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It's the same ol refrain we've heard (and written about) since the Iran war began:
Higher oil prices --> inflation woes
Yet risk assets such as stocks and cryptos had gladly ignored the scenario above and willfully marched higher, with US stocks literally punching their way to newfound records ... until recently.
Since the end of last week, major assets fell as inflation concerns came roaring back, dragging down riskier assets such as US stock indexes, cryptos, and even Asian currencies - though earlier declines today have subsided since.
READ MORE (published May 12th): 3 assets that can help beat the "inflation storm" in 2026
Here's how inflation woes haunt risk assets:
DECODE: When investors worry that inflation will erode the value of money over time, they demand higher interest rates (yields) on bonds to compensate for that lost purchasing power.
In active terms, investors sell bonds rapidly, which drives bond yields up.
Today, bond yields in major economies surged to multi-year highs:
US 10-year bond yields: 4.62% - highest since February 2025
US 30-year bond yields: 5.15% - highest since October 2023
UK 10-year bond yields: 5.17% - highest since June 2008
Japan's 10-year bond yields: 2.74% - highest since 1996
Japan's 30-year bond yields: 4.2% - its highest levels in this bond's history!
NOTE: In our 2026 Crypto Outlook report, published Jan 5th, we had previously already cited surging Japanese bond yields as a major macro risk for global markets for the year.
And when bond yields soar, investors shift money out of riskier assets like stocks and crypto into bonds.
That's because higher bond yields mean these bonds now offer more attractive returns with less risk.
The perception of "less risk" is because these bonds are issued by governments of some of the biggest economies in the world i.e. they're seen to have better ability to uphold their financial commitments (pay yields) to investors worldwide.
This week, watch these 3 assets, even as markets continue battling with the ongoing inflation angst:
Nvidia is set to unveil its latest quarterly results after US markets close on Wednesday, May 20th.
Markets predict that Nvidia's stock price may react with a 5.8% up/down move after its earnings release.
NOTE: You can trade Nvidia shares live during the earnings announcement, and for nearly-24 hours weekdays.
Shares of the world's most valuable company just ended a 7-day winning streak, when it fell 4.4% on Friday, May 15th.
Still, with a market cap of US$ 5.46 trillion (as of US market close on Fri, May 15), it remains to be seen whether the overall reaction to Nvidia's earnings will either offset or add to broader inflation concerns that are dragging down stock markets worldwide at the time of writing.
Also, at the time of writing (before US markets open on Monday, May 18th, and more importantly, prior to Nvidia's May 20th earnings announcement) ...
Wall Street analysts predict that Nvidia shares could rise a further 22% over the next 12 months (through May 2027)!
Traders and investors will be watching closely whether these Wall Street experts would revise their respective 12-month targets for Nvidia's share price after the latest earnings announcement.
But for this week ...
POTENTIAL SCENARIOS
The British Pound is the 2nd-biggest G10 loser against the US dollar so far this month (May 2026):
The ongoing inflation woes have bolstered demand for the US dollar - the safe haven of choice since the Iran war erupted.
Amid the Middle East conflict, "the buck" has strengthened against most of its G10 and Asian peers since end-Feb (except against the Chinese Yuan, Australian Dollar, and Norwegian Krone).
On top of the ongoing inflation woes, the Pound has also been dragged down by political turmoil in the UK.
This week, GBPUSD+ traders will also have to contend with these macro events:
Tue, May 19: UK March unemployment data
Wed, May 20: UK April inflation (CPI)
Wed, May 20: FOMC meeting minutes - may unveil more clues about Fed officials' thinking about the US inflation outlook
Fri, May 22: UK May consumer confidence; April retail sales data
The Bloomberg FX model forecasts a 76.5% chance that GBPUSD+ will trade between 1.320 - 1.350 over the course of this week.
POTENTIAL SCENARIOS
higher-than-expected UK inflation, which prompts markets to expect more rate hikes by the Bank of England (BoE)
easing of UK political risks
and/or Fed officials that are not-as-alarmed about US inflation running hot.
To be clear, the world's biggest and oldest crypto is still up 17% since the start of the Iran war on February 28th.
Also, it's near-700% surge over the past 6 years - since the onset of the Covid-19 pandemic - does suggest its longer-term prowess as an inflation hedge.
However, BTC has been found wanting during specific periods of heightened inflation, notably recently during the post-pandemic period (2021-2022).
Still, should the world witness an incoming "inflation storm", this would be yet another ripe testing ground for Bitcoin to showcase its merits as an inflation hedge, if it can live up to such a lofty title.
For the time being, Bitcoin is faltering away.
BTC prices recently met resistance around its 200-day simple moving average (SMA), and now trading around $77k and on the cusp of erasing all of its month-to-date (May 2026) gains.
POTENTIAL SCENARIOS
DISCLAIMER:
This article is provided for general information and reflects the author's views only. It does not constitute investment advice, nor an offer or solicitation to buy or sell any financial instruments or digital assets. Your ability to access or use any products or services mentioned may be subject to the laws and regulatory requirements of your jurisdiction.