Ten Stories Moving the Market

Ten Stories Moving the Market:

U.S. President Donald Trump said Iran’s response to the U.S. proposal to end the war was unacceptable; Iran formally sent a response to the latest U.S. proposal to mediator Pakistan that didn’t include commitments about Tehran’s nuclear program – WSJ. (Why you should care – the U.S. is unlikely to agree to a deal that doesn’t include Iran giving up its nuclear ambitions)

European Central Bank President Christine Lagarde said it is carefully weighing its response to the Iran war and the impact on inflation to ensure it acts neither prematurely nor too late; in an interview with Spain’s RTVE she said policymakers face “massive uncertainty” and need “a lot more data” to understand the repercussions of the conflict – Bloomberg. (Why you should care – Lagarde is signaling the ECB is getting closer to raising interest rates)

Britain said it was deploying its warship HMS Dragon to the Middle East in ​preparation for a potential multinational effort to protect shipping ‌in the Strait of Hormuz – Reuters. (Why you should care – a multinational group is looking to secure safe passage for shipping traffic through the Strait of Hormuz once the Middle East conflict has ended)

As the heads of the U.S. and Iran meet in Beijing this week, President Donald Trump and Chinese leader Xi Jinping will have another nation looming over their summit: Iran; Trump is eager to move on from the Middle East war that is sapping his domestic power and straining the global economy – WSJ. (Why you should care – the White House is likely to ask for China’s help in securing safe passage for traffic through the Strait of Hormuz)

A fresh batch of consumer price data in the coming week is likely to affirm Americans’ growing frustration with inflation; economists see a sharp 0.6% increase in the consumer price index for April, according to Bloomberg survey data – Bloomberg. (Why you should care – headline inflation numbers are likely to rise even higher when the April numbers come out later this week)

China's export growth gathered pace in April as factories raced to meet a wave of orders from AI-related industries and other buyers seeking to stockpile components amid ​fears the Iran war could push global input costs even higher – Reuters. (Why you should care – the government is said to be increasingly concerned that high input costs will hurt demand) 

Goldman Sachs said it pushed back expectations for the Federal Reserve’s next two rate cuts by one quarter to December 2026 and March 2027 as inflation proves stickier than anticipated; energy cost passthrough is likely to keep the core PCE inflation closer to 3% than the Fed’s 2% target through the year, delaying the conditions needed for policy easing – Bloomberg. (Why you should care – one rate cut by the end of this year would exceed Wall Street’s current expectation for none)

Saudi Aramco reported a 25% jump in first-quarter profit, showing its ‌resilience as U.S.-Iran war tensions curtail Strait of Hormuz shipping, with the state oil giant's East-West crude pipeline running at full capacity to mitigate the impact to supplies – Reuters. (Why you should care – the company said its East-West pipeline has been able to mitigate any slowdowns related to the Strait of Hormuz closure)

Federal Reserve Governor Christopher Waller said the 12 regional Fed banks had agreed to a framework on how to standardize and centralize some functions, such as back-office operations; the remarks by Waller come less than three weeks after he delivered a speech calling for a shakeup in the U.S. central bank’s operations, arguing that key functions should be centralized and subject to less consensus-building among its regional reserve banks – Bloomberg. (Why you should care – the Fed is looking to centralize control and give the regional banks less ability to hinder change)

The U.S. job market exceeded expectations again in April, buoyed by gains across industries including retail, transportation and warehousing, and healthcare; the results were a sign that the labor market remained resilient so far in the face of the Iran war – WSJ. (Why you should care – job gains have improved recently but still remain well below historical monthly norms)

Economic Calendar:

Earnings: ASTS, CEG, FOXA, MOS, SATS, SPG

China – CPI, PPI for April

U.S. – Conference Board Employment Trends Index for April (10 a.m.)

U.S. – Existing Home Sales for April (10 a.m.)

BoE’s Woods (Deputy Governor) Speaks (10:40 a.m.)

Treasury Auctions $89 Billion in 13-Week Bills (11:30 a.m.)

Treasury Auctions $77 Billion in 26-Week Bills (11:30 a.m.)

Treasury Auctions $58 Billion in 3-Year Notes (1 p.m.)

Treasury Auctions $42 Billion in 10-Year Notes (11:30 a.m.)