Market News

Katayama says that:

• It would be desirable for currencies to move in stable manner reflecting fundamentals
• We are watching market developments closely, prepared to take various measures if needed
• Intervention could be included in various measures as agreed under US-Japan joint statement
• Will keep an eye on any increase in bond yields

The comments above are not anything new. We've heard them all before and many a time in the past two months. When it comes to Japan officials intervening verbally, it is more so on the timing. And this comes after USD/JPY ran higher close to the 158.00 level overnight, the highest point since Tokyo performed 'rate checks' at the end of January.

Despite normally being a safe haven currency, the yen hasn't found any…

The best-case scenario in this war (for markets at least) is that Iran quickly folds.

Here are some estimates about how many missiles Iran has launched each day of this campaign.

• Day 1 (Feb 28) — ~350 Ballistic Missiles: Open-source intelligence confirms that on the first day alone, Iran fired at least 247 ballistic missiles at just three Gulf states: the UAE (~137), Qatar (~65), and Bahrain (~45). When you add the simultaneous barrages directed at Israel, Jordan, Kuwait, and Saudi Arabia, the aggregate total easily hits the ~350 mark.

  Day 2 (March 1) — ~175 Ballistic Missiles: This drop-off is corroborated by regional defense reports. For context, the UAE Ministry of Defense reported a sharp decline in their sector on Day 2, intercepting…

• Prior was 49.3
• Non-manufacturing 49.5 vs 49.4 prior
• Composite 49.5 vs 49.8 prior

The malaise in the Chinese economy continues.

• Prior quarter was +0.4%
• Real GDP y/y +2.6% vs +2.2% expected
• Prior y/y GDP was +2.1%
• Final consumption expenditure +0.5% vs +0.6% prior
• GDP chain price index +1.4% vs +0.8% prior
• Gross fixed capital expenditure +0.7% vs +3.0% prior

This is a good report, though there has been little reaction from AUD.

Australia just dropped a Q4 GDP print that blew past expectations and puts the recovery story front and centre.

After flirting with stall speed through mid-2024 — when quarterly growth scraped down to barely 0.1% — the rebound has been real. Growth stepped up through early 2025, printing around 0.4–0.5%, before surging to roughly 0.7% around the middle of the year. The latest read has cooled back to 0.4%, but the trend is still comfortably above…

• Prior was -2.1%
• Import prices vs +0.8% expected
• Prior import prices +0.5%
• Export prices vs +0.5% expected
• Prior export prices -1.6%

New Zealand's terms of trade measure the ratio of the country's export prices to its import prices, serving as a key indicator of the nation's purchasing power in international markets. This metric is particularly important for New Zealand given its heavy reliance on commodity exports, especially dairy, meat, forestry products, and horticultural goods.

Throughout 2025, New Zealand's terms of trade were shaped by several intersecting forces. Global dairy prices, which represent a significant share of export revenue, experienced fluctuations driven by shifting demand from key markets such as China and Southeast Asia.…

• S&P and NASDAQ index close down near 1%
• Trump: DFC to provide political risk insurance and guarantees to all Maritime Trade
• Pres. Trump speaking from the White House: Felt strongly Iran was going to attack first
• Feds Kashkari: Iran war impact could have monetary policy impact
• ECB's Kazaks: Current rates are appropriate based on what I am seeing
• Feds Williams: Long-term inflation expectations have remained remarkably stable
• More from Feds Williams: AI will change productivity growth, demand for labor
• Feds Schmid: No room to be complacent on inflation
• Gold Technicals: In a surprise move, gold is racing to the downside. What next?
• Fed's Williams: If inflation ebbs, further reduction in policy rate would be warranted
• Crude oil is a surging. What needs…

• S&P and NASDAQ index close down near 1%
• Trump: DFC to provide political risk insurance and guarantees to all Maritime Trade
• Pres. Trump speaking from the White House: Felt strongly Iran was going to attack first
• Feds Kashkari: Iran war impact could have monetary policy impact
• ECB's Kazaks: Current rates are appropriate based on what I am seeing
• Feds Williams: Long-term inflation expectations have remained remarkably stable
• More from Feds Williams: AI will change productivity growth, demand for labor
• Feds Schmid: No room to be complacent on inflation
• Gold Technicals: In a surprise move, gold is racing to the downside. What next?
• Fed's Williams: If inflation ebbs, further reduction in policy rate would be warranted
• Crude oil is a surging. What needs…

The price of crude oil has moved lower trading to $72.39. That was just below the 38.2% of the move up from the low last week at $72.49. Staying below that level would open the door to more downside momentum.

US stocks are edging higher as well. The NASDAQ index is trading at to a new high for the day at 22594.38. The S&P index is also yet you thousand dollars at 6838.07.. Those indices are still lower in the day by about -0.62%

• We’re talking about some very big trade deals.

• We’re doing very well.

• Felt strongly Iran was going to attack first.

• Based on the way the talks were going.

• If anything, I might have forced Israel’s hand.

• Iran attacking countries that had nothing to do with what’s going on.

• Iran hitting only civilian places.

• Iran no longer has air protection, detection facilities.

• There was another hit today on the new leadership.

• A lot of people in Iran asking for immunity.

• We’ll just continue to go forward.

• Worst case is that we had Iran and somebody takes over as bad as the previous person.

• We would like to see somebody in there that's better.

• We will see what happens in Iran but first we have to finish off the military.

• Someone from within might be more appropriate…

• Nasdaq stays under pressure amid lower growth and higher inflation fears on US-Iran war
• Inflation fears reemerge as markets digest higher energy prices from US-Iran conflict
• Will Iran really manage to fully block the Strait of Hormuz?
• EURUSD falls back to January lows despite ECB rate hike bets as US Dollar surges
• Eurozone February preliminary CPI +1.9% vs +1.7% y/y expected
• Italy February preliminary CPI +1.6% vs +1.1% y/y expected
• Oil prices surge higher, looks to eclipse the opening gap up from yesterday
• Dollar continues to go from strength to strength to start the week
• ECB's Villeroy: It would be a mistake to predict rate move in a hurry
• USDJPY on track to revisit the "intervention" level as Japanese yen lacks bullish drivers
• Another rough day…

The reaction in the bond market to the US-Iran conflict is something that should warrant more attention. While traders are focused on the risk side of things and safety flows, it'd be easy to miss that Treasury yields have actually gone up since the end of last week. 10-year yields are up another 5 bps today to 4.107%. That is well over 15 bps higher from where we finished up in February.

In a time when traders have to balance out seeking safety assets and pricing in higher inflation expectations, the latter looks to be taking over in a relatively strong manner. That as we see oil prices spike higher again with WTI crude oil now up over 6% to $75.65, its highest level since June last year.

And if you look at major central bank pricing, the…

On Monday evening, a commander from Iran’s Revolutionary Guard Corps declared that the Strait of Hormuz was “closed” and warned that any vessel attempting to pass through would be attacked. As expected, on Tuesday oil, gas, and gold prices all jumped higher, while shipping traffic in the region only worsened.

Yet there’s still no sign of panic, why?

One of the main reasons is that the market does not seem to believe that Iran has either the incentive or the capacity to impose a total blockade of the Strait of Hormuz.

First, closing such an important energy route would not really benefit Iran or its key partners, such as India and China. Second, from a military standpoint, Tehran likely lacks the resources necessary to maintain a total…