● Conflicting signals from Tehran: Iranian state media has denied reports of weekend talks with the U.S. in Islamabad. By conditioning any negotiations on a Lebanon ceasefire, Tehran is keeping geopolitical uncertainty high despite the current truce.
● Market “wait and see” mode: Asian equities rose following a strong Wall Street session, but major assets are stuck in tight ranges. Investors are holding out for hard evidence of de-escalation. EUR/USD remains elevated near 1.17, while gold is hovering at $4,761 per ounce.
● Oil prices remain sticky: Brent crude is holding near $96 a barrel as supply anxieties persist. While prices retraced from $99 to $95 yesterday on news of a potential Israeli de-escalation in Lebanon, the market is refusing to break lower until diplomacy gains real traction.
● Wall Street optimism: US futures are extending their gains after two robust sessions. The US500 is up 0.03%, while the tech-heavy US100 has added 0.11%.
● Strong showing in Asia: Regional benchmarks found a foothold overnight, with China’s CH50 climbing nearly 1% and Japan’s Nikkei 225 gaining 0.65%.
● Japan ramps up the pressure: Finance Minister Katayama has escalated his rhetoric, declaring readiness to intervene “on all fronts” against speculative volatility in FX and oil. To blunt the crisis, Tokyo is also continuing the release of strategic petroleum reserves.
● Fed leadership timeline slips: The postponement of Kevin Warsh’s confirmation hearing due to missing paperwork ensures temporary policy continuity. This delay has fueled speculation that Jerome Powell might maintain his influence as Governor longer than expected.
● Stagflationary shadows in Asia: Central banks are navigating a deepening dilemma. The BoJ is warning of stagflation risks if the Middle East conflict drags on, while South Korea held rates steady to balance rising price pressures against slowing growth.
● The Chinese divergence: New data shows PPI (+0.5% y/y) ending its deflationary streak due to rising fuel costs. However, a soft CPI (+1.0% y/y) confirms that domestic consumer demand remains weak, complicating the reflation story.
● Japan’s inflation surprise: Wholesale inflation (PPI) in Japan jumped to 2.6% y/y, overshooting expectations. This spike, driven by energy costs, significantly raises the stakes for a potential interest rate hike from the BoJ this April.
● Crude oil fell significantly yesterday during the opening hours of Wall Street trading following reports that Israel is to cease its bombardment of Lebanon. Nevertheless, prices remain at elevated levels but are not rebounding toward $100 per barrel, despite news that Iran has no intention of traveling to Pakistan for negotiations.
