Summary

Futures Flat Ahead Of Fed, Mag 7 Earnings Avalanche S&P futures are flat with Nasdaq outperforming ahead of a huge day for tech. Alphabet, Amazon, Meta and Microsoft, representing nearly 20% of S&P market cap, report after the close, with traders focused on capex. The group has a combined options implied move of more than $750 billion of market cap in either direction. As of 8:00am ET, S&P futures are unchanged; Nasdaq futures rise 0.3% amid dip buying following strong results from Seagate, after the index slipped more than 1% in the previous session, and the sector outperformed in Europe and Asia. In premarket trading, semis are again seeing a strong bid post-earnings, Mag7 names are flat to down, Cyclicals are leading Defensives driven by Energy / Industrials / Materials. Treasury yields rose along with the dollar ahead of the Fed’s latest interest-rate announcement at what is likely Jerome Powell’s final meeting as chair and where the Fed will keep rates unchanged. WTI crude rose $103  while Brent jumped above $114 a barrel - approaching the highest since the start of the Iran war - after the US signaled it would stick with a naval blockade of Iranian ports, leaving the Strait of Hormuz impassable. The key overnight news came from Trump’s threat of extending the US blockade, which is boosting oil, pushing Brent to the highest in a month, but for now Equities are blissfully interpreting this as an “escalate to de-escalate” situation. Bond yields are near session highs, above 4.36% ahead of today's Fed decision with no changes expected in an 11-1 vote, though there will likely be multiple questions probing Powell’s intent to leave the Board or to finishing his term which runs into 2028, or perhaps stay on until all investigations are concluded. US economic data calendar slate includes March readings for wholesale inventories, durable goods and housing starts are due at 8:30 a.m. ET. FOMC rate decision is at 2 p.m., followed by a press conference at 2.30 p.m. Bank of Canada rate decision is due at 9:45 a.m. In premarket trading, Mag 7 stocks are mostly lower: Alphabet -0.5%, Amazon -0.1%, Apple -0.7%, Nvidia +0.4%, Meta -0.1%, Microsoft -0.6%, Tesla +0.2% Bloom Energy (BE) jumps 20% after the fuel cell maker boosted its revenue guidance for the full year, beating Wall Street guidance expectations. Booking Holdings (BKNG) falls 3% after the online travel agent said the Middle East conflict impacted its first-quarter results to varying degrees. Its second-quarter and full-year forecasts missed estimates. Brown-Forman (BF/B) falls 5% after the alcoholic beverage maker and Pernod Ricard agreed to terminate discussions regarding a potential business combination. Humana (HUM) slips 1% after the health insurer reaffirmed its adjusted earnings per share forecast for the full year, even as its first-quarter profit came ahead of expectations. KalVista Pharmaceuticals (KALV) shares are halted after Chiesi Farmaceutici SpA agreed to acquire the US-listed company for about $1.9 billion, expanding the Italian company’s rare immunology portfolio. NXP Semiconductors (NXPI) jumps 18% after the chipmaker reported first-quarter results that beat expectations and gave a second-quarter forecast that is above the analyst consensus. O-I Glass (OI) sinks 21% after the glass bottle maker cut its adjusted earnings per share guidance for the full year, citing higher global energy costs as a result of the conflict in the Middle East. Robinhood (HOOD) falls 10% after the firm said expenses jumped 18% in the first quarter and warned that its “Trump account” push would require an additional $100 million investment. Rush Street (RSI) surges 17% after the gaming company reported revenue for the first quarter that beat the average analyst estimate and raised its outlook for the full year. Seagate Technology (STX) rises 17% after the computer hardware and storage company gave a fourth-quarter forecast that was much stronger than expected. It also reported third-quarter results that beat expectations, fueled by AI-related demand. Starbucks (SBUX) climbs 4% after reporting better-than-expected quarterly results and saying it now sees comparable sales rising at least 5% this year, up from its previous view of 3% or more. Teradyne (TER) falls 6% after the semiconductor manufacturing company gave an outlook that wasn’t seen as strong enough to justify the stock’s recent strength. Visa (V) rises 5% after the credit card company reported second-quarter adjusted earnings per share and net revenue that both topped average analyst estimates. Vita Coco (COCO) climbs 15% after after the beverage firm boosted its net sales guidance for the full year. In deals, Jack Daniel’s owner Brown-Forman and Jameson whiskey maker Pernod Ricard terminated their merger talks, marking an abrupt end to a potential deal. Finland’s Kone agreed to acquire TK Elevator for €29.4 billion ($34.4 billion) including debt, in what will be one of Europe’s biggest-ever PE exits. There’s a relentless few days ahead, with companies representing around 42% of the S&P 500’s market cap reporting this week. A lot of that is due to the four hypercalers coming after the close, which represent more than 15% of the index’s value. “I can’t remember a time where you had this many names in one shot,” said Michael O’Rourke, chief market strategist at Jonestrading. “It’s going to be hectic.” The results will have widespread implications for a market that’s largely looked past the impact of war in the Middle East and ridden the AI trade to new highs. Comments on capex will be crucial for chipmakers and memory storage stocks on a record run. Strong results from Seagate Technology Holdings Plc and NXP Semiconductors NV, manufacturers of memory and analog chips, respectively, fueled Wednesday’s US rebound. Both stocks surged around 18% in premarket trading and lifted peers. The Magnificent Seven were weaker for the most part. “Buy-the-dip has been a profitable trade for some time now,” said Roger Lee, head of equity strategy at Cavendish. “Any new news around the monetization of the AI capex already invested will be key, and what level of incremental capex is required in the AI arms race.” “US companies are really good at quarterly earnings. They understand how to under-promise and over-deliver,” said Russ Mould, investment director at AJ Bell. “The absence of bad news elsewhere, the still-powerful competitive positions of the Mag7 and their own powerful earnings forecast profile may be emboldening bulls to take a view ahead of their earnings.” It’s also Fed day. The central bank is poised to hold its benchmark rate in a range of 3.5% to 3.75%. Investors will be looking for clues about how long the Fed is willing to maintain its patient posture, as well as what Powell says about his future, in what’s likely to be his final press conference as Fed chair. Traders in the Treasury options market are bracing for long-dated bond yields to surge past 5% as a rally in oil prices continues. A jump in energy prices has raised the possibility of stronger inflation and weaker economic growth, leaving markets to look out for tweaks to policymakers’ March statement. The “base case is that the Fed will wait until June for meaningful changes in guidance, but the risk is that communications skew hawkish,” wrote Jim Reid, head of macro research and thematic strategy at Deutsche Bank. In politics, key congressional Republicans are poised to break with Trump on his proposed 44% budget raise for the Pentagon in a rare act of defiance. Trump and Xi Jinping are headed toward a summit next month with a shared desire to stabilize ties, as tensions rise over Iranian oil and AI. A Bloomberg Economics analysis found that around 4% of US GDP is derived from industries that use rare earths. Higher energy prices are exerting some pressure on European stocks, with the Stoxx 600 down 0.2% in what has been a busy morning of earnings reports. UBS jumped after traders helped drive profit in the first quarter, while Deutsche Bank shares dropped after the lender increased its credit provisions for commercial real estate. Here are the biggest movers Wednesday: UBS shares advance as much as 5.9% after the Swiss lender reported what analysts say was a strong set of results. With an earnings beat driven by the investment bank, the lender also signaled it could expand an existing $3b buyback Adidas shares soar as much as 8.3%, supported by 1Q revenue and operating profit beat that offered encouraging start to the year, with analysts waiting for details how events such as the soccer World Cup can contribute to sales growth Glanbia shares rally as much as 12% on the Irish stock exchange, hitting a record high, after the food and nutritional products company said it expects adjusted EPS growth this year to hit the high-end of its guided range Nexi shares gain as much as 7.8%, the most in more than a year, after the Financial Times reported that CVC is weighing a €9 billion bid to take the payment services provider private Amundi shares rise as much as 6.5% as the investment manager’s first-quarter earnings, assets under management and flows prove better than expected Fuchs shares rise as much as 10%, the most since October, after the German specialty chemicals company raised its sales guidance to reflect its intention to hike prices to offset raw material inflation caused by the conflict in the Middle East Airbus shares advance as much as 3.5% despite the planemaker missing analyst expectations on adjusted Ebit and free cash flow in the first quarter, alongside a low handover rate for deliveries Kambi gains as much as 22% after the Swedish sports betting company reported its latest earnings. Jefferies says the report shows progress across revenues and Ebita “despite customer migration and regulatory headwinds” GSK shares drop as much as 3.5%, underperforming the Stoxx 600 Health Care Index, after the British drugmaker reported results for the first quarter which Intron Health analysts said were “mixed” Deutsche Bank shares drop as much as 3.6% after the German lender reported what analysts say are mixed results, with Morgan Stanley analyst pointing to capital miss and provisions as the key negatives AstraZeneca falls despite reporting better-than-expected sales and earnings for the first quarter, with Hargreaves Lansdown noting the results probably won’t provide a major catalyst for the stock Iberdrola shares fall as much as 2.2% after the Spanish power company reported net income for the first quarter that matched the average analyst estimate. Analysts at Morgan Stanley note quality of earnings concerns Hexatronic falls as much as 17%, the most since July, after the Swedish maker of fiber-optic cables reported that sales  fell more than some analyhsts forecast Asian stocks fluctuate as traders await a series of upcoming central bank rate decisions in major economies, along with earnings from big artificial intelligence players. The MSCI Asia Pacific Index swung between a gain of as much as 0.3% and a drop of up to 0.5%. Key stock benchmarks in South Korea, Hong Kong, India and mainland China rose, while Australia’s declined. Japan’s markets are shut for a public holiday. Elsewhere in the region, Victory Giant Technology Huizhou Co., a supplier to Nvidia Corp., rose after reporting a 28% year-on-year increase in its first-quarter sales, driven by stronger demand for printed circuit boards used in AI servers. Other tech earnings in focus include Luxshare Precision and Foxconn Industrial. In FX, the Bloomberg Dollar Spot index is up around 0.1%. The Aussie dollar is near the bottom of the G-10 leaderboard after core inflation metrics fell short of expectations. In rates, global bonds are mostly lower, with US yields up around 1bps across the curve. Treasury yields are 1bp-1.5bp higher on the day with curve spread little changed; 10-year is near 4.36%. German and UK front-end yields are 3bp-4bp higher following German regional CPI data, with national print at 8am coming at 2.9%,  below the 3.1% expected.  Wednesday’s US session features Fed rate decision, likely the last of Chair Powell’s tenure, and news conference at 2pm and 2:30pm respectively. No change is expected, leaving investors focused on any comments about the impact of energy prices and supply-chain disruptions on inflation. Into the Fed policy decision, there has been a wave of flows in Treasury options targeting an increase in long-end yields to 5% or higher; front-end swaps price in just 3bp of easing by year end In commodities, WTI crude oil futures are up more than 3% at highest level since April 13; Brent crude futures briefly made their way back above $115 amid concern over a prolonged blockade in the Strait of Hormuz and US President Trump telling Iran it “better get smart soon.”  Spot gold and silver are showing respective losses of 0.6% and 0.1%. Bitcoin adds 1.6%.  US economic data calendar slate includes March housing starts and trade balance and March preliminary durable goods orders and wholesale inventories (8:30am) Market Snapshot S&P 500 mini little changed Nasdaq 100 mini +0.3% Russell 2000 mini +0.1% Stoxx Europe 600 -0.3% DAX -0.1%, CAC 40 -0.6% 10-year Treasury yield +1 basis point at 4.36% VIX +0.1 points at 17.97 Bloomberg Dollar Index little changed at 1198.89 euro little changed at $1.1703 WTI crude +3.5% at $103.42/barrel Top Overnight News President Trump has instructed aides to prepare for an extended blockade of Iran, U.S. officials said, targeting the regime’s coffers in a high-risk bid to compel a nuclear capitulation Tehran has long refused. WSJ War has imposed a heavy cost on Iran’s economy: more than a million people out of work, soaring food prices and a prolonged internet shutdown that has slammed online businesses. The question is how much more pain Iran’s leaders are willing to tolerate as they try to negotiate a favorable end to the war. WSJ The Fed’s widely expected to hold rates today, probably Jerome Powell’s final decision as chair. Instead, uncertainty over the outlook and his own future will dominate. BBG The UAE’s shock decision to quit OPEC blindsided its partners and will weaken the cartel’s grip on prices. Once oil starts flowing again, the move may set the stage for future price wars. BBG US gasoline inventories slumped by 8.5 million barrels last week, a month before driving season, the API is said to have reported. That would be the 11th straight decline and cut holdings to the lowest since November if confirmed by the EIA. BBG Demand for Huawei's Ascend 950 AI chips has surged following the release of DeepSeek's V4 artificial intelligence model that runs on the Shenzhen-based tech firm's chips, with major Chinese internet firms rushing to secure orders. China's biggest internet firms including ByteDance, Tencent, and Alibaba are reaching ‌out to Huawei about new chip orders, said the sources, who are familiar with the procurement discussions. RTRS China is poised to resume exporting jet fuel, gasoline and diesel from May, in a move that could significantly ease the worldwide shortages caused by the Iran conflict. FT The U.S. Department of Commerce last week ordered multiple chip equipment companies to halt certain tool shipments to China's second-largest chipmaker, Hua Hong, its latest action to slow the country's development of advanced chips, according to ‌two people familiar with the matter. RTRS Australian consumer prices surged in the first quarter as war in the Middle East drove up energy costs, while core inflation stayed uncomfortably high for policymakers, keeping pressure on for a rate hike next week. RTRS Republicans are exploring cutting capital gains taxes to appeal to voters ahead of midterms. A proposal to index gains for inflation may feature in a tax package later this year, though passage before November looks unlikely. BBG KPMG has closed its US government audit practice following the loss of an army contract: FT US President Trump's budget office sent a memo urging House Republicans to agree to partly reopen DHS, even without new cash for immigration enforcement: CNN  The White House is developing guidance to allow agencies to get around Anthropic's supply chain risk designation and onboard Mythos: Axios  US Senate votes 51-47 to block Cuba military action resolution. Iran News US President Trump tells officials to prepare for an extended blockade of Iran, WSJ reported citing sources; Trump has opted to continue squeezing Iran's economy, as other options would carry more risk than maintaining the blockade. US President Trump posted "Iran can’t get their act together. They don’t know how to sign a nonnuclear deal. They better get smart soon! President DJT". Post also includes an image of President Trump holding a rifle, with explosions behind him; caption reads "NO MORE MR. NICE GUY!". US President Trump said we are doing very well in the Middle East, King Charles agrees that Iran cannot have a nuclear bomb. Iran's Vice Chairman of the National Security Council Boroujerdi said, on negotiations, that Ghalibaf "personally manages" them. Iran has pushed back on statements from the US regarding pipeline explosions, ISNA reports. Senior Pakistani official said mediation continues, working to narrow the gap between the US and Iran. US Treasury Secretary Bessent said the US Treasury has targeted Iran's financial infrastructure, disrupting tens of billions of dollars in Iranian revenue; Kharg Island is approaching maximum storage capacity, forcing Iran to reduce oil production. The Israeli army carries out a massive bombing operation east of Gaza City. IRGC said that new means of power ready against any new US attack, Press TV reported. Israel's Hayom newspaper estimates that Israel may accept a limited ceasefire with Lebanon, with the stipulation of the disbandment of Hezbollah, Al Hadath reported. An Israeli army commander said that we are not talking about destroying terrorist infrastructure in southern Lebanon, but rather destroying everything, according to Haaretz. A political aide to the IRGC said that we will respond to any new aggression with surprises and new capabilities, will burn America's giant ships at sea if they miscalculate again, Al Jazeera Mubasher reported. Japanese PM Takaichi said Japan will engage with Iran for safe passage of ships. US Treasury has frozen USD 344mln in crypto linked to Iran, according to Fox Business citing officials. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks initially opened with a slight negative bias, amid the tech-led selloff stateside and the lack of progress between US and Iran. Sentiment improved throughout the APAC session, despite light newsflow. ASX 200 underperformed, with Health Care and Miners weighing on the index. Woodside Energy reported Q1 revenue that rose annually and maintained its FY guidance, helping support shares just shy of 2% gains. KOSPI reversed earlier losses, as the index shrugged off the tech-led selloff in US equities. Hang Seng and Shanghai Comp. outperformed, following a flurry of earnings and updates. For BYD, the Co. reported revenue that beat estimates, however net income fell annually. On the other hand, Hua Hong Semiconductor slipped after the US reportedly ordered numerous chip equipment companies to halt tool shipments to two of the co.’s facilities Top Asian News Australian Quarterly Inflation Rate QoQ (Q1) Q/Q 1.4% vs. Exp. 1.4% (Prev. 0.6%, Low. 1.1%, High. 1.6%). Australian RBA Weighted Median CPI YoY (Mar) Y/Y 3.5% (Prev. 3.5%). Australian RBA Trimmed Mean CPI YoY (Mar) Y/Y 3.3% (Prev. 3.3%). Australian RBA Weighted Median CPI MoM (Mar) M/M 0.8% (Prev. 0.2%). Australian Quarterly RBA Trimmed Mean CPI QoQ (Q1) Q/Q 0.8% (Prev. 0.9%). Australian Quarterly RBA Trimmed Mean CPI YoY (Q1) Y/Y 3.5% (Prev. 3.4%). Australian Quarterly Inflation Rate YoY (Q1) Y/Y 4.1% vs. Exp. 4.1% (Prev. 3.6%). Australian Inflation Rate MoM (Mar) M/M 1.1% vs. Exp. 1.3% (Prev. 0.0%, Low. 0.9%, High. 1.6%). Australian Inflation Rate YoY (Mar) Y/Y 4.6% vs. Exp. 4.7% (Prev. 3.7%). European bourses (STOXX 600 -0.4%) began the session on a weaker footing as geopolitical headlines dictate the tape with WSJ reporting "Trump told officials to prepare for an extended blockade of Iran" and the US President posting this morning, "Iran can’t get their act together. They don’t know how to sign a non-nuclear deal. They better get smart soon! President DJT". European sectors opened mixed, though they now show a negative bias as the index dipped lower. Energy tops the pile, and Tech also does well after NXP Semi's Q1 beat-and-raise after hours; Insurance and Retail lag. In terms of key movers: Adidas (+7%, Strong Q1, raised guidance) and UBS (+4%, NII, Top and bottom line beat, share buyback). Top European News NIESR lowers the UK's 2026 growth forecast to 0.9% (prev. 1.4%) and raises its inflation forecast to 4.7% (prev. 3.3%) at the start of 2027; the BoE may have to respond with big rate hikes if energy disruption is prolonged. The UK would face recession and inflation of 5% in a more adverse scenario in which oil prices spike to around USD 140/bbl and Hormuz remains closed. The Middle East shock will also worsen the UK’s public finances. Relative to the OBR's outlook, debt-servicing costs are likely to be higher, growth weaker, and pressure greater for additional support to compensate vulnerable households. UK Chancellor Reeves said the Government needs to make targeted interventions that will not have a lasting impact on interest rates. AstraZeneca (AZN LN) Q1 2026 (USD): Revenue 15.3bln (exp. 14.9bln), adj. EPS 2.58 (exp. 2.55). Confirms guidance for FY26. "...remain on track to achieve our ambition for 2030 and beyond.". GSK (GSK LN) Q1 2026 (GBP) Adj. EPS 46.5p (exp. 43.2p), Turnover 7.63bln (prev. 7.51bln Y/Y), Gross Profit 1.87bln (prev. 1.93bln Y/Y); reaffirms 2026 guidance. Santander (SAN SM) - Q1 2026 (EUR): NII 5.46bln (exp. 4.97bln), EPS 0.36 (exp. 0.26), Total income 15.1bln (exp. 15bln), Net income 5.5bln (exp. 5.0bln), reaffirms 2026-28 targets. Net Loan provisions 3.23bln (exp. 3.17bln). UBS (UBSG SW) - Q1 2026 (USD): Revenue 14.2bln (exp. 13.2bln), Net income 3.04bln (exp. 2.42bln), confident in 2026 financial targets. Announces share buyback of up to USD 3bln by its Q2 results, aiming to do more by year-end. FX DXY continues to outperform most G10 peers as the preferred hedge against higher oil prices. Many catalysts will dictate the path forward for the Greenback, FOMC and BoC today, then the BoE and ECB on Thursday. DXY remains supported by both the 100 and 200 DMAs at the 98.50 mark as crude benchmarks rise into a packed session. In addition to the Fed meeting, the Senate Banking Committee is expected to advance Kevin Warsh’s nomination as Fed Chair; the vote is set for 10:00EDT/15:00BST. A quick preview into the Fed, the Bank is widely expected to leave rates unchanged, with focus squarely on Chair Powell’s guidance as policymakers assess the inflationary impact of the ongoing US-Iran conflict. The recent surge in oil prices has pushed back rate cut expectations, with a Reuters poll showing a majority of economists now see easing delayed until at least September. Traders also seek details about Powell’s future, with this meeting expected to be his last as Fed Chair, providing Kevin Warsh is approved in time. EUR is also lower against the Buck but fares better than peers despite German state CPIs being indicative of a cooler mainland series. EUR remains supported by the 1.17 mark, and ING writes this morning, "Tomorrow’s ECB meeting should, in our view, largely meet market expectations.", aside from geopols, the next catalyst for the EUR will be the Fed meeting today. Antipodeans are the worst performers in the G10 space by a large margin after Aussie inflation for March was softer than expected and trimmed bets for hikes in Next week's RBA meeting. ING writes "The pullback in AUD looks mostly a function of stretched positioning rather than a real rethink of RBA expectations. Central Banks RBNZ Governor Breman said the global environment continues to present headwinds, Q1 core inflation have remained stable within the 1-3% target band. PBoC set USD/CNY mid-point at 6.8608 vs exp. 6.8347 (prev. 6.8589). Banxico Governor Rodriguez said the Bank is close to finishing its rate cutting cycle that began in 2024. Trade/Tariffs European lawmakers failed to reach a deal on watered-down landmark AI rules after 12 hours of negotiations, talks to resume next month. US Secretary of State Rubio expresses deep concerned by China's targeted economic pressure after the Barboa and Cristobal terminals decision. Fixed Income A modestly bearish start in fixed benchmarks, given continued upside in the energy complex. Gains for energy occurring in recent trade despite a lack of fresh driver, and potentially as participants take another look at the WSJ reporting around a prolonged Hormuz closure, as while this is less risky than strikes, it does suggest a further extension of the ongoing supply disruption. Amidst this, fixed benchmarks are at lows. USTs to a 110-24+ base, but with downside of just a few ticks as we await the FOMC. The Fed is expected to maintain its rate in a 3.50-3.75% band, with focus on the guidance from Chair Powell in what may be his last meeting as Chair. As a reminder, the Senate Banking Committee is today expected to advance the nomination of Warsh to the broader Senate. Bunds are also at lows, down to 110-24+ with downside of a few ticks at most. Fleeting upside seen in EGBs as the initial German State CPIs are indicative of a cooler mainland series than the consensus for the 13:00BST mainland series suggests. Bunds spiked higher from 124.95 to 125.07, shy of the earlier 125.16 high. Albeit, the move swiftly pared and Bunds are back at lows. Gilts gapped lower by nine ticks, and have since slipped another 14 to an 86.54 trough. Action a function of the above, with Gilts trading broadly in-line with peers this morning. On the UK specifically, PM Starmer was not referred to the Privileges Committee. However, the number of Labour MPs who defied the whip and those who abstained without a clear reason is indicative of a moderate rebellion, not one sufficient to yet hit the threshold to trigger a leadership contest, but nonetheless an ominous sign into the May 7th local elections and further Mandelson-related communication releases in the weeks ahead. Italy sold EUR 5.5bln vs exp. EUR 4.5-5.5bln 3.15% 2031, 3.35% 2035 BTP and EUR 3.5bln vs exp. EUR 3.0-3.5bln 2036 CCTeu. Germany sold EUR 3.8bln vs exp. EUR 5bln 2.90% 2036 Bund: b/c 1.15x (prev. 1.24x), average yield 3.08% (prev. 2.92%), retention 23.3% (prev. 23.66%) Commodities WTI and Brent began the European morning with very mild gains, and have continued to extend higher. WTI Jun'26 topped the USD 102/bbl mark, to make a peak at USD 102.78/bbl (vs trough of USD 98.42/bbl); Brent Jul'26 resides near peaks at USD 106.16/bbl, which also marks the WTD high. Focus remains on the US-Iran situation, which, as it stands, does not appear to be moving towards peace. A WSJ article overnight, citing sources, suggested that President Trump told officials to prepare for an extended blockade of Iran, attempting to squeeze Iran’s economy. This will ultimately guide traders to price in the possibility of long-term disruptions to energy, and hence explains the strength in energy this morning. Most recently, President Trump posted on Truth Social that “Iran can’t get their act together. They don’t know how to sign a non-nuclear deal. They better get smart soon!”. Alongside this, an AI image of himself holding a rifle, with explosions behind him, the accompanying caption read "NO MORE MR. NICE GUY!". A post which spurred about a bucks worth of upside in the complex. Spot gold is a touch lower this morning and currently resides towards the lower end of a USD 4,568-4,610/oz range. As has been the case, the yellow metal has been subdued by the stronger USD and inflationary implications of the war in Iran. Today’s focus will be on the Fed Policy Announcement, which is widely expected to leave rates unchanged at 3.50-3.75%, with focus squarely on Chair Powellʼs guidance, as policymakers assess the inflationary impact of the ongoing US-Iran conflict. Base metals are mixed; 3M LME Aluminium is a touch firmer this morning, alongside strength in 3M LME Copper, whilst Palladium and Nickel move lower. 3M LME Copper holds above the USD 13k/t mark, within a USD 13,026-13,155.93/t range. Copper has advanced as Chinese fabs replenished stockpiles ahead of the Labor Day holiday, with restocking supporting prices and some buyers viewing recent declines on global growth concerns as an opportunity. Geopolitics Ukraine is facing risk of tougher terms to get some EU loan payouts, Bloomberg reported citing sources; payouts would be dependent on the introduction of a tax change for businesses. US Event Calendar 8:30 am: United States Mar Housing Starts, est. 1380k 8:30 am: United States Mar P Building Permits, est. 1390k 8:30 am: United States Mar P Wholesale Inventories MoM, est. 0.37%, prior 0.8% 8:30 am: United States Mar P Durable Goods Orders, est. 0.5%, prior -1.3% 8:30 am: United States Mar P Durables Ex Transportation, est. 0.4%, prior 0.9% 2:00 pm: United States Apr 29 FOMC Rate Decision (Upper Bound), est. 3.75%, prior 3.75% DB's Jim Reid concludes the overnight wrap Morning from a very sunny Frankfurt where summer has truly arrived. It's now been a week since I started wearing a WHOOP and Oura Ring to go alongside my trusty Apple Watch. With all these wearables I feel like the banking version of Mr T. Apologies to those not old enough to remember the A-team. Quick results are that I sleep very well for 4-5 hours and then it's pot luck what the last 2 hours bring! Lots of awake time and restless sleep. I've done various AI searches as to why that's the case. Maybe it's searching AI that causes it. Anyway, hopefully you're a bit fresher than me as we enter FOMC decision day. Markets are entering it slightly on the back foot as oil prices have continued to grind higher over the last 24 hours while tech sentiment slipped after a report that OpenAI had missed internal targets. However even on the latter point Nasdaq futures have recovered more than half yesterday's losses overnight.   Starting with the Middle East, the US and Iran seem to be no closer to resolution over the closure of the Strait of Hormuz. The WSJ reported last night that President Trump had instructed aides to prepare for an extended blockage of Iran, while Trump himself posted earlier yesterday that Iran “want us to “Open the Hormuz Strait” as soon as possible”. CNN reported that Iranian officials were expected to submit a revised peace proposal in the next few days. This uncertain backdrop saw Brent crude rise +2.80% to $111.26/bbl yesterday, its highest level in four weeks (flat overnight). So concerns about a more prolonged stagflationary shock have risen, not least as slightly further out the oil futures curve, the 3- to 6-month Brent futures are now trading within a dollar of the highs reached in late March.   While higher oil prices and stagflation fears added to the risk-off sentiment, it was AI worries that were the bigger factor in driving yesterday’s equity losses. The major catalyst was a WSJ report that OpenAI had missed its internal revenue and user targets for the end of 2025. While OpenAI pushed back on the concerns, saying its consumer and enterprise businesses are “firing on all cylinders”, the news revived previous fears about whether the huge spending commitments will eventually pay off. So after reaching record highs on Monday, the S&P 500 (-0.49%), the NASDAQ (-0.90%) and the Mag 7 (-0.29%) all fell back, whilst the Philly semiconductor index (-3.58%) saw its biggest loss in four weeks. Moreover, given the integration of OpenAI’s in the AI-ecosystem, those concerns spread from software and cloud companies like Oracle (-4.05%) and Coreweave (-5.83%), to semiconductor equipment firms like Qnity Electronics (-4.35%) and Applied Materials (-5.87%). So that’s rather dampened the mood into this week’s earnings, particularly with four of the Magnificent 7 set to report their earnings tonight after the close. As mentioned at the top Nasdaq futures (+0.49%) have recovered more than half yesterday's losses this morning with S&P 500 (+0.19%) futures also edging higher.   Asian markets are generally higher with the Hang Seng (+1.29%) leading the gains, followed by the KOSPI (+0.72%), the CSI (+0.64%) and the Shanghai Composite (+0.40%). The S&P/ASX 200 (-0.23%) is lower even after slightly softer inflation.   Australian CPI rose by +4.6% year-on-year in March, marginally below the anticipated +4.8%, but it increased significantly from the 3.7% recorded in the previous quarter. Core inflation, as indicated by the trimmed mean CPI, rose by +3.3% in March, remaining steady from the previous month while still surpassing the Reserve Bank of Australia’s (RBA) annual target of 2% to 3%. Q1 trimmed mean came in at 0.81% qoq around a tenth softer than expectations but Q2 so far has continued to see oil prices high so there won't be too much comfort with that print. For now, yields on the 3-year policy-sensitive Australian government bonds are down by -4.5 basis points, currently standing at 4.68% as we go to print. The probability of a hike next week based on futures are down 15pp to 68%. Elsewhere in the region, Japanese markets are closed today due to a public holiday. While yesterday was relatively quiet in terms of Iran newsflow, another major headline for oil markets came with the UAE’s announcement that it would leave OPEC on May 1. They’ve been a member since 1967 and are the third-biggest oil producer in the group, producing around 3.5mn barrels per day before the conflict, accounting for about 12% of OPEC’s output. The UAE had in the past pushed to increase its production quota within OPEC given its investments in new oil production capacity in recent years. While the near-term impact of the move is likely to be negligible, with closure of the Strait of Hormuz the limiting factor, longer-term this could allow the UAE to increase its oil production and reduce OPEC’s influence over the global oil market. Oil futures reacted to these potential long-term ramifications, with the 12-month ahead Brent future edging -0.34% lower to $79.87/bbl yesterday despite front-month prices surging higher. Looking ahead to today, the main highlight will be the Federal Reserve’s latest policy decision. They’re widely expected to keep rates on hold, so the focus will be on their forward guidance for what they’re thinking about future policy. Our US economists think the key question is whether they formally adopt two-sided language about the policy outlook in the statement, and whether Chair Powell indicates a more balanced risk assessment in the press conference. Their base case is that the Fed will wait until June for meaningful changes in guidance, but the risk is that communications skew hawkish. See their full preview here for more. Ahead of that, US Treasury yields moved higher as inflation concerns persisted, with investors dialling back the likelihood of Fed rate cuts this year. In fact, the probability of a cut by December was down to just 24% by the close, having been at 35% on Monday, so it’s seen as an increasingly unlikely prospect. The fading pricing of Fed cuts was also supported by the Conference Board’s consumer confidence print yesterday which surprised on the upside in April, rising to its highest level of 2026 so far at 92.8 (vs. 89.0 expected). So US consumers showing impressive resilience to the energy shock, though we should note that most of the survey was conducted before the latest rise in wholesale gasoline prices since mid-April, which reached a new post-2022 high yesterday. This backdrop saw the 2yr Treasury yield (+3.8bps) rise to 3.84%, though the 10yr yield (+0.6bps) was more stable at 4.35%.   A pessimistic macro mood was clearer in Europe yesterday. Matters weren’t helped by the ECB’s latest bank lending and inflation expectation surveys, which pointed to upside inflation risks combined with downside growth risks. Notably, 1yr and 3yr inflation expectations surged from 2.5% to +4.0% and +3.0% respectively,  their highest levels since 2023. Longer-term expectations were more stable at +2.4% (up from 2.3%). Meanwhile, the Bank Lending Survey showed a clear deterioration, pointing to the tightest credit conditions since early 2024. So it was a difficult backdrop, and inflation fears saw markets fully price in an ECB rate hike by the June meeting again. And in turn, both equities and bonds fell back for a second day, with the Stoxx 600 (-0.37%), DAX (-0.27%) and CAC 40 (-0.46%) moving lower, whilst yields on 10yr bunds (+3.3bps), OATs (+3.7bps) and BTPs (+5.8bps) all rose.   Here in the UK, yesterday saw 10yr gilt yields close above 5% for the first time since 2008, moving up +3.2bps to 5.00%. In part, that was driven by those wider inflation concerns as oil prices crept higher, but the political speculation around PM Keir Starmer kept swirling as well. Indeed, MPs voted on whether Starmer should face a parliamentary enquiry about whether he misled the House of Commons over the vetting for Peter Mandelson’s appointment as US ambassador. That vote failed to pass yesterday evening given Labour’s large majority, but the story has showed no sign of leaving the headlines, and comes as Starmer faces another important test with the local elections next week. It’s a story the gilt market has been following closely, given expectations that Starmer’s successor might loosen the fiscal rules and preside over more gilt issuance.    Looking at the day ahead, the main events include policy decisions from the Federal Reserve and Bank of Canada. Data releases include US March durable goods orders, housing starts, Germany April CPI, Italy’s April economic sentiment, Eurozone March M3 money supply, April economic confidence. And earnings will be in strong focus, with Alphabet, Microsoft, Amazon and Meta all reporting after the close. Tyler Durden Wed, 04/29/2026 - 08:29