Daily update
Daily update
- US air strikes against Iran seem to confirm the Iranian view of negotiations to end the war. Investors had tended to focus on Iran’s perspective rather than the view set out in US President Trump’s social media posts, so the strikes have generated only a muted market response.
- The UK BRC shop price index was in line with recent ranges, showing subdued retail inflation pressure (the measure does not include petrol prices). This is a measure to monitor as profit-led inflation would be a second-round effect that would require a policy response.
- The ECB’s Schabel was strongly advocating for a policy mistake, calling for a rate hike in June because the Iran war has disrupted oil production and global supply chains. It is not clear how the ECB raising rates will help reconstruction of Gulf oil refineries. Schabel warned that there were “spillover” effects—that seems to refer to the automatic price consequence for goods with an energy component (like air fares) which the ECB cannot influence, rather than to second-round inflation effects.
- The Dallas Fed manufacturing sentiment poll comments section always gives a sense of the extreme political polarization that plagues survey data—the April comments were strongly skewed to concerns about tariff policy rather than war policy.