US equity futures are higher and just shy of a new record, with technology names leading futures higher ahead of April jobs report, after Trump’s assertion that the Iran ceasefire is still holding despite an exchange of weapons between the US and Iran overnight, and a deep weekly loss for oil help futures regain positive momentum. Markets are higher ahead of NFP data later this morning following yesterday’s very ‘unwindy’ session (High Beta Momo -7.96%, Software vs Semis +5.83%, Power -3.44%, HF VIP Longs -1.36%). As of 8:00am ET, S&P futures rise 0.5% and are back over 7,400 while Nasdaq futures gain 0.7%. Pre-market, Mag 7 are all higher led by NVDA +0.9% and TSLA +0.9%.Sentiment reversed from Thursday's drop after Trump last night said the recent US strikes on Iranian military facility does not affect the ceasefire status. This morning there are reports that Iran seized an oil tanker for violations (one which was carrying Iranian oil). The Ocean Koi tanker attempted to “disrupt oil exports and the interests of the Iranian nation.” (Tasnim) Trump’s 10% global tariff under the Section 122 was found unlawful by the US Court of International Trade, but the outcome was mostly irrelevant. A busy night with AI headlines: (i) NVDA and IREN announce strategic partnership on AI infra; (ii) CoreWeave fell on weak revenue guidance and higher spending forecast; (iii) SK Hynix reported that they have received offers to invest in chip production lines. (iv) TSMC posted 17.5% growth in April sales, slowest in six months. Oil (WTI Crude) is unchanged at $94.80; bond yields are 1-3bp lower the 10Y yield at 4.38%; The dollar headed for a second straight week of losses. precious metals erased earlier gains with ags all higher. Today's economic data slate includes April jobs report (8:30am), May preliminary University of Michigan sentiment and March wholesale trade sales (10am).
In premarket trading, all Mag 7 stocks are higher (Tesla +1.4%, Alphabet +0.05%, Nvidia +0.9%, Microsoft +0.03%, Amazon +0.3%, Meta Platforms +0.3%, Apple +0.8%)
In AI-related news, TSMC posted its slowest pace of monthly revenue expansion since October, highlighting the potential challenges of sustaining a torrid AI-fueled pace of growth. AI data center operator CoreWeave gave a disappointing forecast for the current quarter, sparking concerns about slowing growth at a time when the company is spending heavily to bolster its operations. SoftBank Group has downsized plans for a $10 billion margin loan backed by its OpenAI stake after facing hesitation from some creditors, people familiar with the matter said. And a key company behind Thailand’s national AI effort is suspected of helping to smuggle billions of dollars worth of Super Micro Computer servers containing advanced Nvidia chips to China, with Alibaba one of multiple end customers. In other corporate news, Toyota Motor forecast an abrupt drop in operating profit due to higher raw material costs from disruptions stemming from the Iran war. Citigroup is expanding its foreign-exchange business with hedge fund and private-equity clients as global trading volumes rise
US stocks rose at the end of a week in which optimism that the conflict is nearing an end and blowout earnings from major tech firms drove the S&P 500 to a succession of records. Hopes that oil flows would soon resume through the Strait of Hormuz also eased inflation worries, even as uncertainty remains over how soon the US and Iran can reach an agreement. US markets were the standout performers on a tough day for stocks elsewhere as clashes in the Middle East risked undermining efforts to secure a permanent end to the war. Stock indexes in Europe and Asia fell. Brent advanced as much as 2.9% before trimming the move to trade just above $100 a barrel. Treasuries rose ahead of April’s payroll numbers, with the two-year yield falling one basis point to 3.90%. UK government bonds advance, led by longer-dated maturities after UK Prime Minister Keir Starmer said he had no plans to step aside as Labour leader after early results in local elections showed losses for his party.
“For now, investor sentiment remains strong as the equity market is looking through high oil prices,” said Marija Veitmane, head of equity research at State Street Global Markets. “We continue to stress that the strength of earnings is heavily concentrated in IT sectors. These sectors are also the least exposed to physical supply chains and commodity pass-through.”
In the latest developments in the Middle East, Iran said it seized a tanker that appeared to be a sanctioned vessel carrying its own oil. Meanwhile, US forces targeted missile and drone launch sites and other military assets in Iran that they said were responsible for attacking US warships transiting the strait. The clashes came as the US awaited a response from Iran on a proposed deal to open Hormuz and end the war. President Donald Trump threatened more intense strikes if Iran refuses his terms.
A pause in worrying headlines out of the Middle East would allow markets and the Fed to focus on nonfarm payrolls at 8:30 a.m. New York for fresh clues about US economic resilience. Bloomberg Economics expects 57,000 jobs were added in April, slightly below sellside consensus for 65,000, while the “whisper” number is 71,000. Options pricing around the print continues to drift lower, with S&P 500 options implying only about a 0.6% move on the release (our full preview is here).
“I would expect a stronger-than-expected set of figures to keep Fed hawks in charge, without necessarily taming equity appetite,” wrote Ipek Ozkardeskaya, senior analyst at Swissquote. Softer-than-expected figures “could revive dovish Fed expectations and provide further support to equity valuations, provided that war headlines leave some room for reaction.”
Jobs are a hot topic in more ways than one this Friday. Block offered a sunnier outlook for profits and growth after orchestrating layoffs linked to AI that executives said were painful but necessary. Cybersecurity firm Cloudflare plans to cut one-fifth of workers as it accelerates its shift to an agentic AI-first operating model. Upwork intends to reduce its workforce by about 24%, while Fidelity is overhauling its tech and product teams. In all cases “the increased adoption of AI tools is a huge factor,” Vital Knowledge founder Adam Crisafulli said on the recent bout of job cuts. He cautioned “this type of behaviour tends to be contagious.”
Meanwhile, investors flocked to cash and bonds last week and emerging market stocks saw their biggest outflows since January, according to Bank of America. The US had its sixth week of equity inflows at $9.3 billion, BofA's Michael Hartnett said. Elsewhere, aggregate retail investor equity flows on Citadel Securities’ platform surged back to elevated levels last week. In other investing news, 43% of large cap active funds are outperforming their benchmarks, according to a BofA analysis of US mutual fund performance, better than the 29% that outperformed last year. Separately, some hedge fund categories, such as macro funds, appear to still have room to increase their equity exposures, according to JPMorgan strategists.
A pillar of support for equities may not be quite what it seems, according to Bloomberg Macro Strategist Simon White. Buyback announcements are surging this year. However, the risk of disappointment is rising as actual repurchases heavily lag the original commitments made, Simon writes.
Jeffrey Gundlach said he was repositioning some of DoubleLine Capital’s funds for the scenario that the US government could restructure its debt in response to a potential future recession. A publicly-traded private credit fund managed by Goldman Sachs put two additional companies on non-accrual status in the first quarter, as the industry grapples with mounting concerns over exposure to businesses vulnerable to AI-driven disruption.
With earnings season in its tail end, of the 425 S&P 500 companies to have reported thus far, 84% have beaten analysts’ estimates, while 11% have missed.
In Europe, the Stoxx 600 falls 0.5%, led by declines in insurance and travel stocks while media and energy outperformed. Here are the biggest movers Friday:
Earlier, Asian stocks fell to trim weekly gains as renewed tensions in the Middle East weighed on sentiment. The MSCI Asia Pacific Index dropped as much as 1.6% following a two-day rally as some investors took profit ahead of Iran’s response to a US peace proposal. Samsung Electronics, TSMC and SoftBank weighed the most on the regional decline. Still, the index has risen more than 5% for the week and was poised for its longest winning streak since January, driven largely by a sustained tech rally. The MSCI AC Asia Pacific Information Technology Index has surged over 13%, its best week since late 2022. Across the region, markets saw renewed risk-off sentiment on Friday after the US struck military targets in Iran in response to attacks on three Navy destroyers in the Strait of Hormuz. Australia, Indonesia and Hong Kong were among the hardest hit.
In FX, the pound gains 0.4% after PM Keir Starmer said he had no plans to step aside as Labour leader after early results in local elections showed losses for his party; the dollar falls across the board. The Norwegian krone is leading gains among the G-10 currencies, rising 1.2%.
In rates, treasuries hold small gains in early US session, led by front-end and belly sectors as oil prices stabilize. Oil prices partially unwind Thursday’s rebound despite escalation of Middle East war, with US and Iran clashing near the Strait of Hormuz. US yields richer by 1bp-2bp in belly of the curve with 5s30s spread steeper by about 1bp; 10-year near 4.37% is down 1bp with UK counterpart outperforming by around 5bp. Gilts outperform as UK Prime Minister Starmer vows to stay on despite election setback. Gilts rallied over early London session after Starmer said he’d remain as Labour leader despite the party’s election losses
In commodities, oil prices are little changed with Brent crude futures near $100 a barrel. Precious metals rise with spot silver up almost 3% and on course for a fourth day of gains. Bitcoin rises 0.5%.
Today's economic data slate includes April jobs report (8:30am), May preliminary University of Michigan sentiment and March wholesale trade sales (10am). Fed speaker slate includes Goolsbee (11:05am and 2:20pm). Waller, Bowman, Daly and Goolsbee are panelists at Hoover Institution Monetary Policy Conference (7:30pm)
Market Snapshot
Top Overnight News
Iran Latest: Reports surrounding a potential deal:
Iran Latest: Commentary following the US-Iran strikes:
Iran Latest: Reports of overnight strikes:
A more detailed look at global markets courtesy of Newsquawk
Asia-Pac stocks traded entirely in the red as geopolitical tensions rose, with the US Military and the Iranian Navy exchanging fire. Despite US President Trump announcing that the ceasefire remains in place, bourses failed to see any positivity. ASX 200 opened on the softer side and extended lower, nearly wiping out the gains seen in the past 2 sessions. Real estate and Financials weighed on the index, with Macquarie being dragged down despite reporting FY earnings that beat estimates. Nikkei 225 pulled back from the ATH formed in Thursday’s session amid the negative risk tone. SoftBank has dragged the Nikkei lower after ARM tumbled on smartphone market weakness and AI chip supply concerns. Sony reported FY25/26 earnings, with operating income missing estimates, however announced a JPY 500bln share buyback programme. KOSPI slipped, as investors profit-take following the recent strength in the index, primarily driven by Samsung Electronics and SK Hynix.Shanghai Comp. and Hang Seng followed the broader risk-off tone, as Shanghai Comp. outperformed its Asia-Pac peers with only modest losses.
Top Asian News
European bourses (STOXX -0.7%) are almost entirely in the red, with sentiment today pressured by recent flare-ups between US-Iran, whereby US struck Iranian ports which led to retaliatory attempts from the Iranian side. Though, indices are attempting to clamber off lows, with markets focusing on President Trump downplaying the attacks, calling them nothing but a “love tap”, noting that the ceasefire remains in place. European sectors are entirely in the red, display a market fearful of the current geopolitical environment; with cyclical sectors (Travel & Leisure/Consumer Products) residing at the foot of the list, whilst Energy is amongst the top performers. As for key movers this morning: Commerzbank (-0.5%, in-line metrics, raised targets and plans to cut 3k jobs), IAG (-2.7%, strong metrics but cut FY26 capacity outlook; sees strong demand), Intertek (-3%, rejects EQT’s GBP 9bln offer) US equity futures are broadly modestly firmer this morning, in contrast to the downbeat mood in Europe. In terms of key pre-market movers: CoreWeave (-6.6%, Q1 profit miss, Q2 revenue guidance missed expectations, and it raised capex forecasts), Gilead (-0.8%, mixed guidance, despite beating Q1 sales expectations).
Top European News
FX
Fixed Income
Commodities
Trade/Tariffs
US Event Calendar
Central Bank Speakers
DB's Jim Reid concludes the overnight wrap
As we go to press this morning, markets have slipped back thanks to questions about whether the US-Iran ceasefire is holding. Indeed, there’s been a clear escalation in the last few hours, with the US striking targets in Iran after they fired on three US warships in the Strait of Hormuz. And in turn, Trump posted that “we’ll knock them out a lot harder, and a lot more violently, in the future, if they don’t get their Deal signed, FAST!” So Brent crude is back up +1.58% this morning to $101.64/bbl, having been beneath $100/bbl for a good chunk of yesterday’s session. However, markets still aren’t pricing in the worst-case scenario, as Trump told ABC News that “the ceasefire is going. It’s in effect”, referring to the US strikes as a “love tap”.
Questions around the ceasefire have already had a market impact in Asia overnight, where all the major equity indices have lost ground. That includes the Nikkei (-0.69%), the KOSPI (-0.73%), Hang Seng (-1.17%), CSI 300 (-0.90%) and the Shanghai Comp (-0.43%). Moreover, European equity futures are down, with those on the FTSE 100 (-0.70%) and the DAX (-0.87%) both lower, although US futures have picked up a bit after yesterday’s losses, with S&P 500 futures up +0.21%.
Prior to all that, Brent crude (-1.19%) had posted a modest decline yesterday to $100.06/bbl, but that was a decent recovery from the intra-day lows of $96/bbl given there were no obvious signs of progress towards a deal. Moreover, as reports of explosions in Iran came through, that pushed oil prices even higher, so whilst Brent crude spent much of the day beneath $100/bbl, it was just above that mark by the close.
These more negative headlines weighed on broader risk sentiment, leading the S&P 500 (-0.38%) to pull back from its record high. And on top of the geopolitical headlines, we also had a hawkish batch of US data, with numbers on the labour market and inflation both surprising on the upside. For instance, the NY Fed’s latest survey showed 1yr inflation expectations up to 3.64% in April (vs. 3.5% expected), which is the highest since September 2023. So that raised expectations about a more hawkish response from the Fed. And that came on top of strong labour market data, with the weekly initial jobless claims at 200k in the week ending May 2 (vs. 205k expected), which took the 4-week moving average down to a two-year low of 203.25k.
That hawkish newsflow continued with various Fed speakers. In particular, Boston Fed President Collins (a non-voter this year) said she agreed with the hawkish dissenters who didn’t want to include the easing bias in the statement. So that added to the sense there was wider scepticism around further rate cuts. We also heard from two of the hawkish dissenters. Cleveland Fed President Hammack said her own outlook was that “interest rates will be on hold for quite some time.” And Minneapolis President Kashkari said that “if the Strait of Hormuz is closed for an extended period of time, it may well be that the next move might need to be up in interest rates.” So investors priced in a more hawkish outlook, with markets pricing a 38% chance of a rate hike by March 2027 at the close, up from 21% the previous day. And in turn, Treasury yields rose across the curve, with the 2yr yield (+4.6bps) up to 3.91%, whilst the 10yr yield (+3.8bps) rose to 4.39%.
This backdrop meant it was a tough one for equities as well, with the S&P 500 (-0.38%) falling back from its Wednesday record. Indeed, the losses would have been even bigger were it not for the Mag 7 (+0.71%) reaching another record. So the equal-weighted S&P 500 (-0.67%) saw its largest decline in almost four weeks, whilst the small-cap Russell 2000 (-1.63%) struggled even more. And over in Europe, there were also broad declines, with the STOXX 600 (-1.10%) posting its biggest decline in over a month, alongside losses for the DAX (-1.02%), the CAC 40 (-1.17%) and the FTSE 100 (-1.55%).
Looking forward, we’ll get more data today with the US jobs report for April. That’s an important one, as Fed pricing has already shifted in a hawkish direction given the energy shock, and last month’s payrolls were at a 15-month high of +178k. This time round, our US economists are looking for payrolls to come in at +50k, which would actually mark the first back-to-back positive reading since May last year. Meanwhile, they see the unemployment rate steady at 4.3%.
Elsewhere today, the UK will be in focus, as we’ve just started to get the results from the local elections overnight. We’ve only got a few results so far, but the governing Labour Party have suffered heavy losses in the seats they were defending, whilst Nigel Farage’s Reform UK party has seen major gains. Today, it’ll be important to watch what Labour MPs and cabinet ministers are saying, as gilt markets are focused on whether PM Keir Starmer will remain in post following the results. That’s because of expectations that a new Labour leader might ease the fiscal rules and raise gilt issuance, so when Starmer’s position has come into question, that’s coincided with selloffs for gilts.
Before all that, sovereign bonds were fairly steady across Europe yesterday, with the 10yr bund yield (+0.1bps) remaining at 3.00%. There had been more of a rally earlier in the session, but that unwound as oil prices moved higher again, with yields tracking those moves. So yields on 10yr gilts (+0.9bps) and OATs (+0.4bps) also saw a modest increase, although those on BTPs (-0.6bps) came down slightly. Otherwise, investor expectations of an ECB rate hike in June were also steady yesterday, with markets pricing in an 80% chance of a hike by the close, up from 79% on Wednesday.
Finally, there were a couple of noteworthy headlines on US trade yesterday. First, the 10% global tariff currently in place was found to be unlawful by the US Court of International Trade. That’s the one the administration had imposed under the Trade Act of 1974, after the Supreme Court ruled against the previous IEEPA tariffs earlier this year. But for now, at least, the Court of International Trade only blocked them from enforcing it against the companies that sued and Washington State. The second story was that Trump set a deadline of July 4 for the EU to “deliver their side of the Deal”, or tariffs would be raised.
Looking at the day ahead, data releases include the US jobs report for April, the University of Michigan’s preliminary consumer sentiment index for May, and German industrial production for March. Central bank speakers include ECB President Lagarde, ECB Vice President de Guindos, the ECB’s Nagel, the Fed’s Cook, Waller, Bowman, Daly and Goolsbee, BoE Governor Bailey, and BoE Deputy Governor Breeden.
Tyler Durden Fri, 05/08/2026 - 08:23Update (0800ET): After hitting 28-year highs earlier in the week, UK gilt yields are lower as UK PM Keir Starmer said he had no plans to step aside as Labour leader after early results in local elections showed Nigel Farage’s populist Reform UK racking up sweeping gains over Britain’s governing party.
Cable is also stronger against the dollar...
The Polymarket prediction platform showed punters paring bets on a Starmer departure this year, giving a 57% chance of the premier exiting by Dec. 31, down from 70% on Thursday.
UK's Milliband reportedly told PM Starmer he should consider setting out a timeline for his departure, via Times.
The sources said Miliband made the suggestion during a private meeting with the prime minister about a fortnight ago.
But, for now, Starmer is staying:
“These are really tough results — I’m not going to sugarcoat it,” Starmer told broadcasters on Friday, while resolving to stay on as prime minister until the next election.
“The voters have sent a message about the pace of change, how they want their lives improved. I was elected to meet those challenges, and I’m not going to walk away from those challenges and plunge the country into chaos.”
So far, markets have responded positively suggesting investors think the more pessimistic predictions about the outcome will probably be avoided.
Still, Bloomberg economist Dan Hanson warns that, with plenty more results to come in, the final verdict is uncertain, as is the likely reaction from Labour MPs.
Here's how to judge the results:
The risk for the economic outlook is that the local elections spark a chain of events that eventually sees Prime Minister Keir Starmer replaced by a leader who favors looser fiscal policy.
With the economy in the midst of a fresh inflationary shock and the public finances stretched, a promise of higher spending would put a new leader on a collision course with the gilt market.
“We’re proving in a big way, we can win in areas that Labour have dominated, frankly, since the end of World War I,” Farage told journalists in London on Friday.
“You’re witnessing an historic shift in British politics. This is now the most national of all parties. We’re competitive in the north of Scotland. We were competitive in Cornwall in the county elections last year. We’re competitive in every part of the country, and we’re here to stay.”
* * *
Reform UK is on track for historic gains in the 2026 UK local elections - seizing hundreds of seats in the early counts while Labour and the Conservatives suffer heavy defeats across England.
Nigel Farage, leader of Reform UK, celebrated huge gains in England’s local elections on May 1 (Press Association via AP Images)With results from 39 of 136 councils declared overnight (roughly 28% of the vote counted), Reform UK has already gained over 300 seats - a remarkable surge for a party that had almost no local presence just a few years ago.
Labour has lost 220 seats, the Conservatives 107, while the Liberal Democrats gained 35 and the Greens 22.
//--> //--> //--> Will Reform UK win the most council seat elections in the 2026 United Kingdom local elections?The scale of Labour’s collapse is stark. In areas where the party was defending seats, it has retained only 23% so far. One senior Conservative commentator noted on X that Labour is “currently losing 84% of the seats they are defending.”
Labour has already lost control of at least five councils, including long-held northern strongholds. Tameside fell after 47 years of Labour rule. Heavy losses were also recorded in Halton, Hartlepool, Redditch and Tamworth, with Reform UK making major inroads in former Labour heartlands across the North and Midlands.
Birmingham on the Brink of a Reform Takeover?Nowhere is the drama more intense than in Birmingham, where all 101 council seats are up for election. Pre-poll surveys had Reform UK as the largest party or very close to it, with some projections putting them on 47 seats - just short of an outright majority.
A widely shared post on X claimed Reform UK is “tipped to take control of Birmingham City Council in what could become one of the biggest political upsets in modern British politics.” Local issues including a prolonged bin strike and council finances have dominated the campaign. Results from Britain’s second city are expected later today.
Across the declared councils, Reform UK is winning approximately 48% of the seats contested so far. Many authorities are heading for no overall control, creating a fragmented political map.
The Liberal Democrats enjoyed a standout result in Richmond upon Thames, taking every seat. The Greens also made solid gains.
In Scotland, counting for the Scottish Parliament election begins this morning, with first results expected around lunchtime. Polls had suggested the SNP would fall short of a majority while Reform UK was on course for a significant breakthrough. Wales is also counting today.
Political Earthquake for StarmerThese are the first major elections since Labour’s 2024 landslide victory and represent a serious test for Prime Minister Keir Starmer. Reform UK leader Nigel Farage has hailed the results as evidence of a “historic change in British politics.”
Conservative leader Kemi Badenoch faces questions about her party’s ability to stem the flow of votes to Reform on the right.
This is a developing story. More councils - including several major metropolitan boroughs - will declare throughout Friday, with the full national picture expected by Saturday.
The last word goes to @higgyboson
CV.
Completely ruined a major 126 year old political party in less than 2 years.
Became the most hated UK Prime Minister in history.
Unilaterally gave away billions of £'s of taxpayers money with no accountability required from the recipients.
Wrecked the economy.
Failed to control mass immigration, both legal and illegal.
Failed to address the problem of muslim rape gangs.
Increased welfare payments to a point where benefits now cost more than the entire income tax take.
Allowed weekly pro-Palestinian hate marches on our streets.
Consistently referred to people with concerns about the proliferation of migrant violence as "Far Right".
Promoted one of his friends to high office despite knowing he was a buddy of one of the most prolific paedophiles on the planet.
Consistently worked to reverse the result of the biggest democratic vote in British history by stealth.
Placed tax dodgers, fraudsters and CV fantasists in Ministerial posts.
Invited a known islamist terrorist to No.10 while simultaneously banning foreign commentators from the UK for merely reporting on the border fiasco.
Took two weeks to find a Royal Navy ship that actually worked.
Introduced legislation that will destroy the private rental market and create hundreds of thousands of homeless families.
Promised to build 1.5 million homes in five years despite everyone telling him it would be impossible.
Failed to help motorists and hauliers after the rise in the price of fuel caused by the war in Iran.
Continues to allow Ed Milliband to wreck the UK's energy industry with his insane Net Zero policies.
Raised the minimum wage and employers National Insurance contributions leading to thousands of job losses and businesses folding.
Introduced VAT to private school fees leading to many excellent seats of learning closing their doors.
Consistently refused to answer questions during the session in the parliamentary week set aside for this specific purpose.
Consistently failed to accept responsibility for any wrong doing, preferring to sack others instead.
Alienated "working people" while claiming to be on their side.
And the lies. The constant lies.
Failure. Failure. And more Failure.
Time to go.
Tyler Durden Fri, 05/08/2026 - 08:00Authored by Michael Snyder via The Economic Collapse blog,
January, February and March were insanely dry. In fact, in all of U.S. history conditions have never been so dry during the first three months of the year. Just think about that for a moment. Not even during the Dust Bowl days of the 1930s were conditions this dry. Many were hoping that 2026 would be the year when our multi-year drought would finally break. Needless to say, that hasn’t happened. Scientists are telling us that the southwestern U.S. is in the midst of the worst multi-year drought in at least 1,200 years. We really are experiencing a “megadrought”, and this is something that experts such as Steve Quayle and Dane Wigington have been talking about for a long time. Unfortunately, it appears that our seemingly endless “megadrought” has gone to an entirely new level in 2026.
If it simply doesn’t rain, there is not much that farmers and ranchers can do.
Right now approximately 63 percent of the continental United States is experiencing at least some level of drought, and the first quarter of this year was one for the record books…
Winter wheat is dying in Kansas fields that should be green by now. Ranchers in New Mexico are selling cattle they cannot afford to feed. Reservoir levels along the Colorado River system are dropping weeks ahead of the season when mountain snowmelt is supposed to refill them. Across roughly 63% of the contiguous United States, drought rated moderate to exceptional on the federal scale has taken hold, and the first three months of 2026 were the driest the nation has recorded in 131 years of continuous measurement.
This isn’t just a crisis.
This is catastrophic.
It appears that the winter wheat crop in the U.S. is going to be a disaster.
At this stage, more than 81 percent of the Southern Plains is experiencing drought…
Heading into the harvesting season for the key winter wheat crop, much of the western side of the U.S. Plains are locked in drought. Over 81% of Southern Plains is experiencing some form of drought, according to the latest data from the U.S. Drought Monitor. Nearly 20% of the region is experiencing either “extreme” or “exceptional” drought.
Only 30% of U.S. winter wheat is in either good or excellent condition as of the start of this week, according to the most recent weekly Crop Progress report from the Department of Agriculture. By comparison, 49% of the crop was good-or-excellent at this point last year.
The situation is particularly dire in the state of Oklahoma.
Last year, the state produced 101.1 million bushels of red winter wheat.
Thanks to the drought, it is being projected that the state will produce less than half of that total this year…
At the 2026 Oklahoma Grain and Feed Association meeting, crop scouts, extension specialists, and grain elevator representatives painted a sobering picture of this year’s hard red winter wheat crop. Their estimates say the 2026 crop is roughly half the size of the previous two years, with production projected at 48.9 million bushels compared to 101.1 million bushels in 2025. The outlook is based on an average yield of 23.93 bushels per acre across an expected 2.043 million harvested acres, highlighting the significant downturn facing Oklahoma wheat producers.
When there is a lot less wheat to go around, prices will go up.
It is simply a matter of supply and demand.
One farmer that grows winter wheat in Kansas is saying that his farm has only had a quarter of an inch of precipitation since last fall…
Southwest Kansas farmer Gary Millershaski says his area has only received a quarter-of-an-inch of precipitation since last fall. “For us to get a 30-bushel crop, you’ve really got to be optimistic and believe in prayer. That’s a fact.”
He has done everything right, but the sky has been silent.
What is he supposed to do?
So far in 2026, Chicago wheat futures are up about 30 percent…
Chicago wheat futures have gained nearly 30% since the start of the year — the biggest gain among row crop futures — due to the combination of U.S. drought, global fertilizer shortages and a looming El Niño.
If this crisis in the Middle East is not resolved, this will only be just the beginning.
Once upon a time, the U.S. was absolutely swimming in wheat, but now we are moving into a time when it will be considered a “luxury grain”.
Of course beef is already considered to be a “luxury meat”.
When I was growing up, my mother would feed us beef constantly because it was so inexpensive.
But now beef prices have skyrocketed, and some of the prices that we are seeing at the meat counters in our grocery stores are absolutely absurd…
I never thought that I would see beef prices get this high.
But this is the reality that we are living in now.
And it appears that beef prices will continue to remain elevated because the size of the U.S. cattle herd is the smallest that it has been since 1951…
The US cattle herd remained the smallest since 1951 at the start of the year, in the latest signal that consumer beef prices will remain near records.
There were about 86.2 million cattle and calves in the US as of Jan. 1, the US Department of Agriculture said in a Friday report. The tally is nearly unchanged from 2025, providing no relief to the ongoing cattle shortage.
The lack of improvement comes as ranchers keep selling animals to slaughter amid high beef demand, rather than retaining the animals to grow their herds. The downsizing — which began years prior when ranchers shrunk their herds due to high production costs and droughts — has sent consumer beef prices to all-time highs.
It is really hard to feed cattle when conditions are bone dry.
Sadly, they could get even drier in the months ahead…
Meanwhile, there’s a 62% chance of the world’s climate shifting from neutral to El Niño between June and August, according to NOAA’s Climate Prediction Center forecast. The European Center for Medium-Range Weather Forecasts said that this El Niño could be the strongest on record, with peak intensity hitting in October.
El Niño typically results in hot and dry weather in many growing areas, including the U.S. Corn Belt and in Australia. With fertilizer supplies thin, this may further compound production losses for world wheat.
We are being told that we could soon be experiencing a “super El Niño”, and meteorologist Ryan Maue is warning that the long-term forecast for the second half of this year is “off the charts”…
I have been repeatedly warning my readers that global weather patterns are going nuts, and I was not exaggerating one bit.
We really are facing a historic long-term crisis with no end in sight.
As I discussed last week, for the upcoming season U.S. farmers are planting the fewest acres of wheat that we have seen since records began in 1919.
In 1919, there were 104 million people living in the United States.
Today, there are 341 million people living in the United States.
It doesn’t take a genius to figure out that we have a major problem on our hands.
Many of us have been warning about this crisis for years, and now we really have reached a breaking point.
Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
Tyler Durden Fri, 05/08/2026 - 07:45