Daily update

  • The language and tone of US President Trump’s weekend social media post on Iran mean it will receive little attention from investors. It was seemingly aimed at Trump’s supporters. Markets are unlikely to view the post as a clear development of policy. Iranian attacks on energy targets in the Gulf have continued.
  • Markets’ desire to believe in any good news means vague talks of mediators seeking a ceasefire have supported risk assets in Asian trading. The oil price remains well below levels required to match demand and supply (absent Gulf oil) in the medium term.
  • The oil price feeds directly into the US affordability crisis. March consumer price inflation is due Friday. US gasoline prices went from below USD 3 per US gallon to over USD 4 over the course of March, so when prices were measured matters. With gasoline prices continuing to rise, inflation perceptions are not improving.
  • Employment also impacts affordability. The March US employment data showed a decline in unemployment, but the details were less healthy (long-term unemployment remains high, and the labor force is shrinking). Earnings growth (not the same as wages) slowed. The quality of US data remains a concern, with the household survey response rate hit an all-time low.
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