U.S. Indexes rallied to fresh record highs while oil prices plunged after Iran announced it would reopen the Strait of Hormuz to all commercial traffic. Brent fell below USD 90/bbl, easing supply concerns and driving a broad risk-on move across markets. Despite the positive headline, uncertainty remains around the durability of the development. Shipping firms are cautious resume activity, while mixed messaging from Iranian officials — including apparent surprise from the IRGC — and conflicting reports between the US and Iran continue to cloud the durability of the agreement. While President Trump has struck an optimistic tone, suggesting significant progress in negotiations, Iranian officials have pushed back on key elements, highlighting ongoing disagreement. The decline in oil fed through into rates, with T-notes rallying across the curve as easing inflation pressures supported expectations for rate cuts to resume. In FX, the Dollar weakened initially before paring losses amid lingering uncertainty, while Gold was bid alongside the move lower in yields. Fed commentary remained focused on inflation risks. Governor Waller indicated a preference to hold rates in a scenario of higher inflation and weaker growth, while Daly emphasised that the outlook depends on the persistence of elevated energy prices and the conflict. Overall, markets are pricing in a partial unwind of geopolitical risk premia, although ongoing uncertainty around negotiations and enforcement continues to limit conviction. Equity-specific updates saw Meta gain following reports that it’s to lay off ~10% of its total workforce in May. Netflix (NFLX) fell 9.8% after its Q2 EPS and FY26 revenue outlooks underwhelmed; co-founder Hastings to leave the board. Fed Member Waller said that if war produces high inflation and a weak labour market, it could argue for keeping rates steady. The longer the war remains unresolved, the greater the risks to inflation and jobs, he said. He said high inflation and a weak labour market could pose a challenge for the Fed. Waller expects March headline PCE likely reached 3.5% Y/Y, with the surge in energy prices potentially having a lasting effect on inflation. He said markets appeared to have underestimated the risk of a prolonged conflict. After a series of shocks, it becomes harder to look through the inflation spike. On labour, he said the labour market breakeven rate was now likely around zero and that a period of negative job growth might not signal a recession. Some of the low-hire, low-fire labour market reflects firms dealing with tariffs, and shifts in the labour market make it difficult to analyse. Separately, he does not so far see systemic risks stemming from private credit, adding that private credit is not a large part of financial markets. Meanwhile, Fed Member Daly said her outlook depends on how long oil prices remain high and how long the conflict lasts. She said the shock was likely to have a bigger effect on inflation than on growth, and that it was too early to know whether it would prove short-lived or persistent. If it ends soon, the Fed would return to the interest-rate path it was on before, but if it persists, inflationary pressures would last longer. In that case, rates would need to rise if inflation took off, but if it ends, the Fed could cut rates quickly. She also said policymakers could leave rates where they are. She said rates were slightly restrictive, just above the 3% neutral level. She is watching to see whether higher oil prices spill over into other goods and services prices, but said policymakers were currently in a wait-and-see mode and described the current position as “a nice place to be”. On the labour market, she said zero job growth might be the new steady state. On productivity, she said growth can help with disinflation, while it is hard to link higher productivity growth to the real neutral rate, though it is something to watch on both sides. Finally, she said commercial real estate was no longer on her list of worries. Elsewhere, Oil closed lower by 10% while Gold ended Friday’s volatile trading session with a 1.5% gain.
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For anyone following my Platinum Service it lost 425 points on Friday and is now ahead by 881 points for April after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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