Markets push to record highs as geopolitical risks fade

For the week ending 17 April 2026

As of midday Friday, global equities traded in record high territory amid continued deescalation in the Middle East, signs the U.S. economy has weathered the worst of the conflict well and renewed focus on the AI infrastructure buildout. The yield on the US 10-year Treasury note eased 10 basis points to 4.23% from last week as Fed cuts are beginning to be priced in again. The reopening of the Strait of Hormuz saw the price of a barrel of West Texas Intermediate crude oil fall about US$16.50 to US$82.50. Volatility, as measured by futures of the Cboe Volatility Index (VIX), was little changed from last Friday at 20. 

Iran crisis

Ceasefire holds more talks ahead, Strait reopens

Though talks in Islamabad last weekend between the U.S. and Iran fell short of an agreement, backchannel messages have been exchanged through intermediaries this week and more talks may take place this weekend. After last week’s talks failed to produce an agreement, the U.S. announced a naval blockade of ships travelling to and from Iranian ports, which went into effect Tuesday morning Washington time, depriving the Iranian government of much-needed oil revenues. U.S. President Donald Trump expressed optimism on Thursday afternoon that the two sides will be able to reach an agreement over Iran’s nuclear program and reopening the Strait of Hormuz. Trump told Fox Business early this week that the war is “close to over. Trump suggested on Thursday that Iran had agreed to give up its enriched uranium and not develop a nuclear weapon. Tehran has not responded to the claims.

On Friday morning, Iranian Foreign Minister Abbas Araghchi announced that due to the ceasefire in Lebanon, passage through the Strait of Hormuz is now “completely open” for all commercial ships for the duration of the ceasefire. President Trump welcomed the reopening but said the U.S. naval blockade against Iran will remain in effect until “our transaction” with Iran is 100% complete, a process he expects to move quickly as most points have already been negotiated. Trump later added that the U.S. is working with Iran to clear any mines laid in the Strait.

Also crossing the wires before markets opened Friday was a report of a potential cash-for uranium deal in which the U.S. would pay Iran US$20 billion for its stockpile of enriched uranium — a notion that President Trump denied via social media later that day.

China reportedly continues to pressure Iran to reopen the Strait, adhere to the ceasefire, and to continue peace talks, while the U.S. has threatened to impose 50% tariffs on imports from China amid reports that China was sending weapons to Iran. On Wednesday, Trump said he had been assured by Chinese President Xi Jinping that China has agreed not to arm Iran.

The U.S. Treasury announced this week that the temporary suspension of sanctions on Iranian and Russian oil will be allowed to expire in the coming days. 

MACRO NEWS

Warsh confirmation hearing set for Tuesday

The U.S. Senate Banking Committee will hold a confirmation hearing for Kevin Warsh on Tuesday, though the 11 Democrats on the committee have called on committee chair Tim Scott to delay the hearing until the Trump administration closes the investigations into Fed Chair Jerome Powell and Governor Lisa Cook. In addition, Republican Senator Thom Tillis, whose vote is required to advance the nomination, has repeatedly said he will not vote to do so until the Powell matter is dropped. On Wednesday, Senate Majority Leader John Thune said “I think it’s in everybody’s best interest to wrap up the investigation.” However, President Trump has thus far been unrelenting, saying he’s not inclined to drop the criminal probe and threatening to fire Powell if he doesn’t leave the  central bank when his term as chair expires on May 15.

High frequency data holding up despite conflict

We don’t usually put a great deal of stock in regional Fed surveys such as the Empire State Manufacturing Index or the Philadelphia Fed’s variant. However, they are worth keeping an eye on in light of the conflict in the Middle East. Logically, if the conflict were to seriously undermine business confidence, it would likely show up first in the “soft” data such as surveys like these. This week, the April readings of the Empire State Manufacturing Index rose to 11% from -0.2% in March, while the Philly Fed survey rose to 26.7 from 18.1. In recent years, these data have tended to be volatile and far from predictive of the future path of the U.S. economy, but it’s worth noting that readings such as these, along with low, steady U.S. weekly jobless claims and strong consumer spending data (as reported by credit card issuers), suggest that the U.S. economy is weathering the spike in energy prices pretty well so far.

Record quick rebound

The S&P 500 is on pace to close well above 7,000 this week. The market reclaimed new highs in just 11 trading days — the fastest recovery in 75 years following a correction of 8% or more. Over the 75-year period, it has taken an average of 197 trading days for such a recovery to unfold. After making new highs following an 8% or greater drawdown, the market historically has risen 72% of the time over the next six months. 

Quick hits

• Producer prices in the U.S. rose less than expected in March, gaining 0.5% from the month before, less than the 1.1% expected. On a year-over-year basis, PPI rose 4%, below expectations for a 4.4% jump. The core rate rose 0.2% from the month before and 3.8% year-over-year, both lower than expected.
• Germany will reduce its gasoline tax by 17 cents per litre for the next two months to ease the impact of surging fuel costs, and the French government is reportedly working on a plan to cap fuel prices, as well. It was also announced this week that Canada will suspend its fuel tax until the end of the summer.
• Analysts at Goldman Sachs expect U.S. core PCE will end the year at 2.5%, 0.3% higher than its pre-Iran war forecast.
• U.S. existing homes sales fell 3.6% to a 3.98-million-unit annual rate in March. The median price home rose 1.4% to US$408,800.
• Following three special election wins, Canadian Prime Minister Mark Carney secured a parliamentary majority for the ruling Liberal Party.
• President Trump has nominated senior PIMCO executive ‌Erin Browne as Treasury under-secretary for international affairs.
• In Washington for this week’s spring meeting of the International Monetary Fund, European  Central Bank President Christine Lagarde said that as a result of the conflict in the Middle East, the central bank must be “agile” and data-dependent. While the ECB doesn’t have a tightening bias, it won’t hesitate to act if needed, she added.
• The U.S. has eased sanctions on Venezuelan banks to help stabilize the country’s economy, facilitate rising oil revenues and incentivizing U.S. investment.
• The Trump administration is reportedly readying a system, set to launch next week, to issue refunds to American importers after the U.S. Supreme Court struck down its IEEPA tariffs. Those refunds could be an unexpected fiscal tailwind for the U.S. economy later this year.
• The IMF warned this week that with no U.S. debt consolidation plan in sight, the safety premium of U.S. Treasuries is becoming compressed.
• The U.S. Energy Information Administration said this week that total U.S. oil exports have jumped to a record high. Total crude oil plus petroleum product exports rose to 12.7 million barrels per day last week.
• The Fed’s Beige Book reported that most districts saw slight-to-modest growth, price growth remained moderate overall, and employment was “steady to up” in almost all districts. The Mideast war was cited as major source of uncertainty.
• China’s economy grew more quickly in the first quarter, led by manufacturing, according to data released Thursday. GDP grew at a 5% rate year-over-year in Q1, up from 4.5% in Q4 2025. Retail sales rose 1.7% year-over-year, slower than the median forecast of 2.4%. Industrial production rose 5.7% from the year before, while residential property sales fell 18.5%. The data suggest that while exports remain strong, domestic consumption continues to be subpar.