ASEAN economic ministers warn Middle East war threatens regional energy security and growth. Strait of Hormuz carries ~25% of global seaborne oil and LNG; over 80% destined for Asia. Freight, insurance and logistics costs rising sharply. Summary:The ASEAN Economic Community Council issued a joint statement on Friday warning that the Middle East war is posing growing threats to global energy security and could significantly slow regional economic growthMinisters expressed deep concern over disruptions to key maritime routes, specifically the Strait of Hormuz, through which approximately one quarter of global seaborne oil and LNG exports passMore than 80% of the oil and LNG transiting the Strait of Hormuz is destined for Asia, making the region uniquely and acutely exposed to any sustained disruption to that corridorThe statement flagged persistent volatility in oil and LNG prices, sharply rising freight costs, higher insurance premiums and increased logistics costs as direct consequences of the disruptionThe formal collective statement from ASEAN's economic ministers represents an escalation in the diplomatic acknowledgement of the war's economic consequences, moving beyond individual national responses to a coordinated regional positionThe warning adds to a growing body of evidence that the Middle East war is functioning as a systemic economic shock for Asia, with effects visible across inflation data, manufacturing surveys and consumer confidence readings across the regionThe economic ministers of Southeast Asia's ten-nation bloc have broken into formal collective statement, warning that the Middle East war is inflicting severe damage on the region's energy security and threatening to significantly slow growth across an area that is among the world's most exposed to disruption in the Strait of Hormuz.The ASEAN Economic Community Council's joint communique, issued on Friday, puts diplomatic weight behind what the region's economic data has been signalling for weeks. Manufacturing surveys from Japan to Australia have flagged supply chain disruption at multi-year extremes. Consumer confidence readings from New Zealand have collapsed to three-year lows. Central banks from Tokyo to Sydney are being forced into or toward rate increases they would not otherwise be making. The ASEAN statement is the political acknowledgement that these are not isolated national problems but a shared regional emergency with a single cause.The geography of the crisis is the core of the ministers' concern. The Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula, carries approximately one quarter of all global seaborne oil and liquefied natural gas exports. Of that volume, more than 80% is bound for Asia. No other region on earth is as dependent on the unimpeded flow of energy through a single maritime chokepoint, and no other region therefore bears a greater share of the economic risk when that chokepoint is compromised.The consequences are cascading. Oil and LNG prices have been volatile and persistently elevated, with crude briefly trading above $126 a barrel this week. But the statement draws attention to a set of secondary costs that are less visible in commodity price headlines but no less economically damaging: freight rates, insurance premiums and logistics costs have all risen sharply as shippers price in the risks of operating in or near a conflict zone. Those costs feed directly into the price of everything that moves by sea, which in an import-dependent region means virtually everything.For ASEAN economies, the implications stretch from energy bills to monetary policy. The inflation consequences of sustained high energy and logistics costs are already forcing central banks across the region to maintain or tighten policy stances that are themselves weighing on growth. The ministers' warning that regional growth could be significantly slowed is not a projection about a possible future state; it is a description of a process already underway.---The statement is notable less for its content, which reflects what markets already know, than for its diplomatic weight. A formal joint communique from the ASEAN Economic Community Council signals that the economic damage from the Middle East war is now severe enough to compel collective political acknowledgement from the region most exposed to it. That matters for how Asian governments respond in terms of energy policy, strategic reserve drawdowns and trade route contingency planning.The numbers in the statement are stark. A quarter of global seaborne oil and LNG exports pass through the Strait of Hormuz, with over 80% of that volume destined for Asia. Any prolonged disruption to that corridor does not just raise prices; it threatens physical energy availability for economies that have limited short-term alternatives. The compounding effects on freight, insurance and logistics costs are already feeding through to broader inflation across the region, reinforcing the hawkish drift visible in central bank positioning from Tokyo to Sydney. ---The Association of Southeast Asian Nations, known as ASEAN, is a regional intergovernmental organisation comprising ten member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Founded in 1967, it functions as the primary forum for economic, political and security cooperation across Southeast Asia. The ASEAN Economic Community Council, which issued Friday's statement, is the ministerial body responsible for coordinating the bloc's economic integration agenda and represents a combined GDP of approximately $4 trillion, making ASEAN collectively the fifth largest economy in the world. The bloc is home to around 670 million people and sits at the crossroads of global trade routes connecting the Indian Ocean to the Pacific, giving it an outsized strategic interest in the security of maritime energy corridors. This article was written by Eamonn Sheridan at investinglive.com.

Reuters poll: RBA to hike 25bps to 4.35% on May 5, say 30 of 33 economists. Over a third now see rates at 4.60%+ by year-end vs none in March. Strait of Hormuz closure keeps oil above $100; CPI at 4.1%. Summary:A Reuters poll of 33 economists conducted April 27 to 30 found 30 expect the RBA to raise its cash rate by 25 basis points to 4.35% at its May 5 meeting, a third consecutive increaseMore than a third of forecasters now see rates reaching 4.60% or higher by the end of 2026, compared with none in the March poll, representing a significant shift in the distribution of terminal rate expectations in just one monthThe RBA has been raising rates since early February 2026, with inflation having remained above its 2% to 3% target since mid-2025Annual CPI rose to 4.1% in the most recent quarter from 3.6%, partly reflecting higher fuel prices; core CPI edged up to 3.5% from 3.4%The Strait of Hormuz closure, a route through which roughly a fifth of global oil supply passes, has kept crude prices mostly above $100 a barrel, with oil briefly trading above $126 this weekEconomists note that even if the Strait reopened immediately, trimmed mean inflation is expected to spike in the second quarter as the energy shock feeds through to core price measuresThe RBA's experience in 2025, when underlying inflation rebounded almost immediately after it cut rates, is seen as having shifted the board's risk tolerance toward maintaining higher rates for longerA majority of economists, 18 of 31, still expect the cash rate to hold at 4.35% through year-end, but that majority has narrowed sharplyAmong the major banks, ANZ, CBA and NAB expect rates to peak at 4.35%, while Westpac forecasts a higher peak of 4.85%Inflation is expected to average 3.8% this year, up from a pre-war forecast of 3.1%, while the median GDP growth forecast remains unchanged at 2.2%Entrenched inflation expectations are flagged as the primary risk, with economists warning that a failure to act decisively could embed higher expectations that become significantly harder to reverseThe Reserve Bank of Australia is on course to deliver its third consecutive interest rate increase on May 5, taking the cash rate to 4.35% and fully reversing the cuts made last year, as the closure of the Strait of Hormuz keeps oil prices elevated and Australia's inflation problem proves more persistent than policymakers had hoped.Thirty of 33 economists surveyed by Reuters between April 27 and 30 expect the 25 basis point move, a near-unanimous view that reflects both the strength of the incoming inflation data and the RBA's own recent history. The central bank began tightening in early February after CPI remained above its 2% to 3% target throughout the second half of 2025. The most recent quarterly figures showed annual inflation accelerating to 4.1% from 3.6%, with core CPI also edging higher to 3.5% from 3.4%, suggesting the energy shock is beginning to spread beyond headline prices.The Strait of Hormuz is the defining variable. The closure of the waterway, through which approximately a fifth of global oil supply passes, has kept crude prices mostly above $100 a barrel, with prices briefly spiking above $126 this week. Economists note that the inflation consequences are no longer purely a headline fuel price story. Even if the Strait were to reopen tomorrow, trimmed mean inflation is now expected to accelerate in the second quarter as the cumulative energy shock works its way through transport, production and services costs.The more significant development in this month's poll is not the May decision itself but the rapid shift in expectations beyond it. In the March poll, not one economist forecast rates reaching 4.60% or higher by year-end. More than a third do now. Among the major banks, the division is stark: ANZ, CBA and NAB see rates peaking at 4.35%, while Westpac is forecasting a higher terminal rate of 4.85%, citing the RBA's scarring experience from 2025 when underlying inflation rebounded almost immediately after the easing cycle began.That experience looms large over the current deliberations. The risk of cutting too soon and being forced to reverse course has clearly shifted the RBA's risk calculus, and economists warn that the board will be particularly alert to any signs of inflation expectations becoming entrenched. If consumers and businesses begin to price in sustained higher inflation, the cost of bringing it back under control rises considerably. Inflation is now forecast to average 3.8% this year, up from a pre-war projection of 3.1%, while the growth outlook, at a median of 2.2%, has held relatively steady for now.Reserve Bank of Australia Governor Bullock threepeat coming up!---A third consecutive RBA hike is now near-certain, but the more significant market development is the shift in the distribution of rate expectations beyond May. A month ago, not one economist in the Reuters poll saw rates reaching 4.60% or higher this year. More than a third do now. That is a rapid and material repricing of the terminal rate outlook, and it is being driven by a specific concern: that core inflation, not just headline, is beginning to accelerate in response to the energy shock.The Strait of Hormuz closure is the critical variable. Oil briefly trading above $126 a barrel this week, with prices mostly holding above $100, means the inflation impulse is not fading. The RBA's own recent experience of cutting prematurely in 2025 only to see underlying inflation rebound will make the board cautious about signalling any pause. Australian dollar rate markets and the currency itself will be sensitive to any language in the May 5 statement that hints at the pace of future moves. This article was written by Eamonn Sheridan at investinglive.com.

Japan April manufacturing PMI 55.1 vs 51.6 in March, best since January 2022. Output fastest since Feb 2014 but driven by stockpiling. Supply delays worst in 15 years. Input costs at 3.5-year high. Business confidence near 5-year low. Summary:The S&P Global Japan Manufacturing PMI rose to 55.1 in April from 51.6 in March, its strongest reading since January 2022 and signalling the best improvement in sector conditions in over four yearsManufacturing output expanded at its fastest pace since February 2014, with all three monitored sub-sectors recording improvement, led by intermediate goods producersNew orders grew at their quickest pace since January 2022, but anecdotal evidence pointed to customer stockpiling driven by concerns over future supply chain delays and price increases from the Middle East conflict, rather than a broad-based improvement in end demandAI-related technology demand was also cited as a supporting factor for new order growthSupplier delivery times lengthened at the steepest rate in 15 years, matching the disruption seen in the immediate aftermath of the 2011 Tohoku earthquake, with the PMI calculation mechanically boosted by this deterioration as longer lead times are inverted in the indexStocks of purchases rose for the first time in ten months, driven by deliberate safety stock accumulation, though the rate of growth was only marginal given widespread supply delaysInput cost inflation surged to a three-and-a-half-year high, the strongest since October 2022, with higher prices for raw materials, oil and transport cited by survey respondents; output price inflation was also the fastest since late 2022Employment grew at the second-fastest rate since January 2022 as firms expanded capacity to meet rising demand, while backlogs of work rose at the quickest pace since February 2014Business confidence in the one-year outlook slipped to its second-lowest level since June 2020, with Middle East uncertainty and its potential impact on global economic conditions weighing on output forecasts despite the strong near-term activity dataThe report warns explicitly that the current boost to manufacturing could fade quickly if market uncertainty persists, demand weakens and stock-building activity begins to reverseJapan's manufacturing sector posted its strongest PMI reading in over four years in April, with the headline index jumping to 55.1 from 51.6 in March. Output expanded at its fastest pace since February 2014, new orders grew at their quickest rate since January 2022, and employment rose at the second-fastest pace in four years. On the surface, it reads like a sector firing on all cylinders. The detail tells a more complicated story.The primary engine of April's apparent boom was not a strengthening in end demand but a scramble by manufacturers and their customers to build safety stocks ahead of anticipated further disruption from the Middle East conflict. Companies repeatedly cited concerns about future supply chain delays and price increases as the motivation for placing new orders, suggesting a significant portion of the activity surge is borrowed from future quarters rather than reflective of genuine underlying momentum. AI-related technology demand provided a secondary source of support, but it was stockpiling that dominated the narrative.The supply chain data makes clear why. Delivery times for inputs lengthened at the steepest rate in 15 years, a deterioration comparable in scale to the disruption that followed the 2011 Tohoku earthquake. Because the PMI calculation inverts the supplier delivery times component, treating longer lead times as a proxy for capacity pressure from strong demand, this supply shock mechanically inflated the headline reading in much the same way as seen in the Australian PMI data for the same month. The index is signalling stress, not strength.Cost pressures are intensifying rapidly. Input cost inflation accelerated to a three-and-a-half-year high, the strongest reading since October 2022, driven by higher prices for raw materials, oil and transport. Output price inflation also ran at its fastest pace since late 2022 as manufacturers passed costs through to customers at an accelerating rate. That combination of surging input and output costs sits uncomfortably alongside this week's softer-than-expected Tokyo CPI data, and will complicate the BoJ's already difficult task of reading the true state of underlying inflation.The most telling number in the report may be business confidence. Despite output and new orders both expanding at their fastest rates in years, the one-year outlook slipped to its second-lowest level since June 2020. Firms are running hard in April precisely because they are uncertain about what comes next. If the Middle East conflict de-escalates and the stockpiling impulse fades, the pipeline of demand that is currently driving production could drain quickly, leaving manufacturers exposed to a sharp reversal in activity with input costs still elevated.---As with the Australian PMI, the headline number requires significant qualification. A reading of 55.1 is eye-catching, but the composition tells a more cautious story. Supply chain delays at their worst since the 2011 Tohoku earthquake are mechanically inflating the index, while the surge in output and new orders is substantially driven by defensive stockpiling rather than end demand. If the conflict stabilises and stock-building reverses, the headline PMI could fall sharply without any underlying deterioration in genuine demand conditions.The input cost inflation reading, at a three-and-a-half-year high, is the number most relevant to the BoJ. Combined with output price inflation at its fastest since late 2022, there is a clear cost pass-through dynamic building in Japan's manufacturing supply chain that sits awkwardly alongside this week's soft Tokyo CPI print. Business confidence slipping to its second-lowest since June 2020 despite the strong activity data is the most honest signal in the report. This article was written by Eamonn Sheridan at investinglive.com.

Japan's senior currency official Atsushi Mimura refused to confirm or deny reports of yen intervention after the currency breached 160 per dollar, as the BoJ's cautious stance, $120 oil and thin Golden Week liquidity keep the pressure firmly on.Summary:Atsushi Mimura, the Ministry of Finance's top official responsible for international finance and currency policy, declined to comment on reports that Japan had intervened in the foreign exchange market to support the yen, saying only that he would not comment on FX intervention and that Japan remains in close contact with US authorities on currency mattersMimura added that he sees no change to his view that recent yen moves are being driven by speculative activity, and noted that Japan's Golden Week holiday period has just begun, a period of significantly reduced domestic market liquidityThe Nikkei reported that the Ministry of Finance had intervened in the FX market to buy yen, presumed to have been executed via selling of US dollars against yenFinance Minister Katayama issued a verbal warning after the yen breached 160 per dollar, stating Japan is getting closer to taking a decisive step in the FX marketThe BoJ held its short-term policy rate at 0.75% this week in line with expectations, but three board members dissented in favour of an immediate rate hike, an unusually strong signal that briefly lifted the yen before fadingGovernor Kazuo Ueda dampened the impact of the dissent at his press conference, emphasising the need for more time to assess how geopolitical developments filter through to the economy and noting there is no clear horizon for the next rate hikeThe BoJ's quarterly outlook included an upward revision to inflation and a downgrade to growth, reflecting the economic drag from the US-Iran conflictBrent crude near $120 a barrel represents a severe terms-of-trade shock for Japan, which is a major energy importer heavily reliant on Middle East supplyThe BoJ still expects inflation to settle around 2% in the second half of 2026 but Ueda was explicit about uncertainty around timing, leaving markets with little clarity on the pace of normalisationAtsushi Mimura, the Ministry of Finance's most senior official on international financial affairs and the man Tokyo turns to when currency markets need managing, declined on Friday to confirm or deny reports that Japan had stepped into the foreign exchange market to arrest the yen's slide toward and beyond 160 per dollar.Mimura, who holds the title of Vice Minister of Finance for International Affairs and serves as Japan's primary point of contact with overseas monetary authorities, said only that he would not comment on FX intervention, that he remains in close contact with US counterparts on currency matters, and that he continues to view recent yen moves as speculative in nature. He also noted that Japan's Golden Week holiday season has just begun, a period that drains domestic market liquidity and historically amplifies currency volatility in both directions.His remarks came after the Nikkei reported that the Ministry of Finance had already moved to buy yen, most likely by selling US dollars, in an effort to arrest the currency's decline. Finance Minister Katayama had already escalated the rhetoric, warning after the yen breached 160 that Japan is getting closer to taking a decisive step in the FX market, language that in Tokyo's typically understated diplomatic lexicon amounts to a fairly explicit threat of action.The pressure on the yen stems from several converging forces, none of which are straightforward to resolve. The BoJ held rates at 0.75% at its April meeting, in line with expectations, but the outcome was more nuanced than the unchanged decision suggested. Three board members dissented in favour of an immediate hike, an unusually strong signal that briefly lifted the yen before Governor Kazuo Ueda effectively neutralised it at his subsequent press conference. Ueda struck a deliberately cautious tone, stressing the need to assess how the US-Iran conflict filters through to Japan's economy before acting, and was explicit that there is no clear timeline for the next rate increase. The BoJ's quarterly outlook did revise inflation higher and growth lower, an acknowledgement of the terms-of-trade shock Japan is absorbing, but Ueda's messaging left markets with little reason to bring forward their hike expectations.That policy hesitation is colliding with an oil price shock of considerable severity. Brent crude near $120 a barrel is an acute problem for an economy that imports the vast majority of its energy and sources much of it from the Middle East. The US-Iran conflict, which increasingly resembles a prolonged siege rather than a swift resolution, is keeping prices elevated with no obvious near-term off-ramp. For Japan, higher oil prices in a weak-yen environment mean import costs rise in domestic currency terms at a compounding rate, squeezing corporate margins, household budgets and the current account simultaneously.The result is a feedback loop that monetary policy alone cannot easily break. A BoJ reluctant to hike keeps the yen under pressure, a weak yen amplifies the oil shock, and the oil shock undermines the growth outlook that might otherwise justify faster normalisation. Intervention buys time, but unless the fundamental policy divergence between Japan and the US narrows, or oil prices retreat, the pressure on 160 is unlikely to dissipate during Golden Week. The combination of a BoJ that cannot hike aggressively, oil at $120 and a yen near 160 is a serious terms-of-trade problem for Japan. Energy import costs are surging in yen terms at precisely the moment the central bank lacks the policy flexibility to defend the currency through conventional rate action. That dynamic is self-reinforcing: yen weakness raises import costs, which pressures the economy, which makes the BoJ more cautious, which keeps the yen weak.The intervention question is the near-term market focus. Mimura's non-denial, combined with the Nikkei report of Ministry of Finance buying, suggests action may already have taken place. It has. Golden Week thins liquidity considerably, which cuts both ways: intervention achieves more in thin markets, but so does speculative pressure. Finance Minister Katayama's warning that Japan is getting closer to taking a decisive step is as explicit a pre-commitment to action as Japanese officials typically make. This article was written by Eamonn Sheridan at investinglive.com.

This is a yen-negative, JGB-positive print in the near term. The magnitude of the miss on core-core, coming in at 1.9% against a 2.3% expectation and prior, is significant enough to give the BoJ genuine cover to delay a June hike despite the hawkish signals delivered at the April meeting. Rate markets will likely push out their June hike pricing on this data.The structural tension remains, however. Fuel subsidies are suppressing the headline and core readings artificially, and analysts broadly expect inflation to re-accelerate as oil price pressures and yen weakness feed through import costs. The BoJ is caught between data that argues for patience and a currency dynamic that argues for action: the slow pace of hikes is itself a driver of yen weakness, which in turn generates the import cost inflation that ultimately forces the bank's hand.-Summary:Tokyo headline CPI came in at 1.5% year-on-year in April, below the 1.6% forecast and up from 1.4% in MarchCore CPI excluding fresh food rose 1.5% year-on-year, its slowest pace since March 2022, missing the 1.8% forecast and slowing from 1.7% in MarchCore-core CPI excluding fresh food and energy rose 1.9% year-on-year, well below the 2.3% forecast and the 2.3% prior reading, marking a significant deceleration in the measure most closely watched by the BoJ as a gauge of trend inflationTokyo core inflation has now remained below the BoJ's 2% target for a third consecutive month, with fuel subsidies cited as a key factor suppressing readings despite rising raw material costs linked to the Middle East conflictFalling nursery fees and slower goods inflation were also noted as contributors to the cooling in price pressuresThe BoJ kept rates on hold at its April meeting but signalled a possible hike as soon as June, citing mounting inflationary pressures; the Tokyo data complicates that guidanceThe BoJ has raised rates several times since exiting its decade-long stimulus programme in 2024, most recently in December when it lifted the short-term policy rate to 0.75%The slow pace of hikes has been blamed for keeping the yen weak, which is itself generating import cost inflation and adding to the price pressures the BoJ is trying to manageThe US-Israeli conflict with Iran is adding a further layer of complexity, pushing fuel costs higher in an economy heavily reliant on Middle East oil importsAnalysts broadly expect Tokyo and national inflation to re-accelerate in coming months as oil price pressures and yen weakness continue to feed through import costs, keeping the BoJ under pressure to act even as current data argues for patienceTokyo inflation slowed more sharply than expected in April, with the core reading dropping to its weakest level since March 2022 and missing forecasts by a significant margin, handing the Bank of Japan a data-driven reason to exercise caution before acting on the June rate hike signals it delivered just days earlier.Core CPI excluding fresh food rose 1.5% year-on-year in April, down from 1.7% in March and well below the 1.8% median market forecast. The more closely watched core-core measure, which strips out both fresh food and energy and is seen by the BoJ as the cleanest read on underlying trend inflation, decelerated sharply to 1.9% from 2.3% the prior month, against expectations of an unchanged 2.3% reading. Headline inflation came in at 1.5%, also below forecasts. Across all three measures, the data undershot, and core inflation has now remained below the BoJ's 2% target for a third consecutive month.The softness is partly technical. Fuel subsidies are masking the pass-through from rising oil prices linked to the Middle East conflict, and falling nursery fees have added a further downward pull on the index. That means the current readings are likely flattering the underlying inflation picture, and analysts broadly expect a re-acceleration in coming months as those suppression effects fade and the dual pressures of higher oil prices and a weak yen continue to push import costs higher.The timing is awkward for the BoJ. Governor Kazuo Ueda's board held rates steady at 0.75% at its April meeting earlier this week but dropped clear signals that a hike could come as soon as June, pointing to mounting inflationary pressures as justification. The Tokyo data undermines that urgency, at least on the surface, and will likely prompt markets to reprice the probability of a June move lower.The deeper problem for the BoJ is structural. The slow pace of rate increases since the bank exited its decade-long stimulus programme in 2024 has kept the yen under persistent pressure, and a weak currency amplifies the very import cost inflation the bank is trying to contain. The US-Israeli conflict with Iran adds a further complication, pushing energy costs higher in an economy that is heavily dependent on oil imports from the region. The BoJ finds itself navigating a feedback loop in which caution on rates feeds yen weakness, which feeds inflation, which ultimately demands a policy response. This article was written by Eamonn Sheridan at investinglive.com.

The $8,000 price target is conceptual rather than a formal forecast, but the structural argument underpinning it is difficult to dismiss. Central bank buying has been the dominant driver of gold demand since 2008, and the broadening of that buying beyond the major accumulators to include Saudi Arabia, Qatar, the UAE and Egypt suggests the trend has further to run.The near-term picture is more complicated. Gold has suffered its worst two-month decline on record, losing almost 12% over that period as the US-Iran conflict, paradoxically, weighed on prices rather than supported them. The metal remains up 7% year-to-date and 39.5% over the past 12 months, but the failure to sustain a safe-haven bid during active conflict has raised questions about the durability of the rally at current levels.The longer-term bull case rests on the pace and scale of emerging market reserve reallocation. At just 16% of emerging market central bank reserves currently, gold has significant headroom if those institutions move toward a 40% target allocation.---Via a Deutsche Bank note earlier this week, ICYMI. Summary:Deutsche Bank has published a scenario analysis projecting gold prices could reach $8,000 an ounce within five years, implying roughly 80% upside from current levels, based on central bank gold reserves rising to 40% of total holdings from approximately 30% currentlyThe projection is described as conceptual in nature and not an official price forecast, but is grounded in the bank's assessment of structural de-dollarisation trends among emerging market central banksEmerging market central banks currently hold only 16% of their reserves in gold, despite having accounted for all net central bank gold purchases since 2008, suggesting significant capacity for further accumulationCentral banks globally have added over 225 million ounces to their gold reserves since the 2008 financial crisis, while the US dollar's share of global reserves has fallen from over 60% in the early 2000s to around 40% todayBuying is broadening beyond the major accumulators of China, Russia, India and Turkey to include Kazakhstan, Saudi Arabia, Qatar, Egypt and the United Arab EmiratesDeutsche Bank frames the structural shift as the end of the post-Cold War "end of history" era, noting that the world has returned to superpower competition, the US is retreating from free trade and alliances, and the dollar banking system has been weaponised through sanctionsGold is seen as particularly attractive to emerging market central banks seeking dollar diversification because it is liquid, widely accepted and carries no sovereign risk as it is not issued by any governmentEmerging market and developing economy reserves currently stand at approximately $7.5 trillion to $8 trillion, per IMF data; Deutsche Bank's scenario assumes those reserves could fall to $5 trillion while gold's share still rises to 40%Gold has fallen nearly 12% over the past two months in its worst two-month decline on record, losing two-thirds of its year-to-date gains after rallying to a record high in January; it remains up 7% year-to-date and 39.5% over the past 12 monthsFront-month gold futures settled at $4,614.70, with the metal's underperformance during the US-Iran conflict having disappointed investors who anticipated a stronger safe-haven bidGold's near-term performance has frustrated bulls, but Deutsche Bank has laid out a structural case for prices approaching $8,000 an ounce within five years, anchored in one of the most significant shifts in global reserve management in a generation.The German bank's scenario analysis centres on the pace of de-dollarisation among emerging market central banks. Those institutions currently hold just 16% of their reserves in gold, a remarkably low figure given that they have accounted for all net central bank gold purchases since the 2008 financial crisis. Global central banks have added over 225 million ounces to their holdings in that period, while the dollar's share of global reserves has declined from over 60% in the early 2000s to around 40% today. If emerging market central banks were to push their gold allocation to 40% of reserves, Deutsche Bank's simulation points to a gold price of $8,000 an ounce, even on the assumption that total emerging market reserves contract from their current level of $7.5 trillion to $8 trillion down to $5 trillion.The bank is careful to frame this as a conceptual scenario rather than a formal price forecast, but the structural logic is consistent with where the gold market's centre of gravity has been shifting for years. What has changed is the breadth of the buying. It is no longer confined to China, Russia, India and Turkey. Saudi Arabia, Qatar, the UAE, Kazakhstan and Egypt are all now active accumulators, suggesting the trend is becoming a systemic feature of emerging market reserve policy rather than an idiosyncratic decision by a handful of large economies.Deutsche Bank's explanation for why this is happening draws on a broad geopolitical thesis. The post-Cold War era, built on US-led multilateralism, free trade and dollar dominance, is unwinding. The US is retreating from its traditional role as guarantor of global security and open commerce, and the weaponisation of the dollar banking system through sanctions has given emerging market central banks a concrete operational reason to diversify away from dollar assets. Gold is the natural beneficiary of that shift: it is liquid, universally accepted and carries no sovereign risk, as it is not the liability of any government or central bank.The near-term picture complicates the narrative. Gold has posted its worst two-month decline on record, falling nearly 12% and surrendering two-thirds of its year-to-date gains after reaching a record high in January. The US-Iran conflict, which might have been expected to drive a sharp safe-haven bid, has instead weighed on prices, disappointing investors who had positioned for that outcome. The metal nonetheless remains up 7% year-to-date and 39.5% over the past 12 months, and the long-term structural case, driven by sustained central bank accumulation, remains intact according to Deutsche Bank's analysis. This article was written by Eamonn Sheridan at investinglive.com.

Tokyo CPI, April 2026 is not going to rush the BoJ into rate hikes!Headline is 1.5% y/yexpected 1.6%, prior 1.4%Core CPI (ex Food) 1.5% y/y, slowest since March 2022expected 1.8%, prior1.7%Core-core (ex Food and Energy) 1.9% y/yexpected 2.3%, prior 2.3%Just the data post. I'll have more to come on this separately, details & implications.Here:Tokyo CPI misses forecast sharply, giving BoJ room to hold despite June hike signals This article was written by Eamonn Sheridan at investinglive.com.

Australia April manufacturing PMI 51.3 vs 49.8 in March, but headline flatters. Input costs fastest in 4 years, supply delays worst since July 2022. Output, new orders and employment all fell. Middle East war cited. Summary:The S&P Global Australia Manufacturing PMI rose to 51.3 in April from 49.8 in March, moving back above the 50.0 no-change mark, but the headline reading was driven by supply chain disruption and inventory building rather than genuine demand improvementSuppliers' delivery times lengthened to the largest degree since July 2022, and because longer delivery times are inverted in the PMI calculation, this mechanically inflated the headline indexInput cost inflation accelerated to its fastest pace in over four years, with nearly 69% of respondents reporting a rise in input costs during the month; higher fuel prices were identified as the principal driverOutput price inflation also surged, reaching among the fastest rates in the survey's decade-long history, pointing to significant pass-through pressure building in the manufacturing supply chainNew orders continued to fall, with new export business declining for the first time in four months; output fell for the third consecutive month, with the latest reduction the fastest in 16 monthsEmployment was scaled back for the second consecutive month as firms responded to lower order books through non-replacement of leavers and reduced working hoursDespite lower output requirements, manufacturers increased purchasing activity and built stocks of inputs for the first time in seven months, with anecdotal evidence pointing to deliberate safety stock accumulation ahead of anticipated further price rises and supply delaysBusiness confidence fell for a third straight month to its lowest since July 2024, with the Middle East conflict, associated inflation and cost-of-living pressures cited as key concernsSome residual optimism remained in the year-ahead outlook, with manufacturers expressing hope that an end to the conflict would bring improved demand and operating conditionsAustralia's manufacturing sector posted a PMI reading above 50 in April for the first time since February, but the headline figure offers little genuine comfort. The index rose to 51.3 from 49.8 in March, but the improvement was almost entirely a function of supply chain disruption and defensive inventory building rather than any recovery in underlying demand. Stripped of those distortions, the picture is one of a sector under sustained and intensifying pressure from the Middle East conflict.The mechanics of the PMI calculation mean that longer supplier delivery times, which are inverted in the index, add to the headline reading in the same way that improving demand would. In April, delivery times lengthened to the greatest degree since July 2022, driven by disruption to international freight and acute difficulties sourcing fuel. That single factor did more to lift the PMI above 50 than any genuine improvement in business conditions.The three sub-indices that more directly reflect economic activity, new orders, output and employment, all remained in contraction. Output fell for a third consecutive month and at its fastest rate in 16 months. New orders continued to decline, with export business falling for the first time in four months as overseas demand softened. Employment was cut for the second month running as firms responded to lower workloads through reduced hours and the non-replacement of departing staff.The inflation data is where the report becomes most significant for the broader economic outlook. Input cost inflation accelerated to its fastest pace in over four years in April, with nearly 69% of surveyed manufacturers reporting higher costs during the month. Fuel was the dominant driver, a direct consequence of the energy price shock emanating from the Middle East conflict. Output price inflation also surged, reaching among the highest rates recorded in the survey's decade-long history, suggesting manufacturers are passing costs through at an aggressive pace.Against that backdrop, manufacturers took the unusual step of building stocks of inputs despite falling output requirements, with purchasing activity rising and input inventories increasing for the first time in seven months. The rationale was explicitly defensive: securing materials ahead of anticipated further price rises and supply delays rather than any expectation of improved orders.Business confidence fell for a third consecutive month to its lowest since July 2024. The Middle East conflict, the inflation it is generating and broader cost-of-living pressures were repeatedly cited as concerns. Some optimism about the year ahead persisted, conditional on a resolution to the conflict, but for now operating conditions are worsening with each passing month.---The headline PMI number is misleading and markets should look through it. A reading of 51.3 driven almost entirely by supply chain delays and safety stock building is not a signal of improving demand conditions; it is a distress signal dressed up in expansionary clothing. The three sub-indices that matter most for genuine economic activity, new orders, output and employment, were all in contraction.The input cost inflation reading at a four-year high, with output price inflation among the fastest in the survey's decade-long history, is the number that will concern the Reserve Bank of Australia. If these price pressures persist and feed through to the broader economy, the case for rate cuts weakens further. Business confidence falling for a third consecutive month to its lowest since July 2024 underscores the fragility of the outlook. This article was written by Eamonn Sheridan at investinglive.com.

S&P Dow Jones Indices launches review of megacap eligibility rules, potentially halving the listing period to 6 months and waiving profitability requirements. SpaceX, OpenAI and Anthropic among potential beneficiaries as IPOs loom. Summary:S&P Dow Jones Indices has announced a formal review of eligibility requirements for the S&P 500, examining whether megacap companies should face less stringent entry criteria and be eligible for fast-track inclusionThe review was prompted by the prospect of large unprofitable companies conducting IPOs in 2026, with SpaceX, OpenAI and Anthropic all reportedly preparing to list as soon as later this yearUnder the proposed changes, newly public companies could qualify for S&P 500 inclusion after just six months of listing rather than the current 12-month minimumThe existing requirement for profitability on a GAAP basis over a cumulative 12-month period and in the most recent quarter could be waived entirely for companies that qualify as megacapsS&P Dow Jones Indices said huge new public companies have the potential to achieve immediate and material investor ownership, trading liquidity and market relevance, but current rules could prevent timely index inclusion and undermine the benchmark's effectivenessSpaceX was most recently valued at $1.25 trillion and is reportedly planning to raise fresh capital at a valuation as high as $2 trillion, which would make it one of the largest US companies by market capitalisation at the point of listingOpenAI was valued at $852 billion in its most recent fundraising round, while Anthropic's most recent post-money valuation stood at $380 billion, though funding offers valuing the company at more than $900 billion have been reportedS&P Dow Jones Indices is not the first to move in this direction: Nasdaq approved a fast-entry rule in March to ease access to the Nasdaq-100 for large newly listed companies, and FTSE Russell is also exploring a similar mechanismThe changes remain under review and have not yet been formally adoptedS&P Dow Jones Indices has opened a formal review of the rules governing entry to the S&P 500, raising the prospect of sweeping changes that could allow the world's most closely tracked equity benchmark to fast-track megacap companies at the point of listing and drop its longstanding profitability requirement for the largest entrants.The review, announced late Thursday, is a direct response to the looming wave of major initial public offerings expected in 2026. SpaceX, OpenAI and Anthropic are all reportedly preparing to go public as soon as later this year, and the sheer scale of those companies has exposed a tension at the heart of the existing eligibility framework. Under current rules, a company must have been listed for at least 12 months and must demonstrate GAAP profitability over a cumulative 12-month period and in its most recent quarter before it can be considered for inclusion. Neither OpenAI nor Anthropic is profitable on that basis, and SpaceX, though privately cash-generative, has not yet been subject to public reporting requirements.S&P Dow Jones Indices acknowledged the problem directly, noting that companies of this scale have the potential to achieve immediate and material investor ownership, trading liquidity and market relevance at the point of listing, yet adherence to existing rules could prevent timely inclusion and reduce the benchmark's effectiveness as a market representation tool.The proposed changes address both barriers. The minimum listing period would be cut from 12 months to six, bringing the S&P 500 closer to the position already adopted by Nasdaq, which approved a fast-entry rule for the Nasdaq-100 in March. FTSE Russell is also exploring a similar mechanism, suggesting a broader rethink is underway across the index industry. More significantly, megacap companies could be exempted entirely from the profitability screen, a requirement that has historically served as a quality filter distinguishing the S&P 500 from more speculative benchmarks.The stakes are considerable. SpaceX is reportedly targeting a fundraising valuation of up to $2 trillion, which would place it among the very largest US companies by market capitalisation on day one of any listing. OpenAI's most recent round valued it at $852 billion, while Anthropic has received funding offers implying a valuation above $900 billion. Inclusion of any one of these companies would trigger mandatory buying from the vast pool of passive capital tracking the S&P 500, with immediate and material implications for index flows and the stocks themselves.The review is ongoing and no changes have been formally adopted. Trying to spot the S&P 500. ---This is a structurally bullish development for the S&P 500. The prospect of companies valued at $1 trillion or more entering the index shortly after listing would represent a significant expansion of the benchmark's market cap and investor reach. Passive funds tracking the S&P 500 would be compelled to buy at inclusion, generating immediate and substantial demand for any newly added megacap stock.The relaxation of the profitability requirement is the more consequential of the two proposed changes. The current GAAP profitability screen has historically acted as a quality filter, and removing it for megacap entrants marks a philosophical shift in what the index is designed to represent. For broader markets, the signal is positive in the near term: easier index entry means faster passive inflows into major new listings, supporting valuations at the point of inclusion. This article was written by Eamonn Sheridan at investinglive.com.

ANZ-Roy Morgan NZ Consumer Confidence fell 11pts to 80.3 in April, a three-year low, down 20pts in two months. Inflation expectations jump to 6.6%. Personal finances weakest since mid-2008. Retail outlook deteriorates sharply. Summary:The ANZ-Roy Morgan Consumer Confidence index fell 11 points in April to 80.3, its lowest reading in approximately three years, having dropped 20 points in the two months since the Middle East conflict beganThe future conditions index fell from 96.7 to 85.9, its lowest in two years, while the current conditions index dropped from 83.1 to 71.9, the weakest since October 2023Perceptions of current personal financial situations fell 11 points to a net -31%, the weakest reading since mid-2008, driven by the cost of living rather than income declines, as the oil shock has not yet meaningfully hit household incomesThe net proportion of households viewing now as a good time to buy a major household item, considered the survey's best retail indicator, fell 11 points to -25, the weakest since September 2024Perceptions of the economic outlook over the next 12 months fell 23 points to -48%, the lowest in three years; the five-year-ahead measure fell 2 points to +3%Two-year-ahead CPI inflation expectations jumped 0.9 percentage points to 6.6%, against a backdrop of petrol prices up approximately 30% year-on-year and food price inflation running at 4% to 5%House price inflation expectations eased from 3.8% to 3.2%Only a net 3% of respondents expect to be better off financially this time next year, down 7 pointsThe oil price shock is identified as the clear driver, affecting household budgets directly through petrol prices and indirectly through broader concern about job security and economic conditionsThe widening gap between consumer inflation expectations of 6.6% and firms' wage expectations of 2.5% is flagged as a key concern, alongside the noted drag on sentiment from expectations of OCR hikesNew Zealand consumer confidence has slumped to its lowest level in approximately three years, registering a sharp 20-point fall in the two months since the Middle East conflict began to drive energy prices higher. The ANZ-Roy Morgan Consumer Confidence index dropped a further 11 points in April to 80.3, a reading that puts current sentiment on a par with the difficult conditions of 2022 and 2023, a period New Zealand retailers will not recall with any fondness.The driver is unambiguous. Petrol prices are up around 30% year-on-year, and the squeeze on weekly household budgets is showing up clearly across the survey's key indicators. Current conditions fell to 71.9, the lowest since October 2023, while the forward-looking index dropped to 85.9, a two-year low. Perceptions of the broader economic outlook over the next 12 months fell a striking 23 points to a net -48%, the weakest read in three years, as households grow increasingly worried about what sustained high energy prices mean for jobs and the wider economy.The most alarming single reading may be the personal financial situations measure, which tracks how households feel relative to a year ago. That fell 11 points in April to a net -31%, its weakest since mid-2008. Critically, the oil shock has not yet had time to feed meaningfully into household incomes, meaning this deterioration reflects outgoings rather than earnings. The pressure on budgets is coming through the cost of living, and it has further to run.For retailers, the picture is bleak. The net proportion of households viewing now as a good time to buy a major household item, the survey's most reliable retail spending indicator, fell to -25, its lowest since September 2024. That reading, taken alongside the ANZ's separate Business Outlook survey (also an ugly negative confidence number) showing retail sector respondents as the most pessimistic cohort on future activity, points to clear downside risk for spending data in the weeks ahead.Two-year-ahead inflation expectations jumped nearly a full percentage point to 6.6%, the highest in several years. The Reserve Bank of New Zealand does not set prices and so does not target consumer expectations directly, but the growing gap between households pricing in 6.6% inflation and firms anticipating wage growth of just 2.5% is a tension that will be difficult to ignore. Predictions of OCR hikes are themselves adding to the gloom, creating a feedback loop between policy expectations and consumer mood that complicates the RBNZ's already difficult path.--The scale and speed of the confidence collapse is notable: a 20-point fall in two months is not a gradual deterioration, it is a shock response. The direct read-across is to the Reserve Bank of New Zealand, which now faces a widening gap between consumer inflation expectations at 6.6% and firm-level wage expectations at 2.5%. That divergence will complicate the OCR outlook, particularly given that predictions of rate hikes are themselves being cited as a further drag on household mood.For retailers, the current personal financial situations index at its weakest since mid-2008 is a serious warning. Combined with the separate ANZ Business Outlook showing retail sector respondents as the most pessimistic on future activity, the downside risk to near-term spending data is material. This article was written by Eamonn Sheridan at investinglive.com.

Analysts see ECB hiking in June as Middle East energy shock closes the window for looking through inflation. Two hikes seen as ceiling, lifting rates toward neutral. Gold, commodities and inflation-linked bonds favoured as hedges. Summary of a pile of notes:A rate hike at the ECB's June meeting is now being priced with conviction, analysts say, driven not by domestic inflation dynamics but by the escalating US-Iran conflict and its effects on European energy costs and supply chainsAnalysts note the ECB faces an uncomfortable bind: rate rises are a blunt instrument against an imported energy shock, and that same shock threatens growth and employment, making aggressive tightening counterproductiveThe window for looking through the energy price spike is seen as closing, with June's updated projections and inflation scenarios expected to leave the ECB in a stronger position to actInflation expectations and forward-looking wage developments are flagged as the key variables the ECB will monitor closely, with the inflation outlook for 2026 already seen tracking above the March forecast pathAnalysts broadly do not expect the ECB to hike beyond what is currently priced into markets; two 25 basis point moves would bring the policy rate to the upper bound of the ECB's neutral rate estimate range of 1.75% to 2.5%Those two hikes are seen as primarily serving to manage inflation expectations rather than to aggressively restrict the economyIf economic disruption from the conflict persists long enough, analysts say the focus is likely to shift from inflation to growth, reducing the need for an extended hiking cycleEuropean leaders are growing openly frustrated with Washington over the absence of a credible off-ramp to the Middle East conflict, adding a political dimension to the pressure on household financesAsia is already experiencing fuel rationing in parts, and analysts warn the buffer protecting Europe from similar disruption may not hold indefinitelyOn asset allocation, analysts favour inflation hedges including gold, broad commodities and inflation-linked bonds; within equities, Europe is seen as balanced rather than attractive, while in fixed income quality credit and select emerging market local currency bonds are preferred over lower-grade paperThe question of whether the European Central Bank holds rates is no longer the debate. The question now is how quickly it moves and how far it goes. Analysts are increasingly aligned on the view that June represents a live meeting, with a rate hike being priced into markets with a degree of conviction not seen for some months.The driver is not domestic. European inflation, while above target, has not accelerated dramatically from within the eurozone economy. The impulse is coming from outside, specifically from the escalating conflict between the United States and Iran, which is pushing energy costs higher, straining supply chains and beginning to squeeze household finances across the continent. Parts of Asia are already experiencing fuel rationing, and analysts warn the buffer insulating Europe from similar disruption may not hold indefinitely. European leaders are growing openly frustrated with Washington over what they see as an absence of any credible off-ramp to the conflict.For the ECB, this creates a bind that is genuinely difficult to navigate. Rate rises are a blunt instrument when the inflationary shock is being imported rather than generated at home. Worse, that same energy shock threatens growth and employment, meaning higher rates risk amplifying an already fragile economic backdrop. Christine Lagarde is walking a fine line between acting decisively enough to keep inflation expectations anchored and avoiding a policy tightening that compounds the damage from the external shock.Analysts broadly expect the ECB to use June's updated projections and inflation scenarios as cover to act. Inflation expectations and forward-looking wage data will be scrutinised closely in the weeks ahead, with the 2026 inflation outlook already seen tracking above the March forecast path.The consensus view is that two 25 basis point hikes represent a ceiling rather than a floor. That would bring the ECB's main policy rate to the upper bound of its own neutral rate estimate range of 1.75% to 2.5%, a level analysts describe as primarily serving to manage expectations rather than to aggressively restrict demand. Beyond that, the calculus shifts. If the conflict and its economic disruption persist long enough, analysts say the focus will rotate from inflation containment toward protecting growth, reducing the urgency for further tightening.On asset allocation, the environment argues for inflation protection. Gold, broad commodities and inflation-linked bonds are seen retaining their role as hedges while energy disruption persists. Within equities, analysts view Europe as balanced rather than outright attractive given the geopolitical headwinds. Fixed income quality is increasingly preferred, with lower-grade credit exposed to the combined pressures of slower growth and tighter financial conditions. Emerging market local currency bonds are flagged as a selective opportunity, particularly where exposure sits with oil exporters operating outside the immediate conflict zone. ---A June ECB hike is now priced with real conviction, representing a meaningful shift from just a few months ago. The repricing is driving bond yields higher and weighing on rate-sensitive equity sectors, while gold, broad commodities and inflation-linked bonds are finding renewed demand as hedges against persistent energy disruption.Within equities, Europe is seen as balanced rather than attractive given the geopolitical backdrop. In fixed income, quality is increasingly preferred, with lower-grade credit exposed to the twin pressures of slower growth and tighter financial conditions. Emerging market local currency bonds remain a selective opportunity, particularly where exposure sits with oil exporters outside the conflict zone. This article was written by Eamonn Sheridan at investinglive.com.

ECB holds rates as expected; June hike fully priced by markets. Deutsche Bank flags upside inflation risk and downside growth risk. Eurozone 1yr inflation expectations jump to 4.0%, highest since 2023. Credit conditions tightest since early 2024.Summary:The ECB kept policy rates unchanged at its latest meeting, a decision in line with market expectations, but the accompanying statement flagged an intensification of risks on both sides of its mandateDeutsche Bank characterised the risks as symmetric: upside risks to inflation and downside risks to growth, reflecting the stagflationary pressures building across the eurozoneThe statement conveyed a sense of calm confidence, referencing the resilience of the economy in recent quarters and well-anchored longer-term inflation expectations, but also signalled rising concern over the prolonged Middle East conflictDeutsche Bank noted the statement does not pre-commit the ECB to hiking in June, but equally does not prevent a hike at that meetingThe ECB's consumer inflation expectations survey for March showed one-year expectations jumping from 2.5% to 4.0%, their highest level since 2023, pointing to a meaningful deterioration in the inflation outlook at the household levelThe ECB's Bank Lending Survey showed a clear deterioration in credit conditions, which are now at their tightest since early 2024, signalling that the existing rate environment is already weighing on lending activity and growthMarkets have moved to fully price in an ECB rate hike by the June meeting, with bond yields rising and eurozone equity markets weakening in responseDeutsche Bank Research described the backdrop as difficult, with inflation fears driving the repricing across asset classesThe European Central Bank held its policy rates unchanged at its latest meeting, but the decision masked a more uncomfortable picture beneath the surface. According to Deutsche Bank Research, the ECB's own surveys are now flashing warning signs on both sides of its mandate simultaneously, leaving policymakers navigating one of the more difficult backdrops since the post-pandemic inflation surge.The most striking data point comes from the ECB's monthly consumer survey for March, which showed one-year inflation expectations jumping from 2.5% to 4.0% across the eurozone, the highest reading since 2023. That kind of move in household expectations is not something central banks can afford to dismiss. If consumers begin pricing higher inflation into wage demands and spending behaviour, the risk of expectations becoming self-fulfilling rises sharply, and the cost of correcting course later becomes considerably higher.At the same time, the ECB's Bank Lending Survey painted a deteriorating picture for growth. Credit conditions tightened to their most restrictive since early 2024, suggesting the existing rate environment is already biting into lending activity and, by extension, the real economy. Deutsche Bank described the combination as a difficult backdrop, one in which the central bank must weigh the risk of doing too little on inflation against the risk of tipping a slowing economy into sharper contraction.The ECB's statement attempted to hold both concerns in balance. Deutsche Bank noted a sense of calm confidence in the language, with references to recent economic resilience and well-anchored longer-term inflation expectations. But there was also a discernible shift in tone around the Middle East, with concern growing the longer the conflict continues to keep energy prices elevated and sentiment fragile.Crucially, Deutsche Bank's reading of the statement is that it neither commits the ECB to hiking in June nor rules it out. Markets have already drawn their own conclusion: a rate increase at the June meeting is now fully priced. Bond yields have risen and eurozone equities have weakened as investors reprice the policy path. ---The ECB's hold was fully expected, but the statement's tone and accompanying data surveys are pushing the market conversation in a hawkish direction. Futures have fully priced a June hike, bond yields are moving higher and eurozone equities are weakening.The consumer inflation expectations jump from 2.5% to 4.0% is the standout data point. If sustained, it risks becoming self-fulfilling through wage negotiations and pricing behaviour, which would ultimately force the ECB's hand regardless of the growth picture. The Bank Lending Survey deterioration is the complicating factor, with credit conditions at their tightest since early 2024 meaning any further hike carries genuine downside growth risk. The Middle East remains the key wildcard throughout. This article was written by Eamonn Sheridan at investinglive.com.

Morgan Stanley pushes Fed cut forecast to Jan/March 2027, citing sticky inflation and hawkish FOMC drift. Euro seen decoupled from rate differentials on Middle East risk; dollar safe-haven bid dominates. Terminal rate seen at 3.0-3.25% Justin had the breaking on this yesterday:Morgan Stanley scraps call for Fed rate cuts this yearMore detail now: Summary:Morgan Stanley has revised its Federal Reserve forecast, dropping expected September and December 2026 cuts and now looking for two 25 basis point reductions in January and March 2027, with a terminal range of 3.0% to 3.25%The revision follows the April FOMC meeting, at which three board members dissented in favour of removing the easing bias entirely, and the statement upgraded its inflation characterisation from "somewhat elevated" to "elevated"Chief economist Michael Gapen wrote that the committee is moving from an easing bias toward a neutral stance, with disinflation needing to be proven before cuts can be justifiedRate futures now price an 83.6% probability of no change through year-end, up from 75.9% the prior week, per CME FedWatch dataMorgan Stanley's base case for eventual cuts rests on expected deceleration in core inflation as the tariff impulse fades, shelter inflation slows and seasonal factors weigh on sequential readings through the rest of 2026The bank flagged that if oil prices remain elevated without signs of normalisation, energy spillovers into core inflation could prove more significant than currently anticipatedOn foreign exchange, Morgan Stanley strategists said the euro against the dollar has decoupled from interest rate differentials and is currently driven by Middle East developments and the dollar's safe-haven statusThe bank expects rate differentials to reassert themselves once the conflict de-escalates; a US-Iran deal could push the euro toward $1.12, but a broader Gulf stabilisation would ultimately favour the euro given the yield shift underwayMarkets are currently pricing 83 basis points of ECB rate hikes in 2026The April meeting was the last to be chaired by Powell before Kevin Warsh is expected to take over subject to Senate confirmationThe euro has broken from its traditional relationship with interest rate differentials and is trading instead on the pull of Middle Eastern geopolitics and the dollar's safe-haven appeal, according to Morgan Stanley's foreign exchange strategists. The finding, buried at the foot of a broader rates research note, may be the most structurally consequential observation in the report.In normal conditions, the euro against the dollar tracks closely with the spread between US and European yields. That relationship has temporarily broken down. With tensions in the Strait of Hormuz keeping risk sentiment fragile, investors are reaching for the dollar regardless of where yields are heading. Rate markets are currently pricing 83 basis points of European Central Bank hikes in 2026, a significant tightening path that would ordinarily support the euro, yet the currency remains capped by safe-haven dollar demand.Morgan Stanley expects the dynamic to shift once the geopolitical backdrop stabilises. A US-Iran agreement could push the euro to $1.12, but beyond that, the firm believes the ongoing yield shift will ultimately swing in favour of the single currency.The context for these currency observations matters. Morgan Stanley has simultaneously revised its Federal Reserve outlook, pushing back its forecast for two quarter-point cuts from September and December 2026 to January and March 2027. Chief economist Michael Gapen cited the April FOMC meeting as the catalyst for the change, noting a clear drift within the committee away from an easing bias toward a more neutral policy stance.The meeting produced three dissents from members who wanted the easing bias removed from the statement entirely, and the FOMC upgraded its inflation language from "somewhat elevated" to "elevated." Gapen was direct in his assessment: disinflation now requires proof, the economy is strong enough to be patient, and policy is already close to neutral, reducing the urgency to act.Morgan Stanley's revised terminal range is 3.0% to 3.25%. The path to cuts relies on core inflation decelerating as tariff pressures fade, shelter costs cool and seasonal factors bear down on sequential inflation readings in the second half of 2026. The key risk, Gapen acknowledged, is energy. If oil prices stay elevated without normalising, spillovers into core inflation could delay the easing cycle further than the bank currently anticipates. This article was written by Eamonn Sheridan at investinglive.com.

The major U.S. equity indices extended their rally into the close, capping off an impressive session—and an even more remarkable month. Both the S&P 500 and the NASDAQ Composite finished at fresh record closing highs, underscoring the strength of the broader market despite some notable weakness beneath the surface.The Dow Jones Industrial Average also posted a powerful advance, climbing sharply by 790.33 points, or +1.62%, to close at 49,715. While that keeps the index within striking distance, it still remains below its all-time closing high of 50,188. The gains across the board reflect continued momentum driven by investor optimism, strong economic signals, and persistent dip-buying behavior.Looking at the final numbers:Dow Jones Industrial Average: +790.33 points (+1.62%)S&P 500: +73 points (+1.02%) to a record close NASDAQ Composite: +219.07 points (+0.89%) to a record close Despite the headline strength in the indices, the session revealed an important divergence—particularly within mega-cap technology. Some of the market’s biggest names came under pressure following earnings, acting as a drag on what could have been even stronger index-level gains. NVIDIA shares fell sharply by -4.63%, while Microsoft dropped -3.93% and Meta Platforms declined -8.55% after reporting results following the prior day’s close. That rotation away from high-flying tech and into other sectors helped fuel broader index gains, particularly in the Dow.Zooming out, the bigger story may be the monthly performance, which highlights just how strong the rally has been in April:Dow Jones Industrial Average: +7.14% for the month — its largest monthly gain since November 2024 S&P 500: +10.42% — the strongest monthly advance since November 2020 (+10.75%) NASDAQ Composite: +15.29% — a massive surge, rivaling the +15.45% gain from April 2020 and marking the second-largest monthly gain since 2000 Looking at some of the gainers this month that outpaced the Nasdaq was led by Intel with a rise of 114.09%!While the NASDAQ Composite surged an impressive +15.29% for the month—marking one of its strongest gains in decades—a number of individual stocks didn’t just participate…they significantly outperformed.The following names were the standout winners for the month, with each posting gains that exceeded the Nasdaq’s already powerful advance:Intel: +114.09% Advanced Micro Devices: +74.26% SanDisk: +72.59% Marvell Technology: +66.73% Western Digital: +60.64% Micron Technology: +53.22% Texas Instruments: +44.75% Arista Networks: +40.67% Qualcomm: +39.42% Arm Holdings: +39.03% Ciena: +35.89% Broadcom: +34.87% Alphabet (Class A): +33.82% Ambarella: +33.58% Nebius Group: +33.24% Strategy: +32.51% Vertiv Holdings: +31.11% Dell Technologies: +27.31% Amazon: +27.23% Caterpillar: +25.64% GE Vernova: +24.11% Synopsys: +21.72% Eaton: +21.06% Zoom Video Communications: +20.85% Corning: +20.81% Lam Research: +20.68% Super Micro Computer: +20.33%The takeaway is clear: even with pockets of weakness in key leadership stocks, the broader market continues to push higher, supported by strong inflows and sector rotation. Record highs in the S&P and NASDAQ suggest buyers remain firmly in control, while the Dow’s push toward its own record keeps the bullish momentum intact heading into the next trading cycle. This article was written by Greg Michalowski at investinglive.com.

Apple Q2 EPS $2.01 vs est. $1.95; revenue $111.2B vs est. $109.5B. iPhone $57.0B misses on supply; Mac $8.4B beats; Services $30.98B beats. China $20.5B. $100B buyback.Summary:Apple reported Q2 fiscal 2026 EPS of $2.01, beating the $1.95 consensus, on revenue of $111.2 billion against estimates of $109.45-109.66 billionNet income came in at $29.6 billion versus the $28.5 billion expectation; operating income was $35.9 billion against a $34.8 billion estimateiPhone revenue of $56.99 billion came in marginally below estimates of $57.21 billion; CEO Tim Cook attributed the shortfall to supply constraints on advanced processor chips rather than weak demandMac revenue of $8.40 billion beat the $8.02 billion estimate, boosted by the new $500 MacBook Neo, which targets the lower-priced laptop market currently dominated by ChromebooksServices revenue reached $30.98 billion, ahead of the $30.39 billion estimate, with the App Store continuing to generate robust income despite ongoing regulatory scrutiny in EuropeGreater China net sales of $20.50 billion significantly outpaced estimates of $19.45 billion, a notable beat given the competitive and geopolitical pressures in that marketiPad net sales were $6.91 billion versus $6.66 billion estimated; Wearables, Home and Accessories were $7.90 billion versus $7.70 billion estimatedGross margins were 49.27%, above the 48.38% consensus, reflecting Apple's pricing discipline and product mixThe board authorised an additional $100 billion share buyback, consistent with the prior year's programmeIncoming CEO John Ternus, who takes over from Cook in September, is expected to speak on the earnings call; investors are focused on Siri and AI strategy ahead of the June developer conferenceApple delivered a stronger-than-expected second fiscal quarter, posting earnings per share of $2.01 on revenue of $111.2 billion, comfortably ahead of Wall Street's consensus of $1.95 and $109.5 billion respectively. Net income of $29.6 billion and operating income of $35.9 billion both cleared analyst estimates, and the board authorised a further $100 billion in share buybacks, matching the prior year's programme.The standout performers were Mac, Services and Greater China. Mac revenue of $8.40 billion beat estimates by roughly $380 million, driven in part by early sales of the MacBook Neo, a $500 laptop aimed squarely at the budget segment long dominated by Google Chromebooks. The Neo is seen as a significant strategic move for Apple, opening up a market estimated at $20 billion that the company has not traditionally competed in on price. Services revenue reached $30.98 billion, maintaining its run of above-consensus growth as the App Store, licensing arrangements and subscription offerings continued to expand.Greater China net sales of $20.50 billion came in well ahead of the $19.45 billion estimate, a meaningful beat that will ease concerns about Apple's exposure to geopolitical risk and local competition in the region. The result suggests that Apple's brand loyalty and the appeal of the iPhone 17 family are holding firm in a market where rivals including Huawei have been aggressively competing for share.The one area of friction was iPhone. Revenue of $56.99 billion came in fractionally below the $57.21 billion estimate, and CEO Tim Cook told Reuters the shortfall was a function of supply rather than demand. The iPhone 17 family, including the new iPhone Air, uses an advanced chip made by TSMC on the same manufacturing process node as many leading artificial intelligence processors. With AI chip demand absorbing significant capacity, Apple found less flexibility than usual in securing additional components.Cook described demand as exceptional, suggesting the constraint is temporary. However, if advanced node tightness at TSMC persists through the June quarter, the impact on iPhone volumes could be more than a rounding error heading into what is typically a quieter period ahead of the autumn upgrade cycle.Gross margins of 49.27% against a 48.38% estimate were a further positive, reflecting Apple's ability to manage memory chip cost pressures through its scale and pricing architecture. Entry-level models in the iPhone 17 range held prices steady relative to storage capacity, while Pro models carried higher price tags, a mix that has helped protect the margin line.Investor attention now turns to the earnings call and the June developer conference, where Apple is expected to lay out its artificial intelligence roadmap for Siri and broader software. Incoming CEO John Ternus, who transitions from Tim Cook in September, is expected to speak, giving markets their first substantive look at the strategic direction under new leadership.Time Apple will be replaced by John Apple in September (I know ... but I blame Trump ) This article was written by Eamonn Sheridan at investinglive.com.

China begins 5 days of holidays today, back on May 6. From Japan we get Tokyo area CPI for April. I'll have more to come on this separately. Yen traders will be grappling with the echoes of the intervention (1, 2) that drove USD/JPY down from 160. This article was written by Eamonn Sheridan at investinglive.com.

Japan intervened in the FX market -- reportTrump: Iran is dying to make a deal with usUS initial jobless claims 189K vs 215K estimateUS Q1 advance GDP +2.0% vs +2.3% expectedUS March PCE inflation +3.5% y/y vs +3.5% expectedCanada February GDP +0.2% vs +0.2% expectedECB rate decision: No change, as expectedECB's Lagarde: Most measures of longer term inflation stand around 2%Pakistani officials say they expect new Iran proposal this week - reportAI infrastructure spending is the largest non-war project in human historyEuro rises as report says the ECB very likely to hike in JuneTrump considers plan to deepen the blockade on Iran with allies - reportMarkets:S&P 500 up 1.2% to record highRussell 2000 up 2.1%WTI crude down $1.82 to $105.07Gold up $73 to $4615US 10-year yields down 2.2 bps to 4.39%JPY leads, USD lagsThe big question today: Were the moves position squaring ahead of month end, or a better view on the war?Many of the big moves were reversals of the trend this month, or at least of the past week. That's a move that looks like a 'peace' trade but there wasn't any (public) indications of a breakthrough on Iran, or even talks. There are reports that Iran is readying another proposal and the usual rumors about peace but overall it was quiet on the Iran front.The big news in earlier trade was the surge in the yen. There was some pointed and harsh talk about intervention beforehand but it wasn't clear if it was actually intervention, a rate check or the strong words that caused the drop. A report from Nikkei confirmed it was intervention but the pair traded mostly sideways in New York.That wasn't the case for the euro as it initially declined on the ECB decision and press conference because there wasn't the expected strong hawkish bias. However the usual 'ECB sources' reports later were much more hawkish and the euro rallied. That was combined with broad USD selling and helped push the euro as high as 1.1740.The Bank of England held rates but the pound solidly outperformed the euro as it rose a full figure in the North American session.The commodity currencies were also strongly bid as they climbed alongside a record run in stocks. Gold also turned around after yesterday's selloff and climbed to $4616 in choppy trade.Maybe the best sign that something more-fundamental was driving the move was the decline in Treasury yields, which fell 5.7 at the 2-year tenor. Overall, it was the best month for stocks since 2020 as the AI trade was a full-throated barn burner but note that Sandisk and Western Digital are lower after the close post-earnings and a trio of Mag7 names that reported yesterday were also lower despite a red-hot tape. This article was written by Adam Button at investinglive.com.

The USDJPY moved sharply lower today, driven by renewed concerns over potential Bank of Japan intervention as the pair pushed above the 160.00 level. That warning was enough to trigger aggressive selling.The decline stalled just ahead of a key technical target—the 61.8% retracement of the move up from the February 12 low. That level comes in at 155.50, with the low reaching 155.57 before buyers stepped in and the pair bounced higher.On the corrective move higher, the USDJPY ran into resistance near a confluence zone between 157.25 and 157.50—where the 100-day moving average and the broken 38.2% retracement converge. Sellers leaned against that area, keeping a lid on the recovery. Importantly, the earlier session low has not been retested, leaving that level as a key downside target.Meanwhile, the EURUSD moved higher in sympathy with the broader USD selling. The gains were more measured compared to USDJPY, but technically more constructive.The pair pushed to new session highs into the close and, importantly, extended above the 200-hour moving average at 1.1717. That level had previously acted as a ceiling on April 22 and again on April 26. Breaking and holding above it tilts the bias back in favor of the buyers.Going forward:Stay above 1.1717 (200-hour MA): keeps buyers in control and targets 1.1754 (weekly high), followed by 1.1790, and then the swing area at 1.1823–1.1836.A move toward the April high at 1.1848 would be the next upside extension on stronger momentum.What would shift the bias back lower?A move back below 1.1717, followed by a break of the 100-hour and 100-day MAs near 1.1708.Falling below those levels would disappoint buyers and likely lead to a rotation back to the downside. This article was written by Greg Michalowski at investinglive.com.

I don't know how seriously you can take these kinds of comments. Iran in very bad shapeReiterates that they obliterated Iran's nuclear capabilitiesIran cannot be nuclearIran drone and missile factories are down significantlyTouts new stock market highsThe blockade is incredible, Iran is now not getting any money from oilNo one knows who Iran's leaders areNow one knows what's happening in talks except himself and a couple othersI don't know if we need to break the ceasefire with IranThe market likes what it's hearing and we're seeing some further small bids in equities. The S&P 500 is at a record high, up 1.1% to 7216. This article was written by Adam Button at investinglive.com.

The stock market is a momentum-chasers' dream right now.It's increasingly clear that the backbone of the market rally is AI and nothing to do with the Iran war. Coming into this year there was a big fear about AI capex slowing down or a wall in AI models.Instead, we're seeing some impressive rollouts, including Claude's latest model and the just-released OpenAI image model. Surely it won't be long before Google is back with Gemini but the main problem right now is demand is overwhelming what they can serve. That's led to nerfed models, particularly Gemini.As someone who uses them, the last month or so really has felt impressive and brought the enthusiasm back. Then there are the leaks about Anthropic's Mythos, which marked the bottom of the market. If it is what they say it is, another leg of improvement is coming soon.That said, today's rally isn't exactly being led by hyperscalers, with them mostly down aside from Google, which is up 10%.The bigger move today is the Russell 2000, which is up 1.9% and is arguably being boosted by optimism about the Iran war, month-end flows or a bet on the laggards. It has been a staggeringly good month for stocks after a rough March.Here are the companies scheduled to report earnings after the market close:Apple (AAPL)SanDisk (WDC)Reddit (RDDT)Western Digital (WDC)Amgen (AMGN)AXT (AXTI)Roblox (RBLX)Rivian (RIVN)Roku (ROKU)Riot Platforms (RIOT)Atlassian (TEAM)First Solar (FSLR)Monolithic Power Systems (MPWR)MasTec (MTZ)GoDaddy (GDDY)Stryker (SYK)Twilio (TWLO)Zeta Global (ZETA)IMAX (IMAX)Ardelyx (ARDX)Dexcom (DXCM)Corcept Therapeutics (CORT)The Clorox Company (CLX)LendingTree (TREE) This article was written by Adam Button at investinglive.com.