The major US equity benchmarks retreated for the week amid heightened fears of conflict in the Middle East and some signs of persistent inflation pressures that pushed long-term Treasury yields higher. Large-caps held up better than small-caps, with the Russell 2000 Index suffering its biggest daily decline in almost two months on Wednesday. Growth stocks fared better than value shares. Wednesday morning’s release of the US CPI data, which came in higher than expected, weighed on investors’ sentiment. Overall inflation rose 3.5% yoy, its biggest gain since September. The “supercore” inflation (services prices excl. energy and housing costs) jumped 4.8% yoy, substantially higher than expectations and its biggest increase in 10 months. Thursday’s release of PPI data seemed to help calm inflation fears and help equity markets recoup a portion of their losses. But stocks pulled back sharply to end the week in the wake of reports that Iran was preparing to directly attack facilities on Israeli soil for the first time. On the week, US Treasury yields were higher, led by the short-end/belly of the curve. The dollar roared higher this week (its biggest weekly gain since Sept 2022) to its highest since Nov 2023. Gold surged to $2430 – a new all-time high – before pulling back on Friday afternoon. The STOXX Europe 600 Index ended 0.26% lower as the ECB left its key deposit rate but hinted at a rate cut in June. The Nikkei 225 gained 1.4% as the yen tumbled to fresh lows. Cryptos tumbled on Friday, erasing all weekly gains.