Trump-Xi Beijing summit disappoints; yields jump on inflation

President Donald Trump and Chinese President Xi Jinping concluded a two-day summit in Beijing with few concrete agreements. The leaders pledged a three-year “strategic stability” truce but made limited progress on trade and security. Xi warned that Taiwan could lead to “clashes” and create a “highly dangerous situation.” China committed to purchasing 200 Boeing jets, short of investor expectations.

Markets reacted to the summit and stronger macro data. The U.S. 10-year Treasury yield rose to 4.59% as inflation pressures and higher commodity prices weighed on fixed income. The S&P 500 closed at 7,409, ending a six-week run of weekly gains and posting a small weekly decline. Long-term U.K. yields climbed to levels not seen since 1998 amid fiscal concerns.

Traders reduced expectations for 2026 rate cuts and some are now pricing a shift toward tightening. Jeffrey Gundlach, chief executive of DoubleLine Capital, warned that persistent inflation and a commodity boom could push the Federal Reserve toward higher rates rather than cuts. Bond markets experienced heavy selling as investors adjusted central bank paths.

Equity market concentration around artificial intelligence sectors drew attention. Goldman Sachs cautioned that the AI-led rally has become concentrated in a narrow set of names. J.P. Morgan data showed AI-related industries now account for more than half of the S&P 500's market weight. Pershing Square disclosed a large position in Microsoft, with the investor arguing the company’s enterprise software business remains entrenched even as some investors rotate into chipmakers.

Oil supplies and regional disruptions supported crude prices. Ongoing closures in the Strait of Hormuz and other supply bottlenecks helped push WTI and Brent up about 3% on Friday to roughly $109.48 and $105.86 per barrel, respectively. Technical measures cited a short-term WTI support near $103.40 a barrel and resistance in the $112 to $119 range. Higher oil costs have pressured several Asian currencies; the Indian rupee was identified as one of the region’s weakest performers this year.

The stronger dollar and rising yields weighed on interest-sensitive assets. Spot gold fell about 2.4% to $4,540 per ounce as bond yields climbed. The Japanese yen and British pound ended the week lower against the dollar. In Asia, high energy import costs contributed to slower growth and prompted some policy responses, including tighter controls on gold imports and measures to limit fuel consumption in India.

Regional supply-chain risks were highlighted by labor and trade developments. Samsung Electronics resumed pay talks with its union to head off a threatened strike that could affect global memory chip output. Offshore Chinese yuan and other regional currencies weakened after the summit.

Investors are watching corporate catalysts that could test market concentration. Semiconductor and AI infrastructure stocks remain sensitive to rising yields and sector rotation. Market positioning ahead of Nvidia’s first-quarter earnings release on May 20 remains a key focus for traders and portfolio managers.