A.M. Notes

Research evidence excerpt

A.M. Notes

May 14, 2026

Economic Research

NORTH AMERICA — SAL GUATIERI

Douglas Porter Chief Economist

U.S. Treasuries have digested yesterday’s piping hot producer price report surprisingly douglas.porter@bmo.com (416) 359-4887

well, with 10-year yields down a couple of basis points overnight to 4.46% and the 2- Sal Guatieri Senior Economist

year rate still tucked below 4%. U.S. equities continue to largely ignore sal.guatieri@bmo.com (416) 359-5295

oil/inflation/Iran risks, rallying hard yesterday and futures point to a further moderate Jennifer Lee Senior Economist

advance at the open, largely on AI enthusiasm. WTI oil prices are steady at around jennifer.lee@bmo.com (416) 359-4092

$101. Legal Entity: BMO Nesbitt Burns Inc.

Yesterday, the Senate approved Kevin Warsh as Fed Chair. He will face stiff resistance to

any rate-cut musings. In fact, Boston’s Collins (not a voting member) yesterday noted

the possibility of rate hikes to quell inflation, though they are not her base case view.

"Morethanfiveyearsofabove-targetinflationhasreducedmypatiencefor'looking

through'anothersupplyshock," she said. Note that monthly PCE inflation (year-over-

year) has averaged 2.0 ppts above the 2% target in the past five years, after averaging

0.7 ppts below it in the previous nine years. Good thing the Fed isn’t considering

“average inflation targeting”, as was the case in 2020, or it might be inclined to

aggressively raise rates to make up for past high-side misses.

Presidents Trump and Xi meet again today, with potential discussions on Iran, AI,

Taiwan, critical minerals, and trade. Reuters reports that XI says trade talks are making

progress, but also warned Trump that disagreements over Taiwan could lead to a

conflict.

Today’s key report is U.S. retail sales for April at 8:30.