Investment Traffic Lights

The DWS May 2026 report highlights a divergence where U.S. and AI-related equities are surging on strong earnings while bond and commodity markets react to inflationary pressures from the Strait of Hormuz blockade.

Key Takeaways

• 1.Equities experienced a strong rebound in April, driven by an AI-led rally and robust Q1 earnings, despite geopolitical risks.
• 2.The closure of the Strait of Hormuz by both Iran and the U.S. has created a major oil supply shock, pushing Brent prices toward $126.
• 3.Bond markets are under pressure from rising yields and inflation; the Fed is expected to delay rate cuts while the ECB leans toward hikes.

Table of Contents

• 1 / Market overview
• 1.1 The fog of war versus the force of earnings
• 1.2 A tale of two cities: equities surge ahead, bonds and commodities tell a different story
• 2 / Outlook and changes
• 2.1 Fixed Income
• 2.2 Equities
• 2.3 Alternatives
• 3 / Past performance of major financial assets
• 4 / Tactical and strategic signals
• Glossary

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