Market News

EU officials warn a sustained energy shock from Middle East tensions could push inflation above 3% in 2026 and slow economic growth across the bloc.

Summary:

• EU warns inflation could exceed 3% in 2026 if oil and gas prices remain elevated.

• Brent crude near $100 per barrel would significantly worsen the inflation outlook.

• EU economy chief Valdis Dombrovskis says growth could fall 0.4 percentage points below the 1.4% forecast.

• Energy shocks and supply disruptions linked to the Iran conflict could weigh on activity.

• The International Energy Agency plans to release 400 million barrels from emergency reserves to ease oil prices.

• Higher inflation risks may force the European Central Bank to consider further rate hikes despite weaker growth.

The…

There is nothing on the schedule of events to move around markets too much.

As for the war, this raises more questions than answers:

• Trump suggests there's "practically nothing left" to target in Iran, war will end soon

Q1 is why the Strait of Hormuz is not yet safe if this is the case. Anyway, this guy is not known as a straight shooter, best ignored.

This article was written by Eamonn Sheridan at investinglive.com.

• Says oil will be coming down
• Says the US has hit 28 mine ships
• They've hit Iran's leadership twice

We've heard all this before, just announce the end already. Try to make some kind of peace deal where ships can get through.

At the end of the day, what will this have really accomplished? Forcing Iran to build a new generation of weapons? Them realizing that Hormuz is their real leverage point?

This article was written by Adam Button at investinglive.com.

• Says oil will be coming down
• Says the US has hit 28 mine ships
• They've hit Iran's leadership twice

We've heard all this before, just announce the end already. Try to make some kind of peace deal where ships can get through.

At the end of the day, what will this have really accomplished? Forcing Iran to build a new generation of weapons? Them realizing that Hormuz is their real leverage point?

This article was written by Adam Button at investinglive.com.

This is from Iran President Masoud Pezeshkian:

Talking to leaders of Russia and Pakistan, I reaffirmed Iran’s commitment to peace in the region. The only way to end this war—ignited by the Zionist regime & US—is recognizing Iran’s legitimate rights, payment of reparations, and firm int'l guarantees against future aggression.

Those are certainly some aspirational demands, similar to the kinds of things that Ukraine has asked for. The US counter offer is likely "we'll stop dropping bombs on you" and Iran will almost certainly take it.

That said, there is always the risk that Iran wants to keep fighting and senses leverage in the Hormuz.

Also notable is a separate report that said Pezeshkian has had no contact with Mojtaba Khamenei. So it's not…

• Prior was -95.0B
• Last Feb was -137B
• The fiscal year-to-date deficit is $1.004 trillion vs $1.147 trillion a year earlier
• Outlays $621B vs $603B a year earlier
• Receipts $313B vs $296B a year earlier
• Net customs receipts of $26.59B

When you factor in the tariff refunds that are coming, the deficit is on track to break the prior year. The war expense won't help either, though it's fairly negligible in the US scale. There could be some positive accounting around the SPR release but it will eventually need to be refilled.

The Monthly Treasury Statement, published by the U.S. Department of the Treasury, provides a detailed accounting of federal government receipts, outlays, and the resulting surplus or deficit for each month. It serves as the primary…

Iran has threatened to strike the US west coast with offensive drones in retaliation for American military operations, according to an FBI warning issued to California police departments.

This is an ABC News report and it reads to me like the kind of standard thing that police dept's would send out at a time like this, not some kind of imminent operation.

There is some risk-off trading on this and that kind of attack is the kind of thing that could draw the US into a long, messy ground war.

This article was written by Adam Button at investinglive.com.

• High-yield. 4.217%
• WI level at the time of the auction 4.210%
• Tail 0.7 basis points versus 6 month average of 0.3 basis points
• Bid to cover 2.45X versus 6 month average of 2.48X 6 month average of
• Directs 12.8% vs 6 month average of 20.3%
• Indirects 74.5% versus 6 month average of 69.3%
• Dealers 12.7% versus 6 month average of 10.3%

Auction Grade: C-

The 10-year note auction came in with below-average demand, though it was not as weak as the 3-year auction held yesterday.

The auction tailed by 0.7 basis points above the six-month average, indicating investors required a slightly higher yield to take down the supply. The bid-to-cover ratio was roughly in line with the six-month average, suggesting overall participation was steady but not particularly…

• Spain has been bad, may cut off trade
• Spain's leadership is not so good

On Iran:

• Not worried about any Iran-backed attacks on US soil
• Just spoke with leaders of various countries (this would have been on the IEA oil reserves call)
• On Iran, Trump asserts: "We're not finished yet."

From Trump:

"We're doing something that nobody ever thought was possible to do. Our military is the best, it's the most powerful in the world, and they're hitting them very hard. This is 47 years of abuse — and killing lots of people."

This article was written by Adam Button at investinglive.com.

The White House is moving to resurrect its tariff agenda through fresh Section 301 probes targeting what it calls unfair trading practices — a workaround after the Supreme Court struck down earlier levies. The NYT says the announcement will come today.

The USTR will lead the investigations, with excess manufacturing capacity the headline issue — Washington's term for countries that subsidize domestic production beyond domestic demand. Also in the crosshairs: digital services taxes, forced labor, and currency manipulation.

The move follows USTR Greer's comments last month flagging Asian nations that "make more than they can consume" as prime targets. We will await signs on which countries are targeted.

Trump is the administration laying the…

Axios spoke with Trump

"Any time I want it to end, it will end," Trump said during the five-minute call with Axios.

"The war is going great. We are way ahead of the timetable. We have done more damage than we thought possible, even in the original six-week period," Trump told Axios.

This is the strongest signal yet that the war could end in the near-term.

Trump in the article hiimself said it will end "soon" however the same article cites other reports saying Israeli and US officials who have said they are preparing for at least two more weeks of strikes in Iran.

But there is one person in charge of the US military during this operation and -- like he said -- it will end when he wants it to. It sounds like he doesn't have the appetite to…

Today's CPI report was bang in-line with estimates so that gives the Fed breathing room to wait and see what happens with prices. What's complicating that is the spike in crude oil due to the Iran war. WTI continues to bounce around and is up $1.52 to $84.90 today after rising as high as $89.

The interaction with oil, inflation and growth is top-of-mine for bond investors at the moment. Against that is the bid for safety in a world of tariffs and unprovoked US attacks. US 10-year yields are up 5 bps to 4.19%.

That rise isn't hurting stock markets as the S&P 500 is now positive, led by a 12% rally in Oracle shares following earnings.

Looking at the chart, 10-year yields hit 4.216% on Monday as oil prices peaked. They fell below 4.10%…