Rate Hike Odds Just Jumped to 40%

PCE inflation hit a 3-year high. Plus: Iran deal, S&P eighth week, Nvidia falls, 30-year breaks 5%. ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  

May 29, 2026 Today's Thesis: PCE inflation hit 3.8% in April, its highest in three years and nearly double the Fed's 2% target, with rate hike odds jumping from 3% to 40% since January. The S&P 500 closed its eighth straight winning week and Goldman raised its year-end target to 8,000, but healthcare is leading while tech sits down 3% year-to-date. Treasury Secretary Bessent says a 60-day Iran ceasefire deal may be hours from Trump's desk, and crude oil dropped from $104 to below $95 on the news. The 30-year Treasury hit 5% for the first time since 2007, breaking the 60/40 portfolio. And Nvidia reported $81.6 billion in quarterly revenue, up 85% year-over-year, then fell anyway. The market is telling you something. Here are the five stories that matter. 1 YOUR RATE PCE 3.8% · hike odds 40% · Warsh sworn in The Fed's Inflation Gauge Just Hit a 3-Year High. A Rate Hike Is Back on the Table. The Commerce Department reported April PCE inflation at 3.8% year-over-year on Wednesday, the highest reading in three years and nearly double the Fed's 2% target. Core PCE came in at 3.3%. The CME FedWatch tool now shows a 40% probability of a rate hike by December 2026. In January that probability was 3%. Kevin Warsh just became Fed Chair this month. He inherited this number. Read the full story. The other side: The June 17 FOMC meeting is priced at 98% hold. A rate hike is not imminent. But a 40% December probability changes how bonds trade, how growth stocks behave, and how the dollar moves. You don't need a hike to happen to feel the effects. You just need the probability to rise. 2 YOUR PORTFOLIO S&P 8-week streak · Healthcare +3.3% · Goldman target 8,000 The S&P 500 Just Closed Its Eighth Straight Winning Week. Healthcare Led the Charge. The S&P 500 wrapped its eighth consecutive winning week, its longest run since December 2023. The index is up 10% year-to-date and Goldman Sachs raised their year-end target to 8,000. But the real story is the sector rotation underneath it. Healthcare (XLV) gained 3.3% last week, its best performance in six months, while tech is down 3% year-to-date. UnitedHealth, Eli Lilly, Merck, and Johnson and Johnson all beat Q1 estimates and raised guidance. Read the full story. The other side: Eight straight weekly gains is a real streak, but 5% Treasury yields are now competing with stocks for investor capital. The rally is real. So is the drag sitting underneath it. When bond yields rise, stocks need better earnings growth to justify the same valuations. 3 sponsored YOUR MARKET AI Stocks · Smart Money Report 9 AI Stocks the "Smart Money" Is Watching in June A cloud provider ready for explosive growth due to relaxed regulations. A data analytics leader positioned to win government contracts. The smart money is watching and once they move, these stocks could soar. Get the FREE Report Here. 4 YOUR ENERGY Brent $93 · ceasefire pending · Hormuz may reopen A 60-Day Iran Ceasefire May Be Hours Away. Crude Oil Already Dropped Below $95. Treasury Secretary Scott Bessent said this morning the U.S. and Iran may be close to a 60-day ceasefire extension with nuclear talks and reopening of the Strait of Hormuz. Brent crude dropped from $104 last week to below $95 on the news. One-fifth of global oil supply transits that strait. Vice President Vance said a deal is "still TBD" pending Trump's approval, but the direction of travel is clear. Read the full story. The other side: Trump's conditions are strict. Iran must dispose of highly enriched uranium, formally commit to no nuclear weapons, and guarantee full strait transit rights. If the deal falls apart, oil snaps back above $100 and inflation data gets worse. Watch Brent crude closing price today for the market's verdict. 5 YOUR MONEY 30yr yield 5%+ · 10yr 4.56% · 19-year high The 30-Year Treasury Just Hit a 19-Year High. Your Bond Portfolio Is Breaking. The 30-year Treasury yield crossed 5% this week, its highest level since 2007. The 10-year sits at 4.56%. The 2-year is at 4.13%. The whole yield curve is elevated and the traditional 60/40 portfolio is taking damage. Stocks are rising on earnings momentum while bonds are falling on inflation fears. The 40% bond side of the standard retirement allocation is bleeding. Read the full story. The other side: Yields come back down when one of three things happens: inflation falls, the Fed cuts, or the economy weakens enough to trigger a flight to safety. A ceasefire deal that drops oil below $90 would help the PCE trajectory. That is the bond market's best near-term catalyst. 6 YOUR TECH NVDA $81.6B revenue · +85% YoY · stock fell Nvidia Just Reported $81.6 Billion in Revenue. The Stock Fell Anyway. Nvidia reported $81.6 billion in Q1 FY2027 revenue last week, up 85% from a year ago and more than $2.5 billion above Wall Street estimates. Data center revenue was $75.2 billion, nearly 90% of total revenue. The company doubled its data center business in 12 months. The stock fell. This is what a fully-priced market looks like. Morningstar raised its Microsoft price target to $600 this week, citing AI revenue growth. Tech is down 3% year-to-date while energy leads at +21.5%. Read the full story. The other side: Nvidia also announced a 25x dividend increase and $80 billion in buybacks. The business is extraordinary. The problem is that extraordinary was already the expectation. The move happens when AI revenue starts compounding faster than the consensus earnings curve. Until then, it's a wait. 7 sponsored YOUR MARKET Options Trading · Thursday Blitz 74 Cent Contracts into 5 Bucks Overnight I sent my Thursday Blitz subscribers a META call, entry at $0.74 per contract. By Friday morning, that contract was worth $5.00. That's 576 percent. One contract. Under 24 hours. I recorded a free breakdown video walking through the whole trade. Click Here to Get the Free Recording + Playbook OFF THE BRIEF Goldman Sachs raised its year-end S&P 500 target to 8,000. That is 7-8% upside from current levels. Strategist targets are directional signals, not trading calls. But Goldman being bullish in a rising-yield environment is worth noting. Cerebras, an Nvidia chip competitor, plans its IPO next week at a $26-27 billion valuation. First major AI chip IPO of the year. Watch how it opens relative to Nvidia's valuation multiple. Consumer confidence hit a two-year low in May, with 93% of voters blaming the national debt for their rising cost of living. 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