U.S. Indexes were choppy amid broader risk-off sentiment for the majority of the session as participants await US President Trump’s 20:00EDT Iran deadline, as his punchy rhetoric continued as he noted “a whole civilization will die tonight, never to be brought back again; does not want that to happen, but it probably will”. However, souring risk sentiment reversed into the close due to a Pakistan proposal, which seemed to drive some positive responses (more below). Throughout Tuesday, it was a headline heavy day, as Middle East headlines unsurprisingly drove risk sentiment and market moves, as reporting differed but the most recent update was more positive and saw a reversal in risk sentiment; in response to Pakistan requesting Trump to extend Iran deadline for two weeks, and Iran opening the Strait of Hormuz for a corresponding period of two weeks as goodwill gesture, a Senior Iranian official to Reuters said Tehran is positively reviewing Pakistan’s request for a two-week ceasefire, while White House Press Secretary noted Trump has been made aware of the Pakistan proposal, and a response will come. As such, and given the latest update, US equity futures closed up/flat, while the crude complex is now in the red at the time of writing, wiping out its entire gain through the day, which was initially amid chatter that Iran/US do not seem much closer to an agreement ahead of the deadline. G10 FX peers, except for the Swiss Franc also gained versus the Dollar given the latest remarks, although performance was more mixed throughout the day, with the Australian Dollar always outperforming. Precious metals gain, with spot gold at session highs and back above USD $4700/oz. Durable Goods Orders unexpectedly declined again in March, -1.4% (exp. +0.4%, prev. -1.4%). Ex-Transport rose 0.8%, above the expected 0.7% (prev. 0.4%), while ex-defence fell 1.2% (prev. +0.5%). Nondefense capital goods orders excluding aircraft rose 0.6%. Pantheon Macroeconomics writes that the drop in headline orders in February was entirely due to a 37% plunge in the volatile aircraft orders component, reflecting a soft month for Boeing. Ahead, “Mounting consumer headwinds and depressed surveys of capex intentions suggest the goods sector is likely to remain anemic in the months ahead.” Fed Member Goolsbee said rising oil prices is a stagflationary shock. Now in an uncomfortable situation, with no obvious cookbook for Fed. Goolsbee’s immediate concern is the stagflationary shock of oil prices before the tariff-price shock has gone away. He views the job market as stable, but not great, Cautious and nervous about the economy. The Chicago Fed President is hoping the impact from oil will prove temporary, and gas at USD 5/gallon would affect the supply chain. Meanwhile, Fed Member Williams thinks Iran will go directly into headline inflation given energy, and that inflation this year should be around 2.75%. The New York Fed President added he is focused on underlying inflation, and that the story on core has not changed that much. He expects underlying inflation to start coming down later this year, while adding that Monetary Policy takes about a year to have its full effect on inflation, so we have to try and think through where inflation and the economy will be later, and expect underlying inflation to start coming down later this year. Ahead, Williams reiterated that monetary policy is well positioned to wait and see, and it is exactly where it needs to be and can be changed if needed. Speaking on the labour market, noted that the situation is complicated, and that it is low hire, low fire. He expects 2-2.5% GDP this year with stable unemployment rate. Elsewhere, Gold ended Tuesday’s session ith a 1.4% gain while Oil ended the day with a 2% loss.
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