Though shaky, markets welcome ceasefire

For the week ending 10 April 2026

As of midday Friday, global equities were substantially higher on the week ahead of talks between the U.S. and Iran this weekend in Islamabad aimed at ending the conflict. The yield on the U.S. 10-year Treasury note declined from 4.33% before Easter weekend to 4.31% today, while the price of a barrel of West Texas Intermediate crude oil fell US$13.50 to US$98.50. Volatility, as measured by futures contracts on the Cboe Volatility Index (VIX), declined to 20 from 25.2. 

Iran crisis

With just hours to go before a threatened U.S. attack on Iran’s domestic infrastructure, the U.S. and Iran reached a tentative two-week ceasefire ahead of talks scheduled for Saturday, April 11 in Islamabad, Pakistan. Among the terms of the ceasefire is the reopening of the Strait of Hormuz, but thus far only a small number of ships have been permitted to exit the Persian Gulf through the narrow passage, with Iran reportedly charging tolls. China and Pakistan were reportedly instrumental in bringing Iran to the negotiating table. While there has not been a total ceasefire, the Wall Street Journal reports that has been more than 48 hours since the last volley of missiles and drones was launched from Iran. Amid a dispute over whether Lebanon is covered by the terms of the ceasefire, U.S. President Donald Trump is applying pressure on Prime Minister Benjamin Netanyahu to halt Israel’s attacks on Hezbollah fighters there. Lebanon and Israel are scheduled to hold talks next week in Washington on the potential disarmament of Hezbollah.

On Wednesday, President Trump threatened to raise tariffs to 50% on any country that exports weapons to Iran.

The conflict in the Middle East has sharpened divisions within NATO; Spain and France, for example, have refused to allow the U.S. to use its bases and airspace in those countries to support operations in the Middle East. The White House is said to be considering shifting U.S. troops from countries deemed “unhelpful” to countries that are more supportive. NATO Secretary General Mark Rutte, after meeting with Trump, said that allies have been “a bit slow” to respond to Trump’s demands for support but are now doing nearly all that the U.S. asks regarding Iran. Rutte said that Trump wants pledges from allies to help police the Strait of Hormuz with days.

MACRO NEWS

U.S. CPI rose less than feared in March

Amid a spike in gas prices in March, consumer prices rose 0.9% month-over-month, though core price rose less than expected, up only 0.2%. The monthly increase was the largest since June 2022. On a year-over-year basis, CPI rose 3.3%, up from 2.4% in February, while core rose 2.6%. Economists expected a 3.4% gain in the headline inflation rate.

Fed’s Williams sees modest war impact on inflation

New York Fed President John Williams said this week he expects the economy to grow between 2.0% and 2.5% this year; he also believes that higher energy costs will likely add about a “tenth or two” of a percentage point to the core inflation rate, but that the underlying rate of inflation should come down later this year. Monetary policy, he added, is “exactly where it needs to be.”

Warsh confirmation hearing postponed

The U.S. Senate Banking Committee has postponed a confirmation hearing, originally scheduled for April 16, on the nomination of Kevin Warsh to become Chair of the Federal Reserve due to a paperwork delay. Warsh’s nomination is unlikely to advance so long as the U.S. Department of Justice’s criminal investigation of cost overruns on the renovations of the Fed’s headquarters remains ongoing. Senator Thom Tillis (R, NC) has vowed to block Warsh’s confirmation until the investigation is dropped. Current Chair Jerome Powell’s term expires on May 15, but Powell has indicated he’ll stay on until his successor is confirmed.

Greer promotes U.S.–China trade board

On Tuesday, U.S. Trade Representative Jamieson Greer promoted the creation of a U.S.–China board of trade. “We’re looking at that kind of mechanism where we can work with the Chinese to figure what are the non-sensitive goods we should be trading with each other, get a handle on that, figure out what those flows should look like,” Greer said. Such a mechanism would allow the two sides to concentrate on what Greer called “stickier issues.” Greer added that the U.S. trade deficit in goods with China fell by 30% last year to US$130 billion.

Quick hits

• Global purchasing managers’ indices slumped in March as oil prices surged on the back of the conflict in the Middle East. In the U.S., the manufacturing prices-paid measure rose to 70.7 from 63.0 the month before, the highest level since October 2022.
• The U.S. economy grew at an annual rate of 0.5% in the final quarter of 2025, a downward revision of an earlier 0.7% reading. The Fed’s preferred inflation measure, core PCE, slipped to 3% year-over-year in February from January’s 3.1% but remains stubbornly above the central bank’s 2% target. U.S. durable goods orders fell 1.4% in February, while core orders (nondefence ex aircraft) rose 0.8%.
• Recapping data released over the Easter weekend, March U.S. nonfarm payrolls rose a stronger-than-expected 178,000, while the unemployment rate fell to 4.3% from 4.4%.
• President Trump has requested an additional US$441 billion in defence spending in his fiscal year 2027 budget request to Congress.
• According to the minutes to the March FOMC meeting, almost all participants agreed that the current policy rate kept the committee “well positioned” to face future policy decisions as the economy evolves. The minutes showed that the majority of participants saw increased upside risks to inflation and downside risks to employment from the conflict in the Middle East. Most said that further softening in labour market conditions “could warrant additional rate cuts,” while many participants said that elevated inflation “could call for rate increases.”
• FactSet Research reported this week that the number of S&P 500 companies issuing positive EPS guidance rose to its highest level in five years.
• According to Wolfe Research, U.S. tax refunds are up 14% over last year, helping cushion the blow of higher energy prices.
• Analysts at Strategas calculate that the current effective U.S. tariff rate is around 8.4%, down from 11% in October. On an annualized basis, the U.S. is collecting about US$100 billion less tariff revenue than six months ago. This could be a tailwind to consumers, potentially making them more resilient to gas price hikes.
• Reuters reported this week that ratings agency Moody's has downgraded its outlook on business development companies to negative as private lending funds face increased redemption requests, higher leverage, and reduced access to finance markets.
• The Financial Times reports that U.S. crude exports are projected to hit a record high in April as Asian countries look to replace Middle Eastern oil lost because of the Iran war. Oil research group Kpler estimates exports will jump by almost a third this month to 5.2 million barrels per day, up from 3.9 million per day in March.
• The United Kingdom reportedly exposed a secret Russian submarine operation to disrupt British undersea infrastructure such as pipelines and telecommunications cables. While there is currently no evidence of damage to British infrastructure, U.K. Defense Secretary John Healey warned Russia of “serious consequences” if there is any in the future.
• Producer prices in China rose for the first time in three years in March, gaining 0.5% year-over-year. Consumer prices rose 1%.
• Canada’s unemployment rate held steady in March at 6.7%. The economy added just over 14,000 jobs last month after shedding nearly 84,000 in February.
• A preliminary reading of the University of Michigan Consumer Sentiment Index fell to a record low 47.6 in April.