Here we go again

Daily update

The US declared the Strait of Hormuz open. Iran declared the Strait of Hormuz closed. Investors have responded with a muted reaction. Oil prices are up, but not in an economically meaningful way. Shipping traffic volumes seem to give more credibility to the Iranian version, but investors’ optimism bias remains. There is an assumption that the political pain of gasoline prices in the US (which have risen again recently) will justify expectations that the current situation will be resolved.
Physical shortages have been mitigated by changing consumer behaviour, strategic reserve use, Saudi oil pipelines, etc. The oil that has passed through Hormuz in recent weeks helps push out the date when physical shortages might constrain growth.
South Korea’s early export data continues to show the effects of enthusiasm for artificial intelligence.
There are several central bank speakers, rolling like tumbleweed through an otherwise barren economic landscape. Pill of the Bank of England is looking somewhat isolated nowadays. Schnabel of the ECB is bound to advocate policy discipline in spite of the absence of an inflation threat. Bowman and Waller of the Federal Reserve speak—ahead of testimony from Fed Chair Warsh tomorrow. Warsh’s habit of saying nothing of note may throw focus back onto other Fed speakers.