Market News

What a scintillating start to the new week this is. Oil prices have surged by well over 20%, poised for its largest one-day gain on record. And we're talking about prices near $120 again after having initially hesitated to get above $80 last week.

I mentioned last week already that the $80 mark was the key barometer for the temperature in the room:

"The $80 mark is a key line in the sand now. A push above that suggests that traders are growing ever more nervous about the Middle East conflict. Keep below and it leans more towards simmering tensions with hopes that things will settle down soon enough. If traders get around the idea of holding above $80, I'm afraid we might get a rush to much higher levels and even see talks about triple…

• Trump unhappy about Israel's Iran fuel strikes - report
• Iran chooses Khamenei's son as new Supreme Leader
• China February CPI +1.3% vs +0.8% expected
• Japana January current account surplus 941.6B vs 960B expected
• Japanese January labour cash earnings +3.0% vs +2.4% prior
• Trump: Oil will drop rapidly when the destruction of the Iran nuclear threat is over
• Lindsey Graham: The liberation of Cuba is upon us
• China's gold buying spree continues as reserves climb for a 16th straight month

Markets:

• WTI crude oil up $22.15 to $113.10 per barrel
• US 10-year yields up 6.8 bps to 4.20%
• Gold down $73 to $5097
• USD leads, EUR lags
• Gold down $69 to $5100
• Nikkei down 7.0%
• Kospi halted after 8% decline
• ASX 200 in worst day since covid, down 4.3%

The weekend war news wasn't…

• Prior was +0.2% y/y
• CPI m/m +1.0% vs +0.5% expected
• Prior m/m CPI was +0.2%
• PPI y/y -0.9% vs -1.2% expected
• Prior y/y PPI was -1.4%

This is a hot reading and will be even hotter with the energy price rise in March.

China's Consumer Price Index, published monthly by the National Bureau of Statistics (NBS), is the primary gauge of consumer inflation in the world's second-largest economy. The basket is weighted heavily toward food (roughly 32% of the total), making the headline figure sensitive to swings in pork, vegetable, and grain prices. The NBS also reports core CPI, which strips out food and energy, as well as producer prices (PPI) — together providing a fuller picture of domestic demand conditions.

China has struggled to shake deflationary…

USD/JPY is closing in on the highest levels of the year.

The pair is up 80 pips so far today to 158.59, breaking above last week's peak and trading at the best levels since January 22. That was the day of the widely-publicized Ministry of Finance rate check via US banks late on a Friday. That move caused a huge position squaring event, while in early February the strong LDP election win led to a second drop in USD/JPY.

All that has been washed away now as the yen takes a beating. Japan is a major energy importer and the lack of oil and natural gas coming through the Strait of Hormuz is a massive problem for the island.

Japanese trade minister Akazawa said he discussed energy with US Commerce Secretary Howard Lutnick but refrained from…

• Prior was 728.8B yen
• Current account in goods vs 134.9B prior

Japan's current account balance, published monthly by the Ministry of Finance, is one of the broadest measures of the country's international transactions. It captures the trade balance in goods and services, primary income (mainly investment returns from overseas assets), and secondary income (transfers). As the world's largest net creditor nation, Japan's current account has been structurally supported by enormous overseas investment holdings accumulated over decades.

For full-year 2025, Japan posted a record current account surplus of ¥31.88 trillion, up 11.1% from the prior year and the highest since comparable data began in 1985. The result extended a two-year streak of…

• Prior was 728.8B yen
• Current account in goods vs 134.9B prior

Japan's current account balance, published monthly by the Ministry of Finance, is one of the broadest measures of the country's international transactions. It captures the trade balance in goods and services, primary income (mainly investment returns from overseas assets), and secondary income (transfers). As the world's largest net creditor nation, Japan's current account has been structurally supported by enormous overseas investment holdings accumulated over decades.

For full-year 2025, Japan posted a record current account surplus of ¥31.88 trillion, up 11.1% from the prior year and the highest since comparable data began in 1985. The result extended a two-year streak of…

• Prior was +2.4%
• Real cash earnings +1.4% vs +0.9% expected
• Overtime pay vs +1.5% prior

Japan's Monthly Labour Survey, published by the Ministry of Health, Labour and Welfare (MHLW), is one of the country's most closely watched economic indicators. The report tracks average monthly cash earnings across establishments with five or more employees, encompassing contractual earnings (scheduled and overtime pay) as well as special cash earnings such as summer and year-end bonuses. Because private consumption accounts for more than half of Japan's GDP, the survey serves as a key barometer of household purchasing power and a critical input for Bank of Japan monetary policy decisions.

Throughout 2025, the data told a mixed story. Japan's spring wage…

Well, if there was any question about whether Trump was watching the oil futures open, it's been laid to rest. He wrote on Truth Social:

Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY! President DJT

Now, he's obviously right but ending this conflict might not be as easy as Trump think.

What I find most-notable about this message is three things:

1) There is some urgency here with him addressing oil prices less than an hour after the futures open. He notoriously hates high oil prices and endlessly blamed Joe Biden for high gasoline prices and inflation. This isn't going to poll…

Axios reports that Trump is unhappy that Israel bombed 30 Iranian fuel depots on Saturday.

From the report:

Israel's strikes on 30 Iranian fuel depots Saturday went far beyond what the U.S. expected when Israel notified it in advance, sparking the first significant disagreement between the allies since the war began eight days ago, according to a U.S. official, Israeli official and a source with knowledge.

Trump's anger is sure to rise with WTI jumping $15 at the open today to $108 (and as high as $111).

"The president doesn't like the attack on the oil facilities. He wants to save the oil. He doesn't want to burn it. And it reminds people of higher gas prices," a Trump adviser told Axios.

The Trump administration has repeatedly floated plans…

United States Senator Lindsey Graham of South Carolina is a strong Trump supporter and he was on Fox News on the weekend and had this to say:

"If we get in a fight, I want to win it quick. I'm in Miami. You see this hat? 'Free Cuba.' Stay tuned. The liberation of Cuba is upon us... We're marching through the world. We're clearing out the bad guys... Iran is going down and Cuba is next."

I don't think that comes as any surprise but it will really hurt Trump's chances of winning the Nobel Peace Prize. You have to wonder how Cuba is going to take this as well, as it hasn't exactly proven safe or wise to enter into negotiations with the United States.

Cuba's military doctrine has been built around the concept of "War of All the People" (Guerra…

Nonfarm payrolls came in at -92K in February, a massive miss against the +55K consensus. To add insult to injury, the prior two months were revised down by a combined 69K. The three-month average pace of job growth is now running at a paltry 6K.

The unemployment rate ticked up to 4.4% from 4.3%. Not a disaster on its own, but the direction of travel here is not your friend if you're in the soft-landing camp and it came with a drop in labor force participation to 62.0% from 62.5%.

The losses were broad-based. Services shed 61K, goods-producers dropped 25K. Leisure and hospitality got hit for 27K, healthcare lost 19K (healthcare strikes played a role there), and manufacturing gave back 12K. Retail was basically the only sector that managed…