Markets open Monday with two binary variables unresolved from the weekend: Iran rejected the U.S. peace proposal Sunday evening and Trump immediately called it "TOTALLY UNACCEPTABLE," raising the probability of resumed strikes before the Trump-Xi summit on May 14 to 15. Against that backdrop, Friday's 115,000 payrolls beat, nearly double the 62,000 market consensus, is a constructive but now secondary input. WTI jumping 5.47% overnight to USD 99.85 is the market's opening verdict on the Iran breakdown.

Key Highlights

  • Trump rejected Iran's peace proposal as "TOTALLY UNACCEPTABLE"; Trump-Xi summit begins May 14
  • State Department sanctioned entities across the Middle East and China for aiding Iran's war effort
  • Netanyahu: the war with Iran is "not over"
  • Bessent visits Japan Tuesday and South Korea Wednesday ahead of the China summit
  • Brent above $105, WTI at $99.23; S&P 500 closed Friday +0.84%; Nasdaq +2.35%
  • April CPI due this week; Fed expected to hold through 2026

Market Snapshot

U.S. Equity futures are mixed in early Monday trading, reflecting the tug-of-war between Friday's strong payrolls beat and Sunday evening's Iran deal collapse. The S&P 500 closed Friday at 7,398.92, up 0.84%, with the Nasdaq the session's standout at +2.35% to 29,234.99, driven by the payrolls beat and continued AI infrastructure momentum. The Dow barely moved, up 0.02% to 49,613.97, reflecting the rotation out of defensives into growth. The 10-year Yield climbed back to around 4.39% Monday, reversing Friday's decline as the Iran rejection kept Inflation risks in focus and the payrolls beat reinforced expectations the Fed will hold rates unchanged this year. The VIX ticked up to 17.19, up 0.64%. The DXY firmed to 98.081, up 0.24% on Friday. WTI has surged 5.47% overnight to USD 99.85 as the Iran deal rejection reprices the energy war premium back in, erasing most of last week's oil decline. Gold fell 1.01% to USD 4,666.05 as the payrolls beat reduced rate-cut expectations; silver is flat at USD 80.2.

Macro Context

Friday's Employment Report was the week's cleanest positive surprise. April payrolls came in at 115,000, nearly double the 62,000 market consensus and well above the Dow Jones 55,000 estimate, marking the first back-to-back monthly increase in employment in nearly a year. Healthcare led with 37,000 jobs; transportation and Warehousing added 30,000; retail trade added 22,000. Federal government employment continued its structural decline, shedding 9,000 positions. The Unemployment rate held at 4.3%.

The wage data was the one constructive signal for rate-cut expectations: average hourly Earnings rose 0.2% month-on-month and 3.6% year-on-year, both below the 0.3% and 3.8% respective forecasts, suggesting the labour market is adding jobs without accelerating wage inflation. Chicago Fed President Goolsbee said on Friday the labour market has been "pretty much stable for a year, year and a half."

The weekend developments overshadow the payrolls beat heading into Monday. Iran submitted its response to the U.S. 14-point MOU via Pakistani mediators on Sunday. Trump rejected it within hours on Truth Social, calling it "TOTALLY UNACCEPTABLE." Iran's proposal sought a full end to hostilities across all fronts, sanctions relief, and Iranian oversight of the Strait of Hormuz. Tehran offered to move part of its highly enriched uranium stockpile to a third country but declined to dismantle its nuclear facilities or accept a 12-year enrichment halt.

With negotiations stalled, the State Department separately announced sanctions targeting entities across the Middle East and China accused of supporting Iran's war effort, signalling Washington is applying pressure on multiple tracks simultaneously. Netanyahu stated Sunday that the war is not over, a reminder that Israel retains a veto on any agreement it views as insufficiently constraining Iran's nuclear programme.

Trump's China trip begins May 14 with the Iran conflict likely to dominate the agenda, crowding out progress on trade and rare earth Supply chains. Ahead of the summit, Treasury Secretary Bessent will meet Japan PM Takaichi in Tokyo on Tuesday and Chinese Vice Premier He Lifeng in Seoul on Wednesday. Investors are also watching for April CPI data later this week as the primary domestic read on whether the oil price resurgence is passing through to broader inflation.

The only domestic economic data point today is Existing Home Sales for April at 7:30 p.m. ET (consensus 4.06 million, prior 4.05 million), which is too late in the session and too secondary to move markets. Monday is effectively a geopolitical session.

Economic Data

7:30 p.m. ET: Existing Home Sales, April Consensus: 4.06M · Prior: 4.05M · Expected to hold flat. A lagging indicator at current rate levels; not a market-moving print today. The housing market story for 2026 remains one of constrained supply, elevated Mortgage rates, and energy-cost pressure on discretionary spending.

Earnings: Before the Bell

Constellation Energy (NASDAQ:CEG) EPS consensus USD 2.57 against a year-ago USD 2.14, on Revenue of USD 9.89B against a year-ago USD 6.79B. The session's highest-stakes BMO reporter by a wide Margin. Constellation is the largest nuclear power generator in the U.S. and the primary beneficiary of AI data centre power Demand. The 46% year-on-year revenue growth implied by consensus reflects both the energy price environment and new long-term power purchase agreements with hyperscalers. Nuclear capacity Factor, forward PPA pricing, and any update on the Three Mile Island restart timeline are the operative signals. With WTI surging overnight, Constellation's power pricing relative to gas-fired alternatives is a live variable.

Source: Kalkine

One Number to Watch

USD 99.85 is where WTI opened Monday morning, up 5.47% from Friday's close, after Iran's counter-proposal was rejected Sunday evening. The USD 100 level is the psychological threshold that markets spent the past week pricing away from; a sustained break back above it resets the energy inflation narrative, complicates the Fed's wage-below-forecast read from Friday's payrolls, and puts the Stagflation configuration back on the table. A WTI print that holds below USD 100 through the session, as markets digest the Iran rejection as a negotiating posture rather than a deal collapse, would preserve the constructive tone from Friday's payrolls beat. The direction of oil through Monday's session is the single most informative signal for the week ahead, with the Trump-Xi summit beginning in three days.