The ongoing blockade of the Strait of Hormuz is worsening the energy supply outlook at a time when peace in the Middle East remains unclear. Pakistani mediators want Tehran and Washington to agree to a two-week extension of the ceasefire that expires in a few days, and the uncertainty has lifted WTI back to $94 a barrel after it reached an April low of around $87 Tuesday night. The geopolitical caution is raising interest rates and the greenback as well, as monetary policy accommodation prospects become increasingly dim while inflation expectations increase. Additionally, lighter-than-anticipated initial jobless claims reinforced the belief that the labor market is strong, weakening the argument of Fed doves that have generally favored cuts sooner rather than later to boost employment. But a lack of clarity on the Iran war paired with tightening financial conditions isn\u2019t derailing stocks with the S&P 500 and Nasdaq 100 indices hitting fresh records for the second consecutive session while the latter basket is advancing for the 12th consecutive day, the longest streak in approximately 17 years. Most equity sectors are climbing alongside the other two major domestic benchmarks, but hedges are being picked up as volatility protection instruments catch bids. Elsewhere, commodities are mostly appreciating minus silver, prediction markets are gaining traction and cryptocurrencies are suffering modest losses.<\/p>\n\n\n\n
Modest Layoff Activity Points to Labor Market Strength<\/strong><\/p>\n\n\n\n Unemployment claims continue to reflect a solid job market that is experiencing subdued layoffs, with both the first-time and ongoing segments arriving near estimates as well as in the vicinity of the past few prints. Initial filings declined to 207k during the week ended April 11, under the expected 215k and the prior period\u2019s 218k. Continuing applications for the seven-day interval culminating on April 4 increased modestly to 1.818 million, ahead of the projected 1.810 million and the previous publication\u2019s 1.787 million. Four-week moving averages were little changed at 209.75k and 1.813 million.<\/p>\n\n\n\n Industry Retreated Last Month<\/strong><\/p>\n\n\n\n Industrial production sank at its steepest rate in a year and half as output tied to consumer products, business equipment and materials weighed on overall performance. The headline March figure retreated 0.5% month over month (m\/m), well below the 0.1% increase expected and February\u2019s 0.7% expansion. The utilities, mining and manufacturing segments dropped 2.3%, 1.2% and 0.1% m\/m while retail goods, raw inputs and corporate hardware sank 1%, 0.6% and 0.3% m\/m. Construction and nonindustrial supply yields bucked the trend with gains of 0.4% and 0.1%.<\/p>\n\n\n\n Fixed-Income and Stocks at Odds Over Middle East Peace<\/strong><\/p>\n\n\n\n Treasury yields and crude oil continue to signal caution regarding the uncertain Middle East situation and its potentially unfavorable impact on inflation. Conversely, stocks are not reflecting any concern whatsoever, including the cyclical ones. Meanwhile, Washington and Tehran remain far apart on negotiations, although quelled violence is a positive development for capital markets. Only time will tell which asset class has a better grip on geopolitical risks, and this weekend could be another eventful one if the US and Iran agree to hold talks again in Pakistan. Still, even the best case won\u2019t lead to tumbling energy costs, as the damage to production facilities has been too severe for previous supply conditions to recover quickly, which is poised to keep inflation above 3% for the entire year with an adverse scenario of 4% this summer if WTI remains north of $90 per barrel.<\/p>\n\n\n\n International Roundup<\/strong><\/p>\n\n\n\n China\u2019s GDP Growth Beats Expectations<\/strong><\/p>\n\n\n\n China\u2019s gross domestic product (GDP) exceeded expectations for the first quarter and industrial production picked up last month, but unemployment, retail sales and home prices disappointed. The world\u2019s second-largest economy grew 5% year over year (y\/y) in the January through March timeframe, exceeding the economist consensus estimate of 4.8% and accelerating from 4.8% during the final three months of 2025. On a quarter-over-quarter basis, GDP was 1.3% higher, matching the consensus estimate. It expanded 1.2% in the preceding quarter. The strong y\/y GDP result benefited from economic weakness during the first half of 2025 which offered a base-effect tailwind.<\/p>\n\n\n\n House Prices and Retail Sales Miss Expectations<\/strong><\/p>\n\n\n\n The stronger-than-expected GDP print comes as a sagging real estate market continues to hurt consumer sentiment in China. Home prices sank 3.4% y\/y in March, extending a painful streak of residential property deflation that started nearly four years ago. The decline was even worse than in February, when prices retreated 3.2%. In March, retail sales were only 1.7% above the year-ago result, missing the estimate for a 2.4% ascent and weakening from April\u2019s 2.8% y\/y expansion.<\/p>\n\n\n\n Unemployment Also Worsens<\/strong><\/p>\n\n\n\n China\u2019s unemployment rate ticked higher by 0.1 percentage point in March to 5.4%. Economists had anticipated that the rate would fall from 5.3% in February to 5.2%.<\/p>\n\n\n\n But Industrial Production Exceeds Forecast<\/strong><\/p>\n\n\n\n China\u2019s industrial production was 5.7% higher in March than in the year-ago period. The gain slowed from 6.3% in February but still beat the economist estimate of 5.4%. In a similar manner, production year to date through March was up 6.1% y\/y compared to 6.3% as of the end of February. Growth strengthened in high tech manufacturing with the country having increased its commitment to developing artificial intelligence semiconductors. Also during the first quarter, fixed investment was up 1.7% y\/y compared to the economist consensus estimate of 1.9% and the January-February period\u2019s 1.8% jump.<\/p>\n\n\n\n Australia Job Growth Weaker Than Anticipated<\/strong><\/p>\n\n\n\n Australia employers snatched up 17.9k additional workers in March, missing the economist consensus estimate for 19.1k individuals to join the ranks of the gainfully employed. The expansion also eased from February when 49.7k individuals started punching time clocks. On a positive note, the weakness was driven primarily by changes in part-time workers with the number of full-time employees growing 52.5k and reversing from February\u2019s 27.7k drop.<\/p>\n","protected":false},"excerpt":{"rendered":" The ongoing blockade of the Strait of Hormuz is worsening the energy supply outlook at a time when peace in the Middle East remains unclear. <\/p>\n","protected":false},"author":903,"featured_media":220902,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12711,18,6,8,9,26,3],"tags":[],"contributors-categories":[13760],"class_list":{"0":"post-241656","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ibkr-economic-landscape","8":"category-macro","9":"category-north-america","10":"category-region","11":"category-securities","12":"category-text-articles","13":"category-traders-insight","14":"contributors-categories-ibkr-macroeconomics"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"\n