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It's May day in the U.K., OPEC wins the shale war, and 'psychosis' reins in the bond market. Here are some of the things people in markets are talking about today.

May day

Later today U.K. Prime Minister David Cameron will head to Buckingham Palace to tender his resignation to the Queen, who will then ask Theresa May to form a government. She is expected to start naming her new ministerial team this evening, with the key roles of Chancellor of the Exchequer and a new Brexit minister highest on the agenda. The pound, still far below its pre-referendum level, is headed for its longest winning streak in two months as May's quick appointment brings some calm to what has been a very turbulent three weeks in U.K. politics. 

OPEC wins production battle

Oil production from the Middle East has climbed to a record, according to the International Energy Agency, while U.S. output has slumped. Oil prices have dropped by about 40 percent since OPEC shifted strategy in November 2014 to prioritize sales over prices in order to drive higher-cost producers from the market. While most new projects planned over the next decade are economically viable below $60 a barrel, prices as high as $85 may be needed in order to make sufficient supply available to meet the demand that's anticipated over the next decade, according to Wood Mackenzie Ltd. West Texas Intermediate crude for August delivery was down 60 cents a barrel at $46.20 at 6:06 a.m. ET. 

Bond market 'psychosis'

“Call me old-fashioned, but I don’t like investments where if you’re right you don’t make any money,” Jeffrey Gundlach, chief executive officer of DoubleLine Capital said in a webcast, calling the the search for yield a "mass psychosis." This morning, it seems like the market isn't ready to listen yet, as Germany sold 10-year bunds with a negative yield for the first time ever and Switzerland sold bonds due in 2058 at an average yield of minus 0.023 percent. Pacific Investment Management Co.’s Total Return Fund, meanwhile, has increased its holding of U.S. Treasuries to the highest level in 18 months

Market rally slows down

After setting more records yesterday, the market rally is slowing down a bit today. The MSCI Asia Pacific Index gained 0.8 percent overnight with Japan's Topix index adding 1.1 percent, to bring its rally since July 8 to 7.5 percent. In Europe, the Stoxx 600 Index was 0.3 percent higher at 6:12 a.m. ET with Spanish banks surging following favourable indications on an outstanding mortgage claims case. S&P 500 futures were up 0.2 percent.

Commodity rally

While oil is down this morning, raw materials are staging a comeback. Copper briefly topped $5,000 a metric ton, its highest level since April, while iron ore's recent rally has Macquarie Group Ltd. warning that the price may have reached beyond that warranted by fundamentals. In soft commodities, corn futures jumped after latest U.S. government forecast for domestic inventories was less than expected while cotton futures surged by the exchange limit after the forecast came in below the lowest estimate. Gold is higher this morning.

What we've been reading 

This is what's caught our eye over the last 24 hours.

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