Markets’ cynicism premium

Daily update

US President Trump declared that the US delayed attacking Iran because talks are going so well. Markets have been cautious in response. Equities failed to rally, because no attack is the status quo; and if investors have learned one thing about Axios reports of a deal, it is that these are historically a great reverse indicator. Oil prices did stop rising, perhaps reflecting a belief that this reiterates a US desire to find an exit.
Japan’s first-quarter GDP data was somewhat stronger than expected on an annualized basis (though within forecast ranges, and at 0.6% y/y less impressive when not annualized). Exports to Asia, seemingly related to artificial intelligence, and domestic consumption supported. The economic consequences of the war were muted, but will slow growth in the coming quarters.
UK labor market data was inconclusive—a small rise in unemployment, and a modest increase in bonus payments. The data should not prevent consumers supporting economic activity, but does not justify continuing a restrictive monetary policy once the fog of war clears.
Russian President Putin is to visit China—the market focus is likely geopolitical, although energy supplies are also a consideration. Media reports suggest Russia is in retreat in Ukraine, and China’s President Xi thinks Putin might regret the invasion.