It's wild to see how markets are running with this much optimism when we haven't seen any actual progress yet on the Middle East conflict. The fact of the matter remains that the Strait of Hormuz is in de facto closure and set to enter its eighth straight week under such circumstances.Yet, oil prices have come off the boil by quite a mile with WTI crude hovering around $91.75 currently. Meanwhile, the more indicative "front-month" June contract is trading at around $88.15 on the day. As for Brent crude, it is keeping closer to the $95 level at the moment. However, physical prices are still holding a massive $40 to $50 premium. So, keep that in mind.As much as markets are optimistic, the situation on the ground hasn't changed. In Asia, we're already seeing plenty of economies needing to adjust to the reality with price increases everywhere. And we all know that when prices go up, they never come back down. So even if the energy price surge might prove to be temporary, the impact is more permanent for your every day consumer and business.In any case, markets are always a different beast and right now the signal is that there is much expectation of good news to come in the coming week at least. That optimistic angle is enough to push major indices in the US to fresh all-time highs this week.As we get into the second half of the week, here's where we stand on US-Iran developments today:US president Trump says "the war with Iran can be over very soon", touts "an amazing two days ahead"Reports suggest US and Iran are weighing an extension to the ceasefireIran categorically denies extending the ceasefire; no plans for further talks at the momentPakistan tries to mediate the situation with army chief arriving in Tehran to push for second round of talksThe final point is where we stand now, so perhaps we could see talks over the weekend - whether directly or indirectly.The US demands still remain the same, that being the two key points especially. The first is for Iran to give up its nuclear ambition. And the second is for a full reopening of the Strait of Hormuz.On the first demand, Iran is still not giving in and that is a major sticking point in negotiations. On the second demand at least, a Reuters report suggests that Iran seems to be open to the idea of allowing a small passage gap closer to Oman. I would figure it would look something like this:However, Iran's flexibility on that will still be largely tied to how negotiations play out with the US. So, there's that.As we look to the coming two days, it is still all about US-Iran tensions and headline risks for markets. This article was written by Justin Low at investinglive.com.

Trump posts upbeat comments on Israel -Lebanon peace talks -"Nice!"Today's FX winner is Japanese Finance Minister Katayama, She's sent the yen higher.ICYMI - Reports that Iran proposes partial Hormuz reopening for ships via Oman watersFox says its confirmed that Iran used Chinese satellite to target US basesJapan’s Katayama says closely watching FX as oil volatility hits yenMixed China data highlight fragile recovery outlook: retail sales sad, industrial beatChina March new home prices -3.4% y/y (February -3.2%)China Q1 GDP beats forecasts but Iran war risks loomAustralia jobs resilience, unemployment rate steady, keeps RBA focused on inflation risksAustralian March 2026 unemployment rate 4.3% (expected 4.3%, prior 4.3%)PBOC sets USD/ CNY reference rate for today at 6.8616 (vs. estimate at 6.8190)Iran hardliners rise after war, raising risks to Hormuz and peace prospectsICYMI - China to issue 15.5bn yuan offshore bonds, largest sale since October 2023Goldman Sachs rates hit by Iran war volatility as FICC revenue fallsWhite House urges oil CEOs to pump more as prices surgePentagon explores automaker role to boost weapons productionJapan's Finance Minister Katayama said to intensify communication with BessentECB officials lean toward April rate hold amid Iran war uncertaintyIMF says BOJ can look through Iran war inflation shockICYMI - Fed’s Musalem says oil shock to keep core inflation near 3%UK expands energy bill relief scheme for industry amid rising costsUS ramps up Iran pressure as officials warn blockade impact could take monthsECB’s Schnabel says bank can take time to assess Iran shockSummary:FT reports Israel–Lebanon ceasefire expected soon; Trump adds upbeat tone. Reports Iran used Chinese satellite for US base surveillance, raising geopolitical risks. Oil traded subdued despite ongoing supply disruption concerns. Japan signals heightened FX vigilance; yen edges higher on the session. ECB’s Schnabel reinforces “wait-and-see” stance on Iran shock. Australia jobs steady; China data mixed with strong GDP but weak consumption. US defence production push highlights prolonged conflict dynamics. A more constructive tone crept into markets through the session, with geopolitical headlines offering cautious optimism even as underlying risks remain elevated.The Financial Times reported that a ceasefire between Israel and Lebanon could be imminent, citing Lebanese officials. That narrative was reinforced later in the session by upbeat remarks from President Trump, helping stabilise sentiment. At the same time, reports that Iran may have used a Chinese satellite to monitor US bases added a more complex and potentially escalatory dimension to the conflict, with implications for US-China relations and the evolution of modern warfare.Oil markets traded in a relatively subdued range, suggesting some consolidation after recent volatility, even as supply risks tied to Hormuz disruptions remain unresolved.In FX, Japan remained firmly in focus. Finance Minister Satsuki Katayama said Tokyo and Washington agreed to intensify communication on exchange rates following talks with US Treasury Secretary Scott Bessent. She later reiterated that authorities are closely monitoring FX moves, warning that oil-driven volatility is feeding into currency markets and affecting the broader economy. The yen edged modestly stronger on the session, with intervention risk still lingering in the background.On the central bank front, ECB board member Isabel Schnabel struck a measured tone, noting the euro area is in a relatively favourable position after returning inflation to target pre-war. She emphasised that policy is broadly neutral and that the ECB can take time to assess whether the Iran shock generates lasting second-round inflation effects.Data flow was mixed. Australia’s labour market remained resilient, with employment rising 17.9k (exp 20k) and unemployment steady at 4.3%, reinforcing the view that the RBA retains room to tighten. The Australian dollar gained, lifting the kiwi alongside it, while the US dollar was broadly weaker.In China, Q1 GDP beat expectations at 5.0% y/y (exp 4.8%), though accompanying activity data painted a softer picture, with weak retail sales and ongoing property sector stress highlighting a fragile recovery.On the corporate front, reports that the Pentagon is exploring ways to boost weapons production with US manufacturers underscore the likelihood of sustained defence demand, with potential spillovers into broader industrial sectors. This article was written by Eamonn Sheridan at investinglive.com.

Trump pumping talks between Israel and Lebanon, adding to positive sentiment. This article was written by Eamonn Sheridan at investinglive.com.

Japan's Finance Minister Katayama has been verbally intervening today: Not once, but twice:Japan's Finance Minister Katayama said to intensify communication with BessentDropping in the B word in is more forceful verbal interventionJapan’s Katayama says closely watching FX as oil volatility hits yen This article was written by Eamonn Sheridan at investinglive.com.

Iran has proposed allowing ships safe passage via the Omani side of Hormuz as part of US talks, signalling potential easing of disruptions, though flows remain far below pre-war levels.Summary:Iran has reportedly proposed allowing ships to transit the Omani side of Hormuz without attack. The proposal is conditional on progress in negotiations with the US. Shipping remains heavily disrupted, with traffic far below pre-war levels. Hundreds of vessels and ~20,000 seafarers remain stranded The Strait of Hormuz, previously fully open pre-war, remains a key unresolved issue. Would mark a partial de-escalation from earlier hardline proposals (fees, control claims).Iran is considering a partial de-escalation in the Strait of Hormuz, offering to allow ships to transit safely through the Omani side of the critical waterway as part of ongoing negotiations with the United States, according to sources familiar with the discussions. Reuters carreid the report ICYMI. The proposal would permit vessels to pass through waters adjacent to Oman without risk of attack, potentially restoring limited shipping flows through one of the world’s most important energy chokepoints. However, the offer is conditional on progress in broader negotiations aimed at preventing a renewed escalation in the US-Iran conflict.The Strait of Hormuz, through which roughly 20% of global oil and liquefied natural gas flows, has been severely disrupted since the outbreak of war on February 28. Prior to the conflict, the strait functioned as a stable and open artery for global trade. Since then, traffic has collapsed to a fraction of normal levels, with hundreds of vessels stranded and an estimated 20,000 seafarers unable to exit the Gulf.While a ceasefire has been in place since April 8, shipping conditions have yet to normalise. The situation has been further complicated by a US blockade targeting vessels linked to Iranian ports, adding another layer of uncertainty for operators navigating the region.Iran’s proposal marks a notable shift from more aggressive measures floated in recent weeks, including the possibility of imposing transit fees or asserting broader control over the strait—moves that drew strong opposition from the international community and maritime authorities.However, key uncertainties remain. It is unclear whether Iran would clear any mines in the proposed transit corridor or whether all vessels, including those linked to Israel, would be granted safe passage. The proposal’s success ultimately depends on whether Washington is willing to meet Tehran’s conditions in ongoing negotiations.If implemented, the plan would represent the first concrete step toward restoring shipping flows, though likely only partially. Even then, the return to pre-war norms appears distant, with security risks and geopolitical tensions continuing to weigh on one of the world’s most vital trade routes.-Potentially bearish for oil if credible, as it signals partial restoration of flows. However, conditionality and execution risks mean markets likely price only a limited easing of the risk premium for now. This article was written by Eamonn Sheridan at investinglive.com.

Summary:Reports (FT, echoed by Reuters/Fox) say Iran used a Chinese satellite to monitor US bases. The IRGC allegedly gained access to the satellite after launch and used it for targeting support. Satellite imagery was reportedly used before and after strikes on US-linked sites. The development suggests a significant upgrade in Iran’s ISR (intelligence, surveillance, reconnaissance) capability. Raises concerns over potential China–Iran strategic alignment, though Beijing has denied involvement. Adds a new technological dimension to the war, increasing risks to US assets and regional escalation.Iran is reported to have used a Chinese satellite to enhance its ability to monitor and target US military bases across the Middle East during the recent conflict, in what would mark a notable shift in the technological dynamics of the war.According to reporting by the Financial Times, later cited by other outlets, Iran’s Islamic Revolutionary Guard Corps (IRGC) obtained access to a Chinese-built satellite and used it to gather intelligence on key US-linked military sites. The satellite, originally launched for civilian purposes, was reportedly repurposed to provide surveillance imagery, allowing Iranian forces to track targets before and after missile and drone strikes.Fox is now reporting it has confirmed the original FT story. The capability represents a meaningful step up for Iran’s military operations. Historically reliant on more limited domestic satellite systems and regional intelligence networks, access to higher-quality commercial or quasi-commercial satellite imagery would significantly improve targeting accuracy and battle damage assessment.Some reports suggest the satellite was tasked with monitoring bases in Saudi Arabia, Jordan and the Gulf region during periods that coincided with Iranian attacks, reinforcing the view that space-based intelligence played a role in operational planning.The development also raises broader geopolitical questions. While there is no confirmation of direct state-to-state military coordination, the reported use of Chinese-built infrastructure by Iran highlights the increasingly blurred line between commercial and strategic technology flows. Beijing has denied involvement, pushing back against claims of any deliberate support. From a market and geopolitical perspective, the implications are significant. The war is no longer just a regional military confrontation but is increasingly incorporating advanced surveillance and space-based capabilities, complicating the security environment for US and allied forces.The episode underscores how modern conflicts are evolving, with access to space-based intelligence becoming a key force multiplier. It also adds another layer of tension to already strained US-China relations, particularly if Washington views such capabilities as indirectly enabling adversarial military operations. ---Geopolitically bullish for oil and safe havens. Signals escalation in warfare capability and raises US-China tension risks. Adds to uncertainty around military balance and duration of conflict. This article was written by Eamonn Sheridan at investinglive.com.

Japan’s Katayama said authorities are closely watching FX and in dialogue with the US, warning oil-driven volatility is impacting the yen and economy, keeping intervention risk in focus. Earlier:Japan's Finance Minister Katayama said to intensify communication with BessentSummary:Japan Finance Minister Katayama said authorities are closely watching FX moves and have communicated this to the G7. She confirmed discussions with US Treasury Secretary Bessent, agreeing to maintain close dialogue on currencies. Katayama highlighted that oil market volatility is feeding into FX moves and impacting the broader economy. She stressed that FX volatility is affecting livelihoods, reinforcing sensitivity to yen weakness. She said she was not aware of any discussion on BOJ monetary policy during talks with Bessent. Remarks reinforce ongoing vigilance and keep intervention risk in focus.Japan’s Finance Minister Satsuki Katayama reiterated the government’s heightened vigilance over currency movements, signalling continued concern about yen volatility as global energy markets remain unsettled by the Iran conflict.Speaking after international discussions, Katayama said Japan had informed its Group of Seven counterparts that it is closely monitoring developments in foreign exchange markets. She also confirmed holding talks with US Treasury Secretary Scott Bessent, with both sides agreeing to maintain close communication on currency issues.Her comments come as sharp swings in oil markets—driven by the ongoing Middle East conflict—spill over into foreign exchange markets, contributing to heightened volatility in the yen. Katayama emphasised that fluctuations in energy prices are not only affecting financial markets but are also feeding through to the real economy, impacting households and business conditions.The linkage between oil and currency moves has become increasingly important for Japan, a major energy importer, where higher oil prices can weigh on the trade balance and put downward pressure on the yen. Katayama’s remarks suggest authorities are acutely aware of these dynamics and remain prepared to respond if market moves become disorderly.At the same time, she sought to draw a clear line between fiscal and monetary policy responsibilities. When asked whether Bank of Japan policy had been discussed during her meeting with Bessent, Katayama said she was not aware of any such conversation, reinforcing the formal separation between government currency policy and central bank decision-making.The overall tone of her comments underscores a familiar message from Japanese authorities: that excessive or disorderly currency movements are undesirable and warrant close attention. While no explicit intervention warning was issued, the combination of G7 communication, bilateral engagement with the US and references to economic impact keeps the risk of policy action in focus.---Keeps intervention risk alive, particularly if yen weakness accelerates. Reinforces sensitivity to oil-driven FX moves, with USD/JPY likely to remain reactive to energy prices and policy signalling. This article was written by Eamonn Sheridan at investinglive.com.

China industrial output beat forecasts in March, but retail sales missed and property investment stayed weak, highlighting a fragile recovery as the Iran war adds to growth risks.Earlier:China Q1 GDP beats forecasts but Iran war risks loomChina March new home prices -3.4% y/y (February -3.2%)Summary:China industrial production rose 5.7% y/y (exp 5.3–5.5%; prior 6.3%), beating forecasts. Retail sales slowed sharply to 1.7% y/y (exp 2.3–2.4%; prior 2.8%), missing expectations. Fixed-asset investment came in at 1.7% y/y (exp 1.9%; prior 1.8%), undershooting forecasts. Property investment remained deeply negative at -11.2% y/y (prev -11.1%). Surveyed unemployment rate rose to 5.4% (exp 5.2%; prior 5.3%). Data show a mixed picture: industrial resilience but weak consumption and ongoing property drag.China’s March activity data painted a mixed picture of the economy, with stronger-than-expected industrial output offset by weakness in consumption and continued stress in the property sector, as the early effects of the Iran war begin to filter through.Industrial production rose 5.7% year-on-year in March, beating expectations for around 5.3–5.5%, although the pace slowed from 6.3% growth in the first two months of the year. On a year-to-date basis, output expanded 6.1%, slightly below expectations and easing from earlier momentum, suggesting some moderation in factory activity.In contrast, retail sales disappointed, rising just 1.7% year-on-year, well below expectations of around 2.3–2.4% and down from 2.8% previously. The weakness underscores ongoing fragility in household demand, which remains a key constraint on China’s broader economic recovery.Investment data also came in soft. Fixed-asset investment grew 1.7% year-to-date, missing expectations and slipping from 1.8% previously. Within that, private sector investment contracted 2.2%, highlighting subdued business confidence, while infrastructure investment remained a relative bright spot with 8.9% growth.The property sector continues to act as a major drag. Real estate investment fell 11.2% year-on-year in the first quarter, with new construction starts plunging more than 20% and developer funding conditions remaining tight. While residential property sales showed some improvement, they remained sharply negative, down 18.5% year-to-date.Labour market conditions also showed signs of softening, with the surveyed unemployment rate rising to 5.4%, above expectations.Taken together, the data suggest China’s economy is entering a more challenging phase. Industrial activity is holding up for now, but weak consumption, falling private investment and a deep property downturn point to underlying fragility.With the Iran war driving higher energy costs and weighing on global demand, the outlook for the coming quarters is increasingly uncertain, with risks skewed toward slower growth. -Mixed for markets: industrial strength supports near-term sentiment, but weak consumption and property risks reinforce expectations of policy support. Growth concerns remain as external shocks build. This article was written by Eamonn Sheridan at investinglive.com.

Poor data re the property sector from China once again. China's stats people say:In March 2026, home prices in Tier-1 cities rose m/m,declines in Tier-2 and Tier-3 cities narrowed or stabilizedmore cities saw m/m gains in both new and existing home pricesthe number of cities seeing month-on-month increases in both new and existing home prices rose from the previous month. This article was written by Eamonn Sheridan at investinglive.com.

China Q1 GDP rose 5.0% y/y (exp 4.8%), beating forecasts, but officials warned the external outlook is becoming more complex as the Iran war-driven oil shock raises risks for growth.Summary:China Q1 GDP rose 5.0% y/y (exp 4.8%; prior 4.5%), beating expectations. Quarterly growth came in at 1.3% q/q (exp 1.3%; prior 1.2%). The data point to a solid start to the year before the Iran war impact fully hits. Officials warned the external environment is becoming more complex. China remains highly exposed to the oil shock as a major energy importer. Growth risks are building into Q2 and beyond despite the strong Q1 print. China’s economy grew faster than expected in the first quarter of 2026, offering a solid start to the year, though rising external risks linked to the Iran conflict are expected to weigh on momentum in the months ahead.Official data showed gross domestic product expanded 5.0% year-on-year in the January–March period, exceeding market expectations for a 4.8% increase and accelerating from 4.5% growth in the previous quarter. On a quarterly basis, the economy grew 1.3%, in line with forecasts and slightly stronger than the 1.2% expansion recorded in the final quarter of 2025.The stronger-than-expected result suggests that China entered the current global shock from a position of relative stability, supported by resilient activity early in the year. However, policymakers were quick to flag mounting challenges, with the statistics bureau noting that the external environment is becoming increasingly complex.The escalation of conflict in the Middle East has introduced a significant new headwind. As the world’s largest energy importer, China is particularly vulnerable to higher oil prices, which are already feeding through into rising production costs and pressuring industrial margins. At the same time, the country’s export-reliant growth model leaves it exposed to any slowdown in global demand.Early signs suggest the energy shock is beginning to affect trade and broader economic activity, raising concerns that the current pace of growth may not be sustained. The first-quarter data are therefore likely to represent a “pre-shock” snapshot, before the full effects of higher energy costs and geopolitical uncertainty take hold.Looking ahead, economists expect growth to moderate in the coming quarters as these pressures intensify. While Beijing retains policy tools to support the economy, the balance between maintaining growth and managing inflation risks is becoming more delicate.Overall, the data reinforce a familiar theme: a strong starting point for the year, but with downside risks building rapidly as external conditions deteriorate.-Short-term positive for risk sentiment and China-linked assets, but likely fades as focus shifts to Q2 slowdown risks. Oil exposure and export sensitivity keep downside risks elevated. This article was written by Eamonn Sheridan at investinglive.com.

Schnabel signalled the ECB has room to stay patient after the Iran shock, arguing inflation is back at target and policy is neutral, allowing officials to wait for evidence of any lasting second-round effects.Summary:ECB’s Isabel Schnabel said the euro zone is in a relatively favourable position because inflation had already been brought back to 2% before the Iran war began. She said the ECB’s policy stance is now broadly neutral, giving policymakers more room to assess the latest shock calmly. Schnabel argued there is no need to rush into action and said the ECB can take time to analyse the character of the Iran-related shock. She stressed the importance of staying data-dependent as officials judge whether the latest price pressures risk becoming more persistent. A key focus for the ECB will be whether inflation starts to become entrenched through second-round effects. Her remarks suggest the bar for an immediate policy response remains high despite renewed geopolitical uncertainty.European Central Bank board member Isabel Schnabel said the ECB is in a comparatively comfortable position to assess the inflation fallout from the Iran war, arguing that policymakers do not need to respond hastily because euro zone inflation had already been returned to target before the latest geopolitical shock hit.Schnabel said the ECB had successfully brought inflation back to 2% before the conflict began, while the current monetary policy stance is broadly neutral. That, she suggested, gives officials breathing room to evaluate whether the latest surge in uncertainty and energy-related risks will prove temporary or evolve into something more persistent.Her comments point to a patient, data-driven approach from the ECB at a time when markets are trying to judge whether the Iran war will create another sustained inflation pulse through higher oil and energy costs. Rather than signalling an urgent policy shift, Schnabel indicated the central bank can afford to spend time understanding the nature of the shock before deciding whether any response is needed.She also underlined that policymakers must remain highly attentive to incoming data, particularly any evidence that inflation pressures are becoming entrenched. In that context, the ECB is likely to focus closely on signals that higher energy prices are feeding into wages, services inflation or broader second-round effects across the economy.The broader message from Schnabel is that the ECB sees itself as better prepared than in earlier inflation waves. Inflation is no longer far above target, policy is no longer clearly stimulative, and that combination allows the Governing Council to avoid knee-jerk moves while still remaining alert to upside inflation risks. For markets, her remarks lean mildly hawkish in the sense that they suggest patience, caution and a reluctance to deliver quick support unless the data clearly justify it.The remarks suggest no immediate ECB reaction function shift despite the Iran war, which may help anchor front-end rate expectations for now. But Schnabel’s emphasis on fragile inflation expectations and second-round risks keeps a hawkish undertone in place. This article was written by Eamonn Sheridan at investinglive.com.

I posted a preview of the Australian jobs report here:For the Reserve Bank: despite a softening labour outlook, inflation risks tied to the energy shock remain the dominant concern. As a result, upcoming labour data is unlikely to materially shift near-term policy expectations.China’s first-quarter GDP is expected to show a modest pickup in growth, supported by resilient exports, though the outlook for the remainder of 2026 is increasingly clouded by external risks and weak domestic demand.Economists broadly expect the January–March expansion to come in around 4.7–4.8% year-on-year, up from 4.5–5.0% in the fourth quarter, marking a tentative rebound after growth slowed to a multi-year low late last year. On a quarterly basis, activity is seen improving slightly to around 1.3%, suggesting some stabilisation in momentum at the start of the year.However, the underlying detail points to a still-fragile recovery. March activity indicators are expected to remain soft overall, with retail sales forecast to slow to around 2.5% year-on-year, highlighting persistent weakness in household consumption. Fixed-asset investment is also seen subdued at roughly 1.9% year-to-date, reflecting ongoing caution among businesses and local governments.Industrial production is a relative bright spot, projected to grow around 5.5% year-on-year, underpinned by export-oriented manufacturing and pockets of strength in high-tech sectors. Even so, export momentum is expected to cool as the year progresses, particularly if global demand weakens.The property sector remains a key drag. Nationwide housing prices across China’s 70 major cities are expected to stay in negative territory, though any signs of a slower pace of decline would offer tentative encouragement that the sector is nearing a bottom.Looking ahead, economists expect growth to ease through the rest of 2026, with full-year GDP projected around 4.6%. The ongoing Middle East conflict, via higher energy costs and pressure on global demand, is seen as a growing headwind, squeezing corporate margins and complicating the recovery.Policy support is likely to remain measured. With growth tracking within Beijing’s 4.5–5.0% target range, authorities may opt for incremental easing—such as reserve requirement cuts—rather than large-scale stimulus, while continuing to prioritise consumption support over the medium term. This article was written by Eamonn Sheridan at investinglive.com.

Fed's Beige Book: Overall activity showed slight to modest growth in 8 of 12 districtsECB sources report: Policymakers wary of April rate hikeJapan's Katayama said she spoke with Bessent about currenciesUS and Iran said to be weighing two-week ceasefire extensionUS EIA weekly crude oil inventories -913K vs +154K expectedUS NAHB April housing market index 34 vs 37 expectedCeasefire in Lebanon will be approved tonight - reportFed's Hammack signals "patient policy" as Fed navigates five-year inflation missCanada February manufacturing sales +3.6% vs +3.8% expectedEmpire Fed April manufacturing index +11.0 vs -0.5 expectedMarkets:Gold down $46 to $4749WTI crude oil down 28-cents to $90.99US 10-year yields up 2.5 bps to 4.28%AUD leads, JPY lagsIt was another big day in the market as the Nasdaq rose for an 11th consecutive day. The combination of hopes for peace in the Middle East combined with AI optimism has led to a powerful rebound. The question now is whether there is some retracement or whether the FOMO afterburners kick in during earnings season.S&P 500 up 0.8% --- first record closing high since Jan 27Nasdaq up 1.6% to first record closing high since October 29Russell 2000 +0.1%DJIA -0.2%Toronto TSX Comp +0.2%The numbers here highlight some of the divergence as tech is carrying this rally. That shows that it's that sector and a re-leveraging in it that's mostly driving the move. The real economy stocks didn't do much on Wednesday, though they've all had a big bounce from the lows.What worries me is that we've seen big moves in things like quantum computing stocks that are a fair proxy for retail and options activity. That can sometimes be a leading indicator but it's fragile.For what it's worth, there wasn't much validation of the stock market move elsewhere. Treasury yields were 1-3 bps higher across the curve and oil was down just 28-cents while gold was lower. The FX market did see some positive bids in commodity currencies but the euro was flat. Australian jobs data is due later.It looks like we will need a fresh catalyst or actual peace deal to move the needle from here but earnings have also been good and financials have been bid on strong numbers all week. The commentary from banks was also generally good for the real economy and the economic data since the war began has been constructive. Tomorrow we get numbers on initial jobless claims and the Philly Fed. This article was written by Adam Button at investinglive.com.

The market is increasingly looking beyond the war in Iran and that makes it a good time to look to future fundamentals.An interesting spot to watch this year is USD/CAD as USMCA negotiations will be front and center shortly. The way that Trump handled the war is a reminder of his negotiating strategy, which is always about brinksmanship, leverage and threats. It's hard to imagine the trade deal will be any different.I think there is going to be a deal because Republicans in Congress will demand one but the path to get there won't be clean and Canada will have to compromise on something. When I zoom out, I can see a bearish case for the pair as it looks like a messy head-and-shoulders top that targets something in the 1.25 range.The post-war fundamentals support that. Commodity prices remain elevated and Canada's Carney government has now secured a majority. The Prime Minister built last year's campaign around making it easier to build in Canada and I expect a series of measures around that in the coming months. The stability also ensures that foreign investors will take a long look at Canada.The post-war landscape and Hormuz blockade may also lead to Europe and Asian investment in Canadian oil and gas. In the near term, we're likely to get a positive FID on Shell's second stage of LNG Canada. That's not really a needle mover because it's expected but it could put the focus on other investments.As for the domestic economy, it's ok. Carney announced a 10-cent/liter discount on gasoline through September and that's a small boost to the consumer but the story of 2025 was just how strong Canadian spending was. That was something that was repeatedly emphasized by Canadian retailers, including Walmart. The latest airline data also shows Canadians continuing to travel (though not to the US) in a good sign of consumer health.A big drag is housing, which is in a deep correction in Ontario and other parts of the country. No help is on the way from further rate cuts at this point but governments in Ontario and the Federal government are waiving sales tax on new homes, so that could at least boost construction activity.I don't see any big drop off in the economy but I also don't see a path to 3% growth any time soon. So Canada should muddle along in relatively good health and that's probably enough to trip USD/CAD lower. The catalyst is more likely to be broader USD weakness, especially if fiscal conservatism makes a comeback after the midterms, and there's a push to cut the enormous US deficit. This article was written by Adam Button at investinglive.com.

Slight to modest growth in 8 of 12 districtsTwo districts with little changeTwo districts with modest declinesThe April Beige Book landed with a thud. Eight of twelve districts managed slight-to-modest growth, but two were flat and two — Boston and New York — actually contracted. That's not a recession signal, but it's not exactly confidence-inspiring either.The elephant in the room is the Middle East conflict, which gets mentioned on practically every page of the report. It's driving energy costs sharply higher across all twelve districts, pushing up freight, plastics, fertilizers, and basically anything that touches a barrel of oil. The Strait of Hormuz closure is now feeding directly into fertilizer supply disruptions, and Cleveland contacts described fuel costs as "skyrocketing." This is a supply shock playing out in real time.The labor market is frozen, not broken. Employment is essentially flat nationwide — low hiring, low firing, low turnover. The same thing we've been hearing from most Fed officials. Companies are stuck in wait-and-see mode. The big tell here is the surge in demand for temp workers across multiple districts, that's generally good but it could be bad because they're waiting for AI disruption.Margins are getting crushed. This is the key story for anyone trading equities. Input costs are running well ahead of selling prices almost everywhere. Firms can't pass through the full hit from energy, metals, and tariffs to consumers who are already stretched. Philadelphia reported a homebuilder eating construction cost increases because sale prices are locked in before building starts. The consumer is hanging in there — barely. Spending is up slightly on aggregate, but the bifurcation is stark. Luxury is fine. Everything else? Food bank demand is surging. Multiple districts flagged rising credit card usage, debt consolidation, and overdrafts. A New York restaurateur noted working-class consumers are being squeezed by car costs, insurance, and food. One Kansas City contact put it bluntly: LMI households "can't out-budget low wages, tariffs, and inflation."Housing is stuck. Today's NAHB housing market index was bad and mortgage rates are back above 6.5%. Inventories are starting to build in some markets but remain tight in others. The million-dollar-plus segment is doing fine because of course it is.The commercial real estate bright spot is data centers. Basically every district mentioned them. AI-related leasing is surging in New York, though with shorter lease terms — which tells you these companies aren't sure how big they'll actually get. Meanwhile, Class A office is strong, everything below that remains challenged.Overall, it's not a great economy aside from a few pockets, though the end of the war should help. This article was written by Adam Button at investinglive.com.

The S&P 500 is trading up 34 points to 7001, edging above the previous record set January 28.That's an impressive gain in just 11 trading days since the March 30 low.It begs the question: Was there a tell at the bottom.In terms of fundamentals, if we go back to the start of the rally on March 31 and read the news recap from that day, it's hard to see anything remotely close to a 'buy everything' headline.Trump was telling other countries to deal with Hormuz themselves and Iran's President was repeating lines about being prepared to end the war with guarantees. The bull case at the time was that Trump would walk away and Europe/China would have to deal with Hormuz.The one hint was from an Axios report that China had got involved in talks. That's not something that's been widely discussed since but China is surely playing a role here and -- as the buyer of much of Iran's oil -- it absolutely has leverage. Could that have been the trigger? Within that China report there was also a note that had also been a tweet earlier and said:In a brief phone call with Axios, Trump said "the negotiations with Iran are going well."That was a tidbit the bulls latched onto.Equally important was positioning and sentiment. I highlighted the Extreme Fear in the Fear & Greed Index at the time of the bottom and cited a Goldman Sachs note that said this:Systematic positioning is now approaching washed-out levels. Our CTA estimates show positioning has flipped to outright short in US equities, which has historically been associated with more supportive near-term price action.Finally, there was talk about repositioning and rebalancing into the March 31 quarter end that's also important. That initial squeeze surely had some of that and I wrote about it but also added this.Now if I remember back to March 2020, there was a similar sentiment then are big bids came in at the end of what had been the worst month for equities in many years. Plenty of people were convinced to fade that strength but it didn't stop in April and continued through 2022. Oftentimes, once the psychology of the market flips back to 'buy the dips', there is simply no fighting it.So while some cautious is warranted and the oil market needs to be watched closely, there is room for optimism. We will be watching very carefully tomorrow Obviously, stocks continued higher the next day and haven't stopped since. Much of that was Trump TACOs but there are some good lessons here:Watch for sentiment to get washed outThe news doesn't really need to get better, it just needs to stop getting worseThe Presidency is a powerful thing and it became somewhat clear that Trump wanted the war to end the next dayI would not say (at all) that this was an easy episode to trade. Trump is so full of threats and over-the-top claims that it's tough to see what's true. There were also non-stop leaks and rumors, along with abundant fears of insider trading.Finally, I wouldn't underestimate the impact of Claude's latest Mythos model, which was also leaked just before the bottom. That helped to put a bottom in tech shares and restore the AI enthusiasm from 2025. This article was written by Adam Button at investinglive.com.

Reuters is out with an ECB sources report that says they're wary of hiking in April as there is no evidence yet of second-round effects.Yesterday, the market had been pricing in a 39% chance of a hike and this looks designed to drive that down. The way the ECB does business is bizarre as Lagarde was speaking yesterday and could have done this herself but didn't offer any kind of nod.My guess is that this is part of a long climbdown from hawkish talk as the war winds down. The odds of an April hike are already down to 23% and a single hike is now priced in For June with 57 bps of hikes on the year.All of that sounds too hawkish to me with the IMF yesterday dropping its Eurozone growth forecast to 1.1% from 1.3%.The euro is largely unmoved. This article was written by Adam Button at investinglive.com.

The Nasdaq is on a run for the ages as the market quickly shifted from fear of an oil shortage to enthusiasm about peace. It's an 11-day day rally in the tech index that has seen some huge gains and a 15% rally in the index from the March 30 low.The bad news is that we're now meaningfully overbought on short-term indicators and running into the Jan and Oct highs (record) near 24,000. I expect those to give way but some consolidation first is likely. That said, a break out would really catch the market off guard and lead to some serious FOMO buying.In terms of the war, it's worth a reminder that it's not over and we haven't reached a peace yet. Negotiations are always hardest at the end and we could get some kind of strikes, or at least a war of words and brinksmanship at any point. It's safe to say that peace is 95% priced in now so all those risks are to the downside.There are signs that short covering is fuelling the latest leg of the rally. Tesla is a leader today, up 7.5% and the heavily-shorted software names are rallying, with the IGV software ETF up 3.4%. With that, Intuit is up 5.5% and Adobe is up 3.9% despite a report saying Anthropic could release an AI design tool as soon as next week.Another name making a big move today is Microsoft, which is up 4% and is back to pre-war levels. However the stock is still in a big home compared to where it was in October.I think it's still worth keeping an eye on Iran war headlines but what's less discussed is the news that came out during the war. The main one was Claude Mythos and that looks to be another step change in AI model power. It's not out yet but the reports about its hacking capabilities and usefulness among those who have used it are compelling. I think that's reinvigorated the enthusiasm for tech in general and it's why we're not likely at the end of bull market. This article was written by Adam Button at investinglive.com.

Japanese Finance Minister Satsuki Katayama has repeatedly warned of "bold actions" and "firm" responses to "excessive" yen volatility as it approaches the 160 per dollar mark. Now she reveals she has spoken with Bessent about currencies and the two agreed to remain in close contact.She also said that she will take strong actions on FX if necessary.There is an alignment of interests here between the US and Japan. The Trump administration wants a weaker dollar for export competitiveness while Japan wants a stronger yen. That probably only comes into play on another test of 160 and that's looking a bit less likely now with oil prices falling and the war file improving.That said, the pair tested 160 several times before the war so the fundamentals are what they are. This article was written by Adam Button at investinglive.com.

This is nothing really new as AP reported hours ago that a two-week ceasefire was on the table. At the moment, all the headlines are pointing towards peace.Despite that, there are some more equity bids on this and oil is ticking lower. The Nasdaq is now up 1% in its 11th (!) day in a row of gains.About an hour ago, Axios reported that the US and Iran made progress in talks on Tuesday, moving closer to a framework agreement to end the war. This article was written by Adam Button at investinglive.com.