General Market Review
In May 2026, U.S. equity markets continued their upward trajectory, although momentum moderated compared to the sharp rebound seen in April. Market performance was supported by resilient corporate earnings, easing geopolitical concerns, and growing expectations that monetary policy may gradually become less restrictive.
Geopolitical tensions in the Middle East remained contained following the ceasefire agreement reached in April, contributing to improved investor sentiment. Oil prices stabilized after the sharp decline observed in the previous month, reducing pressure on inflation expectations and supporting equity valuations. At the same time, optimism around artificial intelligence and technology-driven growth continued to underpin market performance, particularly within large-cap technology stocks.
The first quarter earnings season extended into May with generally positive results. A majority of companies continued to exceed expectations, although the magnitude of earnings surprises declined compared with April. Technology and semiconductor companies remained key drivers, while other sectors showed more mixed performance. The Philadelphia Semiconductor Index (SOX) recorded further gains, albeit at a slower pace than in April.
U.S. macroeconomic data released during May indicated continued, albeit gradual, economic stabilization. Labor market conditions remained relatively robust, with non-farm payrolls rising by 115k in April, slightly below the previous month’s increase but still indicative of steady job creation.
Inflation showed signs of stabilization. Headline CPI increased from 3.3 to 3.8%, while core CPI increased from 2.6% to 2.8%, suggesting that underlying price pressures persisted but did not significantly accelerate.
The Federal Reserve maintained its cautious stance, leaving monetary policy unchanged and keeping the federal funds target range at 3.50%-3.75%. Communication from policymakers continued to stress a data-dependent approach.
In fixed-income markets, government bond yields were broadly stable with a slight downward bias. The yield on 10-year U.S. Treasuries increased by 6 basis points, from 4.37% to 4.43%, while 10-year German Bund yields fell by 10 basis points, from 3.04% to 2.94%.
Equity markets also posted gains globally, although at a more moderate pace. The MSCI World Index increased by +4.5% in U.S. dollar terms, while the MSCI Europe Index rose by +3.2% in euro terms, supported by improving sentiment and stable macroeconomic conditions.
Portfolio Management Report
Credit markets mirrored the improvement in risk sentiment, with spreads tightening across both investment grade (IG) and high yield (HY) segments. In May, US HY spreads narrowed by 11 basis points, while EUR HY spreads tightened by 18 basis points. Credit default swap (CDS) markets also strengthened, as the iTraxx Crossover tightened by 34 basis points and CDX HY by 30 basis points. Overall, May was another risk-on month, characterized by stronger equity markets, tighter credit spreads, and limited signs of broader market stress.
Nordic high yield (HY) experienced another robust month in May, with the main index returning +0.8%, bringing year-to-date (YTD) gains to 3.2%. Performance was broadly positive across most segments. The energy sector remained the strongest, delivering a monthly return of +1.2%, compared to +0.7% for non-energy sectors. On a YTD basis, the index has now gained 3.2%, with energy up 4.7% and non-energy up 2.9%. Nordic HY continues to compare favorably with global peers, supported by high carry, shorter spread duration, and stable technical conditions.
After adjusting for index rebalancing, spreads tightened by 13 basis points, indicating continued positive momentum in the Nordic market during May, in line with global credit trends. The most notable tightening occurred in the energy sector, where spreads declined from 399 basis points at the end of April to 362 basis points by the end of May. Non-energy spreads remained largely stable at 490 basis points, compared to 494 basis points a month earlier. As a result, the overall index tightened, though a clear divergence between energy and non-energy segments persists.
The Seahawk Credit Opportunities Fund delivered solid performance in May, driven by its sector allocation, including a 20.4% exposure to exploration and production (E&P) and 22.5% to oilfield services. The EUR-S and USD-S share classes rose by 0.77% and 0.91% month-to-date, respectively. On a YTD basis, the share classes have returned 1.9% and 2.6%, significantly outperforming broader US and European high-yield markets.
During the month, the Fund initiated a new position in the E&P sector by participating in the $300 million, 4-year, 9.875% bond issuance by Kistos Holdings. Kistos is an independent E&P company with assets across four different jurisdictions. By 2026, the company is expected to achieve production of approximately 20.8 thousand barrels of oil equivalent per day (boepd) and hold net 2P reserves of 49 million barrels of oil equivalent (mmboe). Asset values are estimated at around $560 million, with pro-forma net debt of $260 million. The current loan-to-value (LTV) ratio stands at approximately 46% and is projected to decrease to 29% by the end of 2026. The new bond issuance is leverage-neutral, as most of the proceeds are used to refinance existing debt. Kistos’ operations are expected to break even at a Brent oil price of $59.8 per barrel.
For more information, you can find our latest Factsheet – May 2026.
Seahawk Investments GmbH
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