Market News

The mood is positive in US markets so far this week as Trump talks about a de-escalation.

The messages are mixed though and that's leading to some confusion. The oil market remains 1.8% higher but US stock futures are up 0.8% and Treasury yields are down 5-7 bps across the curve.

Trump tweeted about negotiations, much as he did last week, but this time the pop in US stock futures was fleeting.

The United States of America is in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran. Great progress has been made but, if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately "Open for Business," we will conclude our lovely "stay" in Iran…

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• Prior +1.9%
• HICP +xx% vs +2.8% y/y expected
• Prior +2.0%
• Core CPI Y/Y +xx% vs +2.5% prior

Headlines:

• Iran's FM spokesperson: US proposals have mostly been 'unrealistic and excessive'
• USDJPY falls below the key 160.00 handle amid intensifying verbal intervention
• Month-end flows point to dollar buying into the fix - BofA
• Dollar buying looks to be the flavour this month-end
• BOJ reaffirms that underlying inflation is rising moderately towards 2% level
• Bavaria March CPI +2.8% vs +1.9% y/y prior
• Euro area economic sentiment eases in March as Middle East conflict stokes inflation fears

Markets:

• WTI crude oil trades near three-week high at $101.67
• S&P 500 futures up 0.5%, European indices more mixed
• 10-year Treasury yields down 5 bps to 4.39%
• USD mostly higher, only USD/JPY down 0.5% to 159.55 amid Tokyo verbal intervention
• Gold up 0.8% to $4,530,…

Trump on Truth Social:The United States of America is in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran. Great progress has been made but, if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately “Open for Business,” we will conclude our lovely “stay” in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!), which we have purposefully not yet “touched.” This will be in retribution for our many soldiers, and others, that Iran has butchered and killed over the old Regime’s 47 year “Reign of Terror.” Thank you for your…

Euro area economic confidence slipped to 96.6 in March, after recording a revised 98.2 reading in February. That's the lowest estimate since September with consumer confidence (-16.3) also falling back on the month to its lowest since the latter months of 2023.

It's all coming undone as the US-Iran war stirs up inflation fears in Europe once again. That as energy prices in the region are surging as the conflict spreads through the Middle East, with disruptions to key gas facilities - in particular Qatar.

The risk now is that the conflict drags on for longer, and that might see higher prices become more entrenched. In turn, that will feed into broader price pressures in general. The ECB had previously been looking to potential rate cuts if…

• No direct talks with the US took place, only messages via intermediaries
• Proposals conveyed to Iran have mostly been 'unrealistic, unreasonable and excessive'

Tehran is dismissing reports of direct negotiations with Washington, clarifying that recent diplomatic exchanges have been limited to messages conveyed through third-party intermediaries. Iranian Foreign Ministry spokesperson, Esmaeil Baghaei, emphasized that these communications do not constitute formal "talks," reiterating the long-standing refusal to engage in direct dialogue under current conditions.

According to the Foreign Ministry, the proposals received from the US via these mediators have been largely characterized as "unrealistic, unreasonable, and excessive." Iranian…

The study notes that the costs of tariffs enacted by the Trump administration are "falling mostly on domestic importers and consumers". In putting a number to that, the study reveals that US consumers are bearing around a third of the tariff burden currently. And if the tariffs are going to stay for longer, that cost will increase even more.

For now, it is noted that US exporters are only absorbing a small fraction of the higher tariff-related costs. It is being estimated that a 10% increase in tariffs implies only a 9.5% increase in prices.

Overall, it is a tough situation for US consumers. The current estimate shows that they are already being burdened by about a third of the cost. But if US firms exhaust their ability to absorb the…