B200s Or B-2s?

B200s Or B-2s?

By Bas van Geffen, senior macro strategist of Rabobank

Concerns about the Middle East continued to dictate markets yesterday. The Strait of Hormuz remains closed, and there were no signs that this will change soon. Oil prices rose further. Dated Brent jumped 5% on the day to top $111.

Alongside the rise in benchmark energy prices, yields increased too. 10y US Treasury yields closed around 5bp higher, and 10y German Bund yields rose 6bp to 3.1%, dragging broader EUR yields up. Equities struggled. European bourses closed around 1.5% lower, but the S&P pared most of its losses after the European close, so the Euro Stoxx index may catch up to its US counterpart today.

This reversal happened after oil prices came off their intraday highs, and as news broke that Nvidia CEO Huang will join the US delegation to China. President Trump indicated that he wants to focus on economic issues during his summit with President Xi, more so than on geopolitical issues in the Middle East. Markets certainly seem hopeful that Trump and Xi will discuss B200 chips rather than B-2 bombers.

Of course, the Iran war complicates negotiations between the two leaders. China agrees to oppose any toll scheme for safe passage through the Strait of Hormuz, according to the US State Department. Meanwhile, Iraq and Pakistan have reportedly made deals with Iran to safeguard oil and LNG shipments from the Gulf – underscoring that Iran is able to effectively control the flow of energy through the Strait of Hormuz. China has also further diversified its oil imports. This may make China more resilient to prolonged disruptions in Hormuz, while it also cuts off more potential income for Iran.

But China will probably want something in return. President Trump will reportedly discuss US weapons sales to Taiwan with Xi, breaking with a decades-long US tradition. US allies in Asia are alarmed that Trump may agree to Xi’s request to delay or stop deliveries. That’s a longer-term geopolitical risk, but markets may shrug off any such potential concessions if the US and China report progress on economic issues.

And any optimism from the Trump-Xi summit may be overshadowed by developments in the Middle East. It’s unlikely that tensions will flare up again during the summit, but that’s only two days of respite. On his way to China, President Trump told reporters that stopping Iran’s nuclear programme outweighs Americans’ economic pain. The US presidents’ comments add to concerns that tensions in the Middle East may flare up again after the summit.

Adding further unease about the US’ next steps in the Middle East, the Wall Street Journal reports that the US president spoke with his U.A.E. counterpart to discuss “mutual interests.” This news follows on the WSJ’ report that the United Arab Emirates had secretly carried out military strikes in Iran.

Elsewhere, gilt yields’ rollercoaster ride continues, as domestic politics stack on top of geopolitical risks. Even the BBC is talking about intraday moves in gilts now, which is never a sign that things are going well. Pressure on a defiant PM Starmer is building. Several ministers resigned from their posts yesterday, after dozens of MPs had already called on Starmer to resign. Today, the 11 unions that support the Labour party are expected to issue a joint statement that calls for a roadmap to a new party leader into the next general elections.

Uncertainty about the UK’s leadership continues to weigh on both UK sovereign yields and the currency.

Tyler Durden
Wed, 05/13/2026 - 12:45