S&P up, 30-year yield above 5%: markets disagree May 2026

Brief

PrediXmarkets

Market intelligence, condensed.

— THE OPEN

Wednesday afternoon, the 30-year Treasury auction closed at 5.046% — the first time since August 2007 that a 30-year bond has sold above 5%.

The same afternoon, leveraged ETF assets under management hit a record $177 billion, up $45 billion since March. The S&P 500 gained 0.7%.

Two markets. Same day. Opposite reads.

Today

The Money Came Back Narrow

Leveraged ETF assets under management reached $177 billion this week, per Kobeisi Letter data — a record. Since the March bottom, leveraged exposure has surged $45 billion. Retail and institutional risk appetite, by this measure, has returned in full.

The breadth picture tells a different story. The S&P 500 gained 0.7% on Wednesday with 312 of its 500 members declining — a majority of the index moved against the headline number. The rally is being carried by a concentrated group of large-cap names, not broad participation.

The market is pricing the recovery. It is doing so on narrow ground.

The Long End Disagrees

Wednesday's 30-year Treasury auction settled at 5.046% — the first auction close above 5% since August 2007, per the Financial Times. Foreign demand was softer than anticipated. The long end of the yield curve is pricing a world where rates stay higher for longer than the equity market implies.

The SOFR futures curve has now crossed a threshold that 3Fourteen Research's Warren Pies described as the rate-cut cycle being "officially in question": the implied December 2027 SOFR rate moved above the current Fed Funds rate for the first time in this cycle. Until Tuesday, every point on the SOFR curve sat below current rates — the bond market was pricing cuts. It is no longer doing so.

The bond market rarely loses this argument.

AI Spending Is Now a Price Input

US data center construction spending reached a record $50 billion annualized in March, up 34% year-over-year, per Kobeisi Letter citing Census Bureau data. Since 2021, the annualized rate has increased 437%. Cisco reported this week that hyperscaler orders for fiscal 2026 are running at $9 billion, up from $5 billion — an 80% jump.

The scale of this construction wave has a second-order effect that most equity analysis skips: electricity demand, steel, concrete, skilled labor, and HVAC equipment are all being absorbed at an accelerating rate. April's PPI showed trade services up 2.7% for the month — the largest single-month increase on record, per Kevin Gordon of Schwab. Construction-linked services are part of that move.

AI infrastructure spending is no longer just a capex story. It is a price story.

THE DISAGREEMENT

What different markets are pricing, as of May 14, 2026.

LEVERAGED ETF AUM record · +$45B since March · Kobeisi Letter	$177B

30-YEAR TREASURY AUCTION first close above 5% since Aug 2007 · FT	5.046%

GLOBAL MONEY SUPPLY record · +$17.1T over 2 years · Bloomberg / Azuria Capital	$121.9T

SOFR IMPLIED DEC 2027 vs FED FUNDS above current rate for first time this cycle · 3Fourteen Research	Flipped

Equities say risk is back. Bonds say rates are staying. Liquidity is expanding. The rate-cut path has closed. Four markets. One unresolved question.

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↑ Wednesday Up

Leveraged ETF flows

S&P 500 headline (+0.7%)

AI / hyperscaler names

↓ Wednesday Down

Long-duration Treasuries

Rate-sensitive REITs

Breadth (312 of 500 down)

Worth Knowing

The standard assumption is that liquidity and rates move in opposite directions. The current picture breaks it. Global M2 is at a record $121.9 trillion, US M2 at $22.7 trillion. Liquidity is expanding. Rates are not falling.

The late 1990s ran the same configuration — record equity positioning, rising long yields, expanding money supply — before the bond market's signal eventually became the equity market's problem. Liz Ann Sonders flagged the analogy this week: "The Late 1990s" is the market's current operating password.

Liquidity and rates can tighten at the same time — different markets, different clocks. The question is which resolves toward the other's price.

Today's Quote

For the first time this cycle, the implied December 2027 SOFR rate is above the current Fed Funds Rate. The rate cut cycle is officially in question.

— Warren Pies, 3Fourteen Research · May 13, 2026

The SOFR curve is how institutional fixed-income traders position for the Fed's path. When every point on that curve sat below current rates, it meant the market expected cuts. The curve has now crossed. That is not a narrative — it is a price.

WORTH WATCHING

May 15 — April retail sales. Consumer breadth question gets a data point.

Ongoing — 30-year yield. A second auction above 5% is a regime, not a signal.

Ongoing — Breadth vs headline. Another S&P gain with a majority of members declining makes the concentration risk harder to dismiss.

— The PrediXmarkets desk

For informational purposes only. Not investment advice.

Stocks up. Bond market not buying it.

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