Daily update
Daily update
- The longer the Strait of Hormuz is closed, the less market impact US President Trump’s early morning social media posts are likely to have. While physical reserves exist, prices can move on expectations. As physical shortages become a threat, expectations will have less of an impact—bad news for speculators placing conveniently timed trades. However, consumers can absorb higher prices for a time.
- The Bank of Japan held interest rates unchanged, with one-third of policymakers wanting an increase. Central banks were in different positions at the start of the war. Japan’s policy was viewed as accommodative, so looking through war effects to tighten is not a surprise. The European Central Bank (ECB) was seen at neutral, with the Federal Reserve and the Bank of England running restrictive policies.
- The UK April BRC shop price index of selected retailers suggested benign second-round inflation risks. Food prices increased less (the Easter timing may complicate discounting practices). Non-food prices are falling. This occurs in spite of good consumer spending, suggesting an awareness of consumers’ price sensitivity.
- ECB inflation expectations will tell us only that retail oil prices have risen in the recent past. The US Dallas Fed manufacturing survey comments section showed widespread concerns about uncertainty, with a significant focus on tariffs.