Please see the below article from Brooks Macdonald detailing their discussions on global markets. Received this afternoon 06/01/2026:
What has happened?
Global markets showed resilience yesterday despite heightened geopolitical tensions. The S&P 500 (+0.64%) closed just 0.43% below its record high, while Europe’s STOXX 600 (+0.94%) set a new high. Even with oil prices edging higher, bonds rallied on both sides of the Atlantic as a weak ISM manufacturing report pushed yields lower as 10yr Treasuries fell 3bps to 4.16%, and bunds dropped by the same margin.
Venezuelan bonds, energy and precious metals surge
While broad markets were largely unaffected by developments in Venezuela, certain assets saw sharp moves. Venezuelan bonds maturing in 2027 surged +29.28% to 42.5 cents on the dollar. US energy stocks also benefited, with the S&P 500 energy sector up +2.67%. Chevron gained +5.10%, while oil services giants SLB (+8.96%) and Halliburton (+7.84%) posted strong gains. This followed comments from former President Trump suggesting potential subsidies to rebuild Venezuela’s oil production, and reports that Energy Secretary Chris Wright will meet oil executives this week. Precious metals also rallied, with gold (+2.70%) and silver (+5.18%).
Rate cut hopes drive bond rally
Beyond geopolitics, softer US economic data provided a tailwind for risk assets. The ISM manufacturing index fell to 47.9 in December (a 14-month low) while new orders (47.7) and employment (44.9) remained in contractionary territory. Prices paid (58.5) were broadly in line with expectations. This reinforced market expectations for further Fed easing, with futures pricing in around 60bps of cuts by December 2026. US Treasuries rallied across the curve, with the 2yr yield down to 3.45% (-2.2bps) and the 10yr yield at 4.16% (-3bps), though both edged slightly higher.
What does Brooks Macdonald think?
The combination of weaker manufacturing data and the absence of a major shock from Venezuela supported a positive tone for equities. While geopolitical risks remain in focus, markets appear more sensitive to economic signals and policy expectations. If softer data persists, it could strengthen the case for accelerated rate cuts, which in turn would underpin risk assets.
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Andrew Lloyd
06/01/2026