One Market, One Trigger: The Hormuz Effect (20-24 April)

Commodity markets continued to swing between relief and renewed uncertainty, with each shift in the United States–Iran narrative quickly feeding into pricing.

Oil reacted sharply to changing supply expectations, while gold and silver held their upward trajectory as easing inflation pressure and shifting rate outlooks supported demand for precious metals. The result has been a market defined less by steady trends and more by rapid repricing, where headlines translate into movement almost instantly.

Currencies

Dollar Index: The US Dollar Index held above 98 but remained on track for a third weekly decline, as easing tensions in the United States–Iran conflict reduced demand for safe-haven assets and lowered energy-driven inflation risks. Donald Trump said a resolution is close, claiming Iran agreed to drop nuclear ambitions and reopen the Strait of Hormuz, alongside a 10-day ceasefire between Israel and Lebanon. Lower oil prices have eased expectations of tighter policy, while John Williams noted uncertainty limits guidance but still sees future rate cuts.
Euro: The Euro climbed above $1.18, its strongest level since before the Iran conflict began, supported by broad weakness in the US Dollar and easing inflation pressure following the temporary reopening of the Strait of Hormuz. Iran’s foreign minister confirmed the waterway is open to commercial shipping during a 10-day ceasefire, helping push oil prices down more than 10%. The euro gained 2.7% on the week, its best performance in a year and heading for a third weekly rise, as markets increasingly price in possible rate hikes by the European Central Bank. Christine Lagarde said high energy costs have shifted the eurozone away from its expected growth path but gave no signal of immediate policy tightening.
British Pound: The British Pound slipped to around $1.356 as expectations for a rate hike by the Bank of England were scaled back, supported by optimism around a possible end to the Iran conflict. Andrew Bailey said it is too early to assess the war’s impact, while Megan Greene noted markets were right to soften tightening bets. Despite near-term pressure on inflation and growth, sterling remains near an eight-week high and is up about 2.6% this month.
Japanese Yen: The Japanese Yen weakened past 159 per dollar, reversing earlier weekly gains after Kazuo Ueda gave no clear signal on interest rate direction ahead of the upcoming policy meeting. He highlighted the challenge of balancing rising inflation risks with weakening growth, leaving markets without the clearer guidance seen previously. The Bank of Japan is still expected to lift inflation forecasts this month due to higher energy costs. Earlier in the week, the yen strengthened after Finance Minister Satsuki Katayama confirmed close FX discussions with US Treasury Secretary Scott Bessent and reiterated readiness for intervention if needed.

Commodities

Gold’s Momentum Builds with Prices Up 17%

Gold held near $4,800 per ounce and remained on track for a fourth straight weekly gain as hopes of a lasting ceasefire between the United States and Iran reduced inflation and rate-hike concerns. Donald Trump said Iran agreed to conditions including abandoning nuclear ambitions and reopening the Strait of Hormuz, though officials in Tehran have not confirmed this. Despite ongoing disruptions, energy supply concerns have eased, with IMF-linked commentary warning recovery could take years. Lower oil prices have helped ease inflation expectations, with gold up about 1% this week and nearly 17% above its March low.

Brent Reacts Fast to New Supply Uncertainty

Brent crude oil climbed to around $96 per barrel, gaining more than 6% in a single session as renewed tensions in the Middle East unsettled financial markets. The move followed Iran’s reversal of plans to reopen the Strait of Hormuz after the United States declined to lift its blockade on Iranian ports, weakening earlier hopes for de-escalation. Optimism around a possible deal had been building late last week, yet uncertainty has returned. Donald Trump also indicated that US negotiators will travel to Pakistan for further discussions on Monday.

Silver Advances Despite Lingering Risks

Silver traded near $79 per ounce and headed for a fourth straight weekly gain as expectations of a lasting ceasefire between the United States and Iran eased inflation risks and reduced bets on further rate hikes. Donald Trump claimed Iran had agreed to terms including abandoning nuclear ambitions, providing “free oil,” and reopening the Strait of Hormuz, though Tehran has not confirmed these statements. The waterway remains effectively closed under a dual blockade, while IMF-related warnings suggest a full recovery in oil and gas supply could take years. Despite ongoing uncertainty, falling oil prices have helped ease inflation pressure, with silver up about 4% this week and nearly 30% above its March low.

Fixed Income

US 10 Year Treasury Note Yield: The yield on the US 10-Year Treasury Note stayed above 4.3% after rising for two consecutive sessions, as firm oil prices kept inflation risks in focus even as weaker growth concerns limited momentum. Expectations for the Federal Reserve have shifted toward no rate cuts this year, compared with earlier forecasts of two reductions. John Williams said the Middle East conflict is already adding inflation pressure but noted policy flexibility remains intact. Donald Trump also said the war with Iran could end soon, citing reported agreement terms and a 10-day ceasefire between Israel and Lebanon that may support negotiations.
UK 10 Year Bond Yield: The yield on the UK 10-Year bond remained elevated as higher oil prices kept inflation risks in focus despite softer growth sentiment. Expectations for Federal Reserve policy have shifted toward no rate cuts this year, down from earlier projections of two. John Williams said the Middle East conflict is fueling inflation pressure while policy flexibility remains in place. Donald Trump added that the war with Iran may end soon and confirmed a ceasefire between Israel and Lebanon.
Japan 10 Year Government Bond Yield: Japan’s 10-Year Government Bond yield held near 2.41% for a third straight session as Kazuo Ueda provided no clear guidance ahead of the upcoming policy meeting. He stressed the challenge of balancing inflation risks with weaker growth, leaving markets without the explicit signals seen before earlier rate increases. The Bank of Japan is still expected to lift inflation forecasts due to higher energy costs. Meanwhile, the International Monetary Fund noted the BOJ may look through inflation linked to the Iran conflict, as underlying price pressure remains limited.
Germany 10-Year Bond Yield: Germany’s 10-Year Bund yield held near 3%, close to 15-year highs, as inflation concerns kept borrowing costs elevated. Optimism around the United States–Iran ceasefire has had limited influence, with markets still demanding a risk premium and expecting further tightening by the European Central Bank. A possible two-week ceasefire extension is under discussion, helping ease oil prices. Markets now price in two 25bps rate hikes this year, down from three, while Christine Lagarde said energy costs have shifted growth expectations without immediate policy action.

Economic Data

United States Existing Home Sales

Existing home sales in the United States fell 3.6% in March 2026 to an annualized 3.98 million units, the weakest level in nine months and below expectations of 4.06 million. Inventory edged up to 1.36 million homes, equal to 4.1 months of supply, though still below long-term averages. The median price rose 1.4% year-on-year to $408,800, marking a March record. Lawrence Yun said weak confidence and slower job growth are limiting demand, while limited supply continues to support prices and household wealth.

United States Producer Price Inflation MoM:

Producer prices in the United States increased 0.5% in March 2026, matching the previous month but below expectations of 1.1%. Goods prices rose 1.6%, the strongest increase since August 2023, driven by an 8.5% surge in energy costs linked to the Iran conflict, while food prices declined 0.3%. Services prices were unchanged after earlier gains, with strength in transport and warehousing offset by weaker trade margins. On an annual basis, producer prices increased 4%, while core inflation rose 0.2% on the month and 3.6% year-on-year, pointing to moderating underlying pressure.

China GDP Annual Growth Rate

China’s economy expanded 5.0% year-on-year in Q1 2026, up from 4.5% in the previous quarter and above forecasts of 4.8%, marking the strongest growth in three quarters, largely supported by resilient exports despite tensions linked to Iran. Industrial output exceeded expectations in March, though retail sales disappointed, while exports slowed and imports increased sharply. Fixed-asset investment continued to grow over January–March, but at a softer pace. Early momentum remains firm, yet analysts expect growth to moderate later in the year due to external pressures and spillover risks from ongoing tensions.

China Balance of Trade

China’s trade surplus narrowed to $51.13 billion in March 2026, the weakest level since February 2025 and far below expectations of $112 billion. Export growth slowed sharply to 2.5% from February’s 39.6% surge, missing forecasts largely due to seasonal distortions from a delayed Lunar New Year and a high base effect from strong March 2025 activity rather than weaker demand. Imports jumped 27.8% to a record $269.9 billion, driven by resource accumulation and increased high-tech purchases amid supply chain pressure linked to the Iran situation. The surplus with the United States stood at $16.8 billion, while the Q1 surplus eased slightly to $264.75 billion.

Latest Analysis

Euro Supported by 3.2% Inflation Reading (05.06.2026)

Negotiations and ceasefire discussions offered occasional relief, reducing fears of a broader regional conflict and helping stabilize sentiment.

Detail

The Global Pricing Problem (04.06.2026)

The latest market moves revealed a growing divide between assets benefiting from economic resilience and those struggling under the weight of persistent inflation.

Detail

The Changing of the Guard at Fed (1-5 June)

A new Fed chair, a surge in AI-related listings, and renewed energy market concerns are driving market sentiment.

Detail