In this issue of the peel:

• 📈 Bond yields climb as markets brace for long-term inflation and rising deficits, signaling investor unease despite Fed patience.

• 💻 Microchip Technology leaps 12.6% after upbeat Q1 forecast and analyst upgrades reignite confidence in a chip sector rebound.

• 🥚 Cal-Maine cracks record profits as egg prices soar 90% amid fresh Avian Flu outbreak and DOJ scrutiny over industry pricing.

Market Snapshot

Banana Bits

• Longer-term Treasury yields climb as the bond market reacts to inflation concerns and unpredictable trade policies.

• Beijing announces a crackdown on the smuggling of critical minerals, signaling leverage in upcoming negotiations.

• The Reserve Bank of Australia signals potential easing, balancing inflation control with growth concerns.

• The Bank of Japan is expected to maintain its policy rate, citing concerns over the impact of U.S. tariffs.

• Defense giant Lockheed Martin names company veteran Evan Scott as CFO following Jay Malave's departure.

• Crude oil futures rise as a new trade agreement between the U.S. and the U.K. boosts market sentiment.

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Macro Monkey Says

The Bond Market's Mood Swings

The bond market is acting a little moody, and Wall Street is listening. As the Federal Reserve holds interest rates steady, the yield on the 10-year Treasury note has climbed to around 4.37%, up from under 4.3% earlier this month. 

At the same time, yields on short-term Treasuries are falling. This phenomenon, called a “steepening twist,” suggests that while investors still expect the Fed to cut rates in the near future, they’re becoming increasingly wary of the long-term inflation picture and government borrowing needs.

The key culprit behind the rise in long-term yields? The term premium—the extra compensation investors demand for holding longer-term bonds—has surged to 0.69%, well above the March average. 

That’s a signal that the bond market isn’t just reacting to economic data, but to many uncertainties: potential new tariffs, rising deficits, and the sheer volume of Treasuries hitting the market. Investors aren’t sure if the Fed can keep inflation in check without tanking growth.

Meanwhile, despite calls from the campaign trail criticizing past debt issuance, Treasury Secretary Scott Bessent hasn’t outlined any big changes in borrowing plans, leading to more volatility and more guesswork for markets trying to price risk. 

The Fed, wary of overstimulating a still-hot economy, is choosing patience—but markets are growing restless.

10-year and 2-year U.S. Treasury Yields

The Takeaway?

Treasury yields are flashing warning signs as longer-term rates rise and short-term ones fall—a signal of investor anxiety over inflation and fiscal uncertainty. The Fed is holding rates steady, wary of cutting too soon, while markets brace for potential trade-related turbulence and growing U.S. debt. 

The term premium is surging, reflecting nervousness around policy credibility, inflation expectations, and long-term economic health. In short, bonds are jittery, and markets are trying to read the Fed’s poker face. Investors now demand more compensation to hold longer-dated bonds, suggesting the bond market believes inflation might not fade quietly, and neither will fiscal volatility. 

Career Corner

Question

I'm aiming to recruit IB San Francisco and am currently going to Berkeley. I've run out of Berkeley IB alumni in SF to connect with on LinkedIn. What should my next move be? Also how many calls should I be aiming to have over the next few months (I'm recruiting summer 2026). I've had 11 calls so far.

Answer

Some students are hitting 5-6 calls a week. It's about the depth of the connection and building a long-term relationship. Find warm connections: referrals, alumni, interest clubs, common firms, etc.

Head Mentor, WSO Academy

Check out WSO Academy!

What's Ripe

Microchip Technology (MCHP) 12.6%

• Microchip Technology surged 12.6% to $55.33 after issuing a stronger-than-expected fiscal first-quarter forecast and receiving upgraded price targets from several analysts. 

• The company projected revenue between $1.02 billion and $1.07 billion and adjusted earnings per share of 18 to 26 cents, outperforming analysts' estimates. 

• Analysts from Jefferies, Citi, and Bank of America responded positively, raising their price targets and signaling renewed investor confidence in Microchip's recovery prospects.

Tesla (TSLA) 4.7%

• Tesla climbed 4.7% on Friday, buoyed by investor optimism surrounding the company's plans to introduce more affordable electric vehicles. CEO Elon Musk has reiterated that Tesla is on track to launch a lower-cost model in the first half of 2025, aiming to make EVs accessible to a broader market. 

• This anticipated model, often referred to as the "Model Q," is expected to be priced under $30,000, potentially reshaping the EV landscape. The prospect of a more affordable Tesla has reignited investor enthusiasm, contributing to the stock's recent gains.

What's Rotten

HubSpot (HUBS) 8.7%

• HubSpot fell 8.7% to $603.05 despite reporting a robust Q1’ 25 performance. The company posted a 16% year-over-year revenue increase to $714 million, with its customer base expanding to 258,000, maintaining a strong compound annual growth rate (CAGR) of 27% since Q1’ 19. 

• Earnings per share slightly exceeded expectations at $1.78. Revenue and operating profit have grown rapidly since Q1’ 25, with a CAGR of 29% and 41% respectively over this period. 

Expedia Group (EXPE) 7.3%

• Expedia Group dropped 7.3% on Friday following disappointing first-quarter earnings that reflected weaker-than-expected domestic and inbound U.S. travel demand. The company reported lower-than-expected revenue of $2.98 billion, falling short of analysts' $3.01 billion estimate. 

• The decline in performance is attributed to weaker travel demand in the U.S., where economic pressures such as ongoing tariff wars and high interest rates have reduced consumer spending. 

• Analysts have expressed concerns over a broader industry slowdown, with other companies like Hilton and Airbnb also reporting signs of faltering consumer activity.

Thought Banana

Egg Boom: Cal-Maine Breaks Records

In the middle of a breakfast-table crisis, Cal-Maine Foods is cooking up record profits. The largest egg producer in the U.S., Cal-Maine, reported that egg prices jumped nearly 90% in the last quarter compared to the same time last year, sending its revenue up 28% to $703 million. 

Net income? A yolk-busting $146.7 million—more than double the year-ago quarter.

What’s behind the windfall? The same villain that scrambled egg markets in 2022: Avian Flu. A recent outbreak has wiped out more than 8.1 million laying hens across the country, pushing supply down and prices up. 

With its robust biosecurity and scale, Cal-Maine has remained largely insulated, benefiting from others’ shortfalls—the result: higher prices and margins.

Still, not everyone’s sunny-side up about it. Politicians and consumers are crying foul, accusing egg producers of profiteering. The Justice Department is reportedly investigating potential price-fixing in the industry, and Cal-Maine confirmed it received a subpoena but insists its pricing follows supply-demand dynamics.

Meanwhile, the company is using its gains to crack into new markets. It’s planning to acquire Echo Lake Foods for $258 million, moving into cooked egg products like pre-made omelets and egg patties—likely hoping to diversify revenue before the next flu cycle flattens demand. 

It has also boosted investment in cage-free facilities, anticipating future consumer and regulatory shifts. Investors, however, are left wondering how long this golden egg streak can last.

The Takeaway?

Cal-Maine Foods' record profits, fueled by the surge in egg prices due to the ongoing avian flu outbreak, position the company as a major beneficiary of market shortages. While the company attributes its success to strong demand and sound biosecurity measures, it faces scrutiny from regulators and lawmakers over potential price gouging. 

With the Justice Department investigating the industry, Cal-Maine is also diversifying into cooked egg products and expanding its cage-free facilities to ensure long-term growth, but the sustainability of its profits amid regulatory pressure remains uncertain.

The Big Question: Can diversifying into cooked egg products protect Cal-Maine from future market volatility?

Banana Brain Teaser

Previous

Of the 150 houses in a certain development, 60% have air-conditioning, 50% have a sunporch, and 30% have a swimming pool. If 5 of the houses have all 3 of these amenities and 5 have none of them, how many houses have exactly 2 of these amenities?

Answer: 55

Today

In a set of 24 cards, each card is numbered with a different positive integer from 1 to 24. One card will be drawn at random from the set. What is the probability that the card drawn will have either a number that is divisible by both 2 and 3 or a number that is divisible by 7?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
Chris, Vyom, Ankit, Mithun, & Patrick

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