Daily update
Daily update
- US President Trump’s weekend rhetoric seemingly had little market impact. Attacks on industrial plants in the United Arab Emirates and Bahrain remind investors that wartime disruption will continue after the war. Houthi involvement raises the risk of disruption to Suez-bound shipping. Iran is allowing limited oil shipments through the Strait of Hormuz in what may become a more normal process.
- Bank of Japan Governor Ueda’s rhetoric has impacted markets. Ueda expressed displeasure at yen weakness, and the yen obligingly stopped weakening (without strengthening much). Verbal and financial intervention can defeat speculative attacks, or work as a short-term remedy; but if a currency is driven by economic fundamentals, in the long term the fundamentals must change.
- German and Irish March consumer price inflation numbers offer early signals of the war’s price effect. The effect may be exaggerated (the numbers will not properly include changing demand patterns in response to higher oil prices). For now, consumers are likely to adjust savings to meet higher prices.
- The Federal Reserve’s Powell and Williams are both speaking, with markets more cautious on the prospect for rate cuts. While the US is an oil producer, the overwhelming majority of US households get no benefit from that (and just pay higher prices at the gasoline pumps).