Treasury yields increased as investors reacted to potential peace negotiations between the US and Iran, which has raised oil prices and inflation concerns. The yield on 10-year notes climbed to 4.35% before settling at 4.32%. Investors remain cautious about the economic impact of the Middle East conflict, leading to a modest pricing in of a Federal Reserve rate cut by year's end.

Oracle's $300 billion AI infrastructure deal with OpenAI is straining credit markets as banks reach exposure limits and struggle to syndicate large loan commitments. Some data center borrowers are offering unusual structures, such as early principal repayment, to attract investors, while pricing increasingly reflects the strength of hyperscaler counterparties. Oracle plans to raise $50 billion this year but may need more than $100 billion by 2028, underscoring growing reliance on capital markets to support the AI buildout.

Some private credit investors are using arbitrage opportunities by shifting funds from nontraded business development companies to publicly traded ones, capitalizing on differences in net asset value. This trend has contributed to a wave of redemption requests from nontraded BDCs, which must cap redemptions at 5% to protect investors.

JPMorgan Chase is preparing a major expansion into private credit, aiming to deploy tens of billions of dollars in loans sourced by its commercial bankers as it seeks to regain ground in the $1.8 trillion market. The asset manager has begun raising several billion dollars from institutional investors, moving aggressively as private credit faces investor scrutiny and recent high-profile losses.

Kevin Warsh, President Donald Trump's nominee for Federal Reserve chair, outlined plans for a narrower, less transparent central bank during his Senate confirmation hearing. Warsh emphasized maintaining the Fed's independence from politics, despite Trump's expectations for lower interest rates. Warsh, who served on the Fed's Board of Governors from 2006 to 2011, has shifted from a hawkish stance on interest rates to a more centrist position.

Federal Reserve Vice Chair for Supervision Michelle Bowman has urged Wall Street CEOs to support capital proposals that would lower industry requirements and to refrain from seeking carve-outs. Bowman has noted that the proposals, which include changes related to Basel III, are unlikely to undergo significant revisions, and she has aimed to finalize them by year-end.

House Republican leaders are trying to rally support for the Senate's budget resolution, a crucial step toward passing an immigration enforcement bill by President Donald Trump's June 1 deadline. Some conservatives are threatening to vote against the resolution if it does not include more GOP policy priorities.