Fragile or failing?

Daily update

In economic terms, the Gulf ceasefire has not held. Iran has closed the Strait of Hormuz in response to significant Israeli strikes against Lebanon. The optimistic bias in markets means that only some of yesterday’s risk market gains have been surrendered. The demonstration of relative power in the Gulf is relevant when considering long term risk premia around global supply chains.
Revised US fourth quarter GDP will be released, along with personal income and spending data for February. Although the data predates the soaring price of gasoline, there is still useful content. The way tariffs impact spending power is similar to the impact of higher oil prices. US consumers met the tariffs by cutting saving to maintain spending. That should be the (short term) response to the oil price shock.
The March US Federal Reserve minutes might politely be described as “even-handed”. There was concern expressed about labour market weakness, although whether rate cuts can remedy that is not necessarily clear. Immigration and tariff policy have both had a bearing on employment, and monetary policy has little impact there.
European data is not especially interesting. German industrial production was weaker, but past data was revised up. Trade data suggests more economic activity in German than was originally reported.