0.4 points from March’s 54.0 and revealing a softer composition beneath the headline. New Orders fell 7.1 points to 53.5, Employment held in contraction at 48.0 for a second straight month, and Prices Paid stayed pinned at 70.7, tied with March for the highest reading since October 2022.

The JOLTS report for March showed job openings at 6.866 million, down 56,000 from a downwardly revised February reading and consistent with a labor market that is cooling without breaking, with hires rising to 5.6 million and quits little changed at 3.2 million. New Residential Sales, released for both February and March after the federal funding lapse pushed the schedule, came in at 635,000 in February and 682,000 in March, a 7.4% monthly gain, with the median sales price falling to $387,400 from $409,000.

The trade deficit widened to $60.3 billion in March from a revised $57.8 billion, with both exports and imports climbing as front-loading patterns continued to unwind. Late in the day President Trump told reporters he had paused Operation Project Freedom to give peace talks more space, even as Iran fired a second day of missiles and drones at the UAE, all of which were intercepted.

Wednesday, May 6 was the quietest day of the week on the U.S. data calendar, with no top-tier release. ECB President Lagarde gave introductory remarks at the Climate, Nature and Monetary Policy Conference in Frankfurt, the first such conference hosted by the central bank, where she estimated that the EU’s ETS2 carbon pricing extension to buildings and road transport would add roughly 0.2 percentage points to euro area headline inflation in 2028. WTI consolidated in the mid-$90s as traders weighed the tactical pause in Project Freedom against the risk of additional UAE attacks.

Thursday produced two delayed Census releases and the weekly claims figure. Construction Spending for February and March, both rescheduled because of the October funding lapse, showed a 0.6% March gain to a $2,185.5 billion seasonally adjusted annual rate, the first monthly increase since December, following declines of 0.2% in February and 1.9% in January.

Residential private construction led the advance with a 1.7% gain on a 2.7% rebound in single-family building, while nonresidential private and public construction each slipped 0.2%. Initial jobless claims for the week ending May 2 rose 10,000 to 200,000, slightly better than the 205,000 Bloomberg consensus, while continuing claims for the week ending April 25 fell 10,000 to 1.766 million, the lowest reading in over two years. The four-week moving average on initial claims declined by 4,500 to 203,250.

Friday, May 8 brought the marquee release of the week. The April Employment Situation showed nonfarm payrolls rising 115,000, nearly double the 60,000 consensus that had reflected widespread expectations of a soft print following the prior week’s claims softness and the JOLTS slowdown. The unemployment rate held at 4.3% for a third straight month. Average hourly earnings rose 0.2% on the month and 3.6% year over year to $37.41, while the average workweek edged up 0.1 hour to 34.3.

Revisions trimmed February’s reading by 23,000 to a loss of 156,000 and lifted March’s by 7,000 to a gain of 185,000, leaving the two-month combined 16,000 lower than previously reported. Job gains concentrated in health care (+37,000), transportation and warehousing (+30,000), and retail trade (+22,000), while federal government (-9,000), information (-13,000), and manufacturing (-2,000) shed positions.

The geopolitical tape stayed live: U.S. forces fired on and disabled two Iran-flagged oil tankers attempting to evade the blockade, the UAE reported additional incoming missiles and drones, and Secretary of State Rubio said Washington was awaiting an Iranian response to its peace proposal that day.

Macro / Policy

The dominant macro story of the week was the simultaneous escalation and de-escalation in the Strait of Hormuz, an unstable equilibrium that markets continue to price as a slow-burn risk rather than an acute threat. On Monday, Iran fired its first missiles at the UAE since the April 8 ceasefire, hitting the Fujairah oil zone and putting the country’s defense ministry in the unfamiliar position of cataloguing 12 ballistic missiles, three cruise missiles, and four drones intercepted in a single morning.