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The market narrative has flipped again—and this time the reversal is dramatic. Just days after investors were positioning for a dangerous escalation in the Strait of Hormuz, traders are suddenly rushing back into risk assets as Washington signals that diplomacy may still be alive.

The turning point came when US President Donald Trump abruptly paused “Project Freedom,” the US naval operation designed to escort shipping through the Iranian-controlled Strait of Hormuz. The mission had rapidly become the center of the latest confrontation, triggering missile incidents, naval clashes, and fears that the four-week-old ceasefire between the US and Iran was collapsing.

Instead of doubling down militarily, Trump announced that the operation would be suspended to facilitate a “complete and final agreement.” That single sentence completely changed market psychology. Within hours, the focus shifted away from imminent escalation and back toward the possibility of a negotiated settlement.

In many ways, markets had already started sniffing out the shift before the announcement became official. Wall Street’s overnight rally now looks less like optimism and more like early positioning. NASDAQ and S&P 500 both closed at record highs despite the geopolitical backdrop, suggesting some traders had already concluded that Washington was preparing to step back from direct confrontation.

The clues were there. During a briefing earlier in the day, Secretary of State Marco Rubio and Defense Secretary Pete Hegseth continued to speak firmly about protecting shipping routes and maintaining “Project Freedom.” But they also repeatedly stressed that the ceasefire remained intact despite recent military skirmishes. That subtle change in tone appears to have been enough for markets to start reversing defensive positioning.

The result was a sharp unwind of the “war trade.” Oil prices retreated as traders reduced the probability of an immediate supply shock through Hormuz. Safe-haven demand for Dollar evaporated quickly, pushing the greenback back under broad pressure.

Equity markets in Asia exploded higher after the pause for formally announced. South Korea’s KOSPI delivered one of the clearest signals, opening above 7093 before surging through 7300 intraday for a fresh record. The move reflected a rapid return of global risk appetite as investors once again embraced the idea that diplomacy—not escalation—would dominate the next phase.

But the most fascinating development is happening in Yen, for it is aggressively outperforming everything else. That has reignited speculation that Japan is intervening again—this time with near-perfect timing. By acting during the tail end of Golden Week holidays, when Tokyo liquidity is exceptionally thin, authorities can move the market far more efficiently. And by stepping in while Dollar is already falling globally, they effectively gain leverage from the market’s own momentum.

This is the essence of “maximum impact for minimum spend.” Japan may have realized that this brief window—falling Dollar and global yields, thin liquidity, and reduced geopolitical fear—offered the best opportunity to reset USD/JPY lower before speculative pressure toward 160 could rebuild. Rather than fighting the market, Tokyo may now be trying to guide it.

In the currency markets, Dollar is currently the worst performer for the day so far, followed by Loonie, and then Euro. Yen is leading, followed by Kiwi, and then Aussie. Swiss Franc and Sterling are positioning in the middle.

In Asia, Japan is in the last day of the Gold Week holidays. Hong Kong HSI is up 0.79%. China Shanghai SSE is up 1.27%. Singapore Strait Times is up 0.07%. Overnight, DOW rose 0.73%. S&P 500 rose 0.81%. NASDAQ rose 1.03%. 10-year yield fell -0.03 to 4.42.

NZ Labor Data Gives RBNZ Room to Stay on Hold

New Zealand’s labor market is stabilizing—but not overheating. Unemployment unexpectedly fell in Q1, yet wage growth remained subdued and participation slipped slightly. The combination eases pressure on the RBNZ to react aggressively to rising energy-driven inflation risks. Read More.

USD/JPY Daily Outlook

Daily Pivots: (S1) 157.35; (P) 157.63; (R1) 158.18; More...

USD/JPY fell sharply after reject below 55 4H EMA (now at 158.06). The decline from 160.71 high is resuming and intraday bias is back on the downside for 61.8% projection of 160.71 to 155.48 from 157.92 at 154.68. Firm break there will target 100% projection at 152.69. That would be close to key 152.25 cluster support (38.2% retracement of 139.87 to 160.71 at 152.74). For now, risk will stay on the downside as long as 157.92 resistance holds, in case of recovery.

In the bigger picture, for now, corrective pattern from 161.94 (2024 high) is still seen as completed at 139.87. Rise from there is seen as resuming the long term up trend. So, break of 161.94 is expected at a later stage to resume the long term up trend. However, sustained break of 55 W EMA (now at 154.01) will dampen this view and bring deeper fall back towards 139.87 to extend the pattern from 161.94.

Key takeaways

• Risk-on rally driven by easing geopolitics: Cooling US–Iran tensions and lower oil prices have reduced risk premiums, lifting global equities to record highs—led by the S&P 500 and Nasdaq 100.
• AI-led earnings momentum remains dominant: Strong corporate earnings revisions, particularly from mega-cap tech and semiconductor players, continue to fuel the equity rally, underpinned by the ongoing AI infrastructure investment cycle.
• Broad cross-asset impact supports risk sentiment: A softer US dollar, stabilizing yields, and resilient commodity demand (despite oil dipping) are reinforcing bullish conditions, with Asia-Pacific markets and AUD/USD benefiting from improved sentiment.
• Chart of the day: Nikkei 225 bullish acceleration phase remains intact above 60,075 key short-term support. Next intermediate resistances at 62,044 and 62,794/63,138.

Top macro headlines

• US-Iran tensions cool: Diplomatic breakthroughs, highlighted by statements to pause Hormuz operations, indicate an Iran deal may be close. This has reduced the geopolitical risk premium.
• Oil prices retreat: Following the de-escalation of Middle East tensions, crude oil prices have dipped, providing relief to markets, though prices remain structurally supported above the $100 level.
• Record equity highs: The S&P 500 and Nasdaq closed at all-time highs, powered by extraordinary earnings momentum from mega-cap tech stocks and the easing of energy-related headwinds.
• Earnings momentum builds: US corporate earnings are being revised higher into 2026, with the 'Magnificent Seven' accounting for a significant portion of expected earnings growth.
• AUD recovered: The Australian dollar recovered from Tuesday, 5 May Asian low of 0.7136 ex-post RBA, supported by RBA’s hawkish monetary policy guidance and resilient risk appetite in equities. AUD/USD is firming up in today’s Asian session (+0.7%) to trade near its 52-week high at 0.7230.

Key macro themes

• AI hardware supercycle: The underlying driver of equity outperformance remains the massive capital expenditure surrounding AI infrastructure, particularly benefiting semiconductor supply chains in Taiwan and South Korea.
• Energy de-escalation: The dipping of oil prices is giving central banks some breathing room, potentially weakening the narrative that sticky energy inflation will force immediate rate hikes.
• Divergent regional recoveries: While the US enjoys robust growth led by tech, Europe faces a more sluggish environment, as evidenced by recent contractions in economic sentiment indicators.

Global markets impact (last 24 hours)

• Equities: Major US indices hit new milestones, with the S&P 500 surpassing 7,230 and the Dow nearing 50,000. Relief from lower oil prices broadened the rally beyond tech into cyclicals.
• Fixed Income: High-yield credit markets saw improved sentiment as risk appetite returned. Sovereign yields stabilized as the immediate threat of energy-driven inflation receded slightly.
• FX: Reducing geopolitical risk premiums put a ceiling on the US dollar strength resurgence. The EUR/USD and GBP/USD rebounded from key near-term supports at 1.1685 and 13490, respectively, after testing these levels on Tuesday, 5 May.
• Commodities: Oil prices dipped on cooling Middle East tensions and paused Hormuz operations, but WTI and Brent remain above $100/bbl. Industrial metals continue to see demand from the AI infrastructure buildout.

Asia Pacific impact

• Stock markets: Regional markets showed a mostly positive response to Wall Street's record close. The Nikkei 225 futures (Globex) climbed 1.1% to 61,285 (fresh all-time high), and the ASX 200 gained 1%. The China A50 rallied 1.2% to hit almost a 4-year high, while the Hang Seng Index recovered by 0.5%
• Currencies: The AUD/USD remains in a near-term bullish trend as it rose to a new 52-week high of 0.7234, holding above its 20-day moving average at 0.71550.
• Economic outlook: Markets linked heavily to the global semiconductor supply chain (like South Korea and Taiwan) remain the strongest performers in the region, absorbing capital flows driven by the AI boom.

Top 4 events to watch today

1. Eurozone S&P Global Services PMI (final) - 4.00 pm SGT Impact: EUR crosses, DAX
2. UK S&P S&P Global Services PMI (final) - 4.30 pm SGT Impact: GBP crosses, FTSE 100
3. US ADP Nonfarm Employment Change - 8.15 pm SGT: A prelude to this Friday’s non-farm payrolls report (consensus: +99K, Mar: +62K) Impact: USD, S&P 500, US Treasuries
4. US EIA Crude Oil Inventories - 10:30 pm SGT Impact: WTI/Brent Crude

Chart of the day - Nikkei 225 bullish acceleration phase intact

Fig. 1: Japan 225 CFD index minor trend as of 6 May 2026 (Source: TradingView)

The price actions of the Japan 225 CFD index (a proxy of the Nikkei 225 futures) surged to a fresh all-time high of 61,405 at this time of writing.

Its short-term uptrend phase remains intact, supported by price actions that continue to oscillate within an ascending channel since the March 30, 2026, low, and the hourly RSI momentum indicator is in an overbought region (above the 70 level) without any bearish divergence conditions.

Watch the 60,075 key short-term pivotal support to maintain the bullish bias for the next intermediate resistances to come in at 62,044 and 62,794/63,138 (see Fig. 1).

On the other hand, a break and an hourly close below 60,075 would negate the bullish tone, leading to a corrective slide and exposing the next intermediate support at 59,050/58,545 (also the 50-day moving average).

Key Highlights

• GBP/USD started a fresh increase from the 1.3450 support zone.
• A rising channel is forming with resistance at 1.3660 on the 4-hour chart.
• EUR/USD could regain traction if it clears the 1.1750 resistance.
• USD/JPY is recovering and might climb toward the 159.20 zone.

GBP/USD Technical Analysis

The British Pound remained supported above 1.3450 against the US Dollar. GBP/USD formed a base and started a fresh increase above 1.3500.

Looking at the 4-hour chart, the pair settles above the 1.3520 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The recent swing low was formed at 1.3510, and the pair is now trading above the 38.2% Fib retracement level of the downward move from the 1.3657 swing high to the 1.3510 low.

On the upside, the pair faces resistance at 1.3595. The first major resistance sits at 1.3600 and the 61.8% Fib retracement level of the downward move from the 1.3657 swing high to the 1.3510 low.

The main resistance could be 1.3650. A close above 1.3650 could open doors for gains above 1.3680. In the stated case, the bulls could aim for a move to 1.3800.

Immediate support is seen near 1.3520. The next support could be 1.3500. A close below 1.3500 might push the pair toward 1.3450. Any more losses could initiate a fresh move to 1.3400 in the coming days.

Looking at EUR/USD, the pair is attempting a fresh increase, and a close above 1.1750 could trigger steady gains.

Upcoming Key Economic Events:

• UK Services PMI for April 2026 – Forecast 52.0, versus 52.0 previous.
• US ADP Employment Change for April 2026 - Forecast 99K, versus 62K previous.

New Zealand’s labor market showed tentative signs of stabilization in the first quarter, with the unemployment rate unexpectedly falling from 5.4% to 5.3%, below expectations for no change. Employment rose 0.2% qoq, slightly under the expected 0.3% gain, marking modest improvement.

However, the decline in unemployment was not entirely driven by stronger hiring. The labor force participation rate edged down from 70.5% to 70.4%, while the employment rate held steady at 66.7%. This suggests that part of the fall in unemployment reflected weaker labor force participation rather than a significant acceleration in job creation.

For the Reserve Bank of New Zealand, the key takeaway was steady growth in wages. Private sector wage growth, measured by the Labor Cost Index, rose 0.4% qoq, leaving annual growth steady at 2.0%. Public sector wages increased 1.7% yoy, while overall salary and wage rates rose 2.0% yoy. With annual CPI inflation running at 3.1%, wage growth remains well below consumer price inflation, suggesting limited evidence of a wage-price spiral.

The data are likely to reinforce the RBNZ’s cautious wait-and-see stance. While energy-related inflation risks remain elevated, stable wage growth gives policymakers more confidence that broader inflation pressures are not yet becoming entrenched through the labor market. As a result, the figures support the view that the RBNZ can remain on hold at 2.25% through the winter rather than rushing toward additional tightening.

Full New Zealand employment release here.

• Bitcoin bullies through $80,000 with Tech flows unstoppable and helping the Crypto space to continue higher
• The gradual rise in Cryptocurrencies could be helping to stabilize the rally, now developing into a more sustainable breakout
• Exploring a Technical Analysis and trading levels for Bitcoin and Ethereum

Bitcoin has officially broken through the significant $80,000 mark, driven by strong tech-focused investment that is lifting the entire cryptocurrency market in a moment when least expected.

Markets are insanely good at playing tricks on expectations and sentiment.

Despite their high-risk and beta profile, the technology sector and digital assets are attracting significant attention because traditional investments are under pressure from higher energy prices.

With Oil prices rising and affecting the broader economy and corporate profits, the more traditional stocks and sectors are exposed to squeezing margins and performance, hence, investors are now looking at spots unaffected by the geopolitical change.

This can be seen in the fantastic rise in the Crypto Market Cap ever since the start of the war, a very surprising dynamic.

Total Crypto Market Cap – Daily Chart. May 5, 2026 – Source: TradingView

The entire Crypto Market is up 22% since the beginning of the War. Quite surprising especially when looking at the price action before the war.

Another factor is the high level of short positions in the market since last October.

As these positions are closed, the steady rise in cryptocurrencies is forcing highly leveraged sellers and pushing the ongoing dynamic even further.

Large-scale buying is also happening in the background.

As mentioned in our late-February analysis when the geopolitical conflict began, most of the long-term distribution in digital assets had already taken place.

Bitcoin and Crypto ETF Inflows and Outflows since 2026 – Source: Coinglass

Could a major rally be on the way? For this breakout to continue, the market will need more geopolitical stability and ongoing strong investor interest.

Every significant rally starts with a foundation, and the current rebound is building a solid base for future growth. If prices stay above the important $70,000 level, the outlook for this crypto rally remains positive.

Let's dive right into a technical analysis and key trading levels for both Bitcoin and Ethereum to spot if a clear breakout in indeed into play from here.

Bitcoin (BTC) 4H Chart and Technical Levels

Bitcoin (BTC) 4H Chart, May 5, 2026 – Source: TradingView

Bitcoin is now pushing within the $80,000 to $83,000 Resistance, a key region of interest for bulls to break in order to confirm the breakout.

The bull channel is still holding strong for now with its top around $85,000.

• Above this, the longer-term breakout is confirmed
• Rejecting $83,000 level could on the other hand provide a good opportunity for sellers to retake control of the mid-term action

We are entering a pivotal moment for Cryptocurrency Markets, hence, make sure to track the price action in upcoming weeks.

Levels of interest for BTC trading:

Support Levels:

• $75,000 Key long-term Pivot (acting as resistance)
• $70,000 Short-term momentum Pivot (50 and 200-4H MA)
• $60,000 to $63,000 Main 2024 support (recent double bottom)
• $59,935 February Lows
• $52,000 to $58,000 Next support and 200-Week MA ($55,000 Mid-point)
• $40,000 Mid-2024 breakout support

Resistance Levels:

• $80,000 to $83,000 mini-resistance (entering, bullish above)
• $85,000 bull channel top
• $90,000 to $95,000 minor Resistance
• $98,000 to $100,000 Pivotal Resistance
• Current ATH Resistance $124,000 to $126,000

Ethereum (ETH) 4H Chart and Technical Levels

Ethereum (ETH) 4H Chart, May 5, 2026– Source: TradingView

Ethereum has been somewhat struggling a bit more than Bitcoin to push above its prior month's highs.

Nonetheless, with Bitcoin dragging market sentiment higher, it wouldn't be surprising to see the second crypto catch up within the next few days (barring any major negative news).

The top of its bull channel is at $2,530; breaking above this should push a particularly bullish momentum, hence this will have to be watched.

• On the other hand, below $2,200 the price action would get bearish again
• Make sure to check out reactions to the Non-Farm Payrolls, which will surely have their impact on general risk-sentiment.

Levels of interest for ETH trading:

Support Levels:

• 4H 50 MA $2,300
• Channel lows $2,200
• $1,700 to $1,800 Pre-Bounce 2025 Key Support (testing)
• $1,744 February 6 lows
• $1,380 to $1,500 2025 Support
• 2025 Lows $1,384

Resistance Levels:

• Mini-Resistance $2,400
• $2,500 to $2,800 June 2025 Pivotal Resistance
• $3,000 to $3,200 Major momentum Pivot (Test of the $3,000)
• $4,950 Current new All-time highs

The narrative is easing, but keep track of WTI Crude and the latest headlines to stay ahead of the game.

Safe Trades!

• GBP/USD has reclaimed the key psychological level of 1.35000, which now serves as a foundational support zone.
• The analysis presents a cautiously optimistic outlook, with medium-term momentum shifting toward the bulls based on the H4 chart MAs.
• Two potential trade setups are detailed: a Bullish Retest near 1.35380-1.35400 and a Breakout Play above the 1.35844 resistance level.

The British Pound has showcased significant resilience over the past few sessions against the Greenback. After finding solid ground near the psychological 1.3500 handle, cable has embarked on a steady recovery, supported by a confluence of technical indicators across various timeframes.

H4 Chart: The Macro View – Breaking Structural Resistance

On the H4 timeframe, the narrative is one of a trend reversal in the making. For much of the previous month, Cable was locked in a descending channel, characterized by lower highs and lower lows. However, the recent price action shows a definitive break above the descending trendline.

More importantly, the pair has reclaimed the psychological 1.35000 handle, which has transitioned from a stubborn resistance level to a foundational support zone. The 100-period Simple Moving Average (MA) (Blue) is currently trending above the 200-period MA (Black), signaling that the medium-term momentum has shifted in favor of the bulls.

The RSI (Relative Strength Index) on the H4 is hovering around the 53 mark, suggesting there is ample "runway" left before the pair reaches overbought territory, leaving the door open for a test of the 1.35844 resistance level.

GBP/USD Four-Hour Chart, May 5, 2026

Source: TradingView

H1 Chart: Intra-day Consolidation and Moving Average Support

Zooming into the H1 chart, we can see the granularity of the recent rally. The pair has spent the last 24 hours consolidating just above the 1.35300 area.

Looking at price action and GBP/USD is consistently finding support at the 100-MA. Each time the price dips toward the 1.35400 level, buyers have stepped in, creating a series of higher lows.

The immediate hurdle for intra-day bulls is the 1.35844 horizontal resistance. A clean hourly candle close above this level would likely trigger a momentum move toward the next major objective at 1.36965.

GBP/USD One-Hour Chart, May 5, 2026

Source: TradingView

M15 Chart: Scalping Opportunities and Entry Triggers

The M15 chart reveals the immediate tactical environment. We are seeing a classic "buy the dip" configuration. The price recently spiked toward the 200-MA (1.35573) and is currently seeing a minor pullback.

The RSI Divergence indicator at the bottom of the chart shows a "Pivot" high followed by a "Bear" tag, which explains the current cooling off. This is not necessarily a reversal, but rather a healthy breather within an uptrend.

Potential Trade Opportunities (M15):

The Bullish Retest: Traders may look for a long entry if the price retraces to the 1.35365 area (confluence of the M15 100-SMA and previous structural support).

• Potential Entry: 1.35380 - 1.35400
• Stop Loss: Below the 1.35200 swing low.
• Target 1: 1.35844 (Recent High/H4 Resistance)
• Target 2: 1.36200

The Breakout Play: A high-conviction move would be a break and retest of the 1.35844 ceiling. If the price clears this level with strong volume, it confirms the H4 bullish bias.

• Potential Entry: Buy stop at 1.35860 or wait for a retest of 1.35844 as support.
• Stop Loss: 1.35500
• Target: 1.36900

GBP/USD M15 Chart, May 5, 2026

Source: TradingView

The technical outlook for GBP/USD remains cautiously optimistic. As long as price action maintains its position above the 1.35000 psychological floor, the path of least resistance is to the upside.

However, traders should keep a close eye on the RSI on the lower timeframes; if the M15 RSI fails to make a higher high alongside price, a deeper correction toward 1.35100 could be on the cards before the next leg up.

RBA hikes as expected in 8–1 vote, citing Middle East boost to existing inflation pressures. Further hikes this year remain likely but June timing is more finely balanced now.

As expected, the RBA Monetary Policy Board (MPB) raised the cash rate 25bps to 4.35% following its May 2026 meeting. The vote was again split, this time 8–1, after the 5–4 vote in March. In explaining the decision, the MPB cited the higher inflation stemming from the Middle East conflict, including second-round effects, with risks tilted to the upside. These added to the inflationary pressures already arising from what it sees as capacity pressures. It also noted indications that “higher fuel prices are likely to have second-round effects on prices for goods and services more broadly”, as we have been highlighting.

While the MPB regards monetary policy as mildly restrictive, both the Statement on Monetary Policy (SMP) and the Governor pointed to credit growth and other indicators as suggesting that financial conditions are not as tight for the same level of the cash rate as was true a few years ago.

We still expect the RBA to tighten rates again this year. However, we think a June move now looks more finely balanced. The Governor’s language in the press conference was a bit more dovish than our read of the media release and the SMP or the implications of the RBA staff forecasts. Governor Bullock characterised the three rate hikes so far as dealing with the high inflation issue that already existed before the conflict in the Middle East started, and that this “gives space” for the MPB to see how the conflict played out. On a plain reading, this might suggest that the MPB is more inclined to pause in June.

The RBA’s inflation forecasts show trimmed mean inflation peaking in Q2 at 3.8% and moderating a little from there but only getting back to the 2.5% target midpoint by June 2028. Contrary to the Governor’s remarks, this implies that the MPB is comfortable with the idea of following something like the market path from here, which at the time the forecasts were finalised implied one-and-a-half more hikes. This forecast is also based on a futures market path for oil tracking back to USD80/bbl by year-end, which might be too optimistic.

Our own assessment, however, is that there is a bit more near-term inflation to come, both from a higher oil price than future markets imply and greater, more drawn-out second-stage pass-through to other prices, especially in areas such as home-building costs. We therefore think the near-term inflation risks are tilted to the upside relative to the RBA forecasts. Our own inflation forecasts see trimmed mean inflation peaking at 4% and staying there for the remainder of 2026.

The question is what might happen between now and the June meeting that would dislodge their view about the outlook. While there are several key events, including the Federal budget and National Wage Case decision, these are unlikely to turn the dial on the RBA forecasts. Meanwhile, the inflation expectations story is going to be hard to monitor in the near term.

We were surprised that the Governor appeared to give the green light to firms passing these fuel and fertiliser cost increases into their own prices, saying that it is reasonable for them to do so. This stood in contrast to the discussion in the media conference about avoiding pass-through to wages. At several points, the Governor emphasised that the energy price shock “makes us all poorer” and there was nothing that could be done about that. In our view, it would have been more helpful to the RBA’s own inflation fight if the Governor had encouraged firms that had the capacity to absorb those cost increases to do so.

Consistent with the track for both inflation and interest rates, the revised forecasts are for lower growth in GDP and consumption, with business investment softening later this year as well. The labour market softens with a lag, though we note that both the solid near-term forecasts for hours worked and the forecast decline in participation further out are fragile.

The SMP included some forecast scenarios centred on higher outcomes for oil prices. These were qualitatively similar to the scenarios we have been publishing and revising since 3 March, though the decline in inflation in their scenarios is relatively front-loaded.

There are a number of tensions in the RBA’s forecast revisions. Although measures of labour market slack, especially underemployment, have been revised up, so was the Wage Price Index, marginally. The RBA assesses that a little spare capacity will open up in the labour market, but not until 2028. A lot hangs on a relatively downbeat government forecast for population growth and an assumption that the participation rate cyclically declines, against the upward trend that has persisted for decades.

Similarly, the near-term forecast for productivity growth is quite downbeat. With actual productivity growth at 0.9%yr for 2025, the forecast of 0%yr to June quarter 2026 implies quite a turnaround, particularly for hours worked. While measured productivity growth is cyclical, this may induce the RBA to remain pessimistic about the underlying trend.

Markets

The by-nature fragile ceasefire between the US and Iran was weakened severely by yesterday’s skirmishes in the Persian Gulf but survives so far. US Defense Secretary Hegseth detailed Operation Freedom in a press conference today, calling it a defensive and temporary mission to open up the vital Hormuz Strait and added that while the US is locked and loaded, it isn’t “looking for a fight”. Monday’s developments had pushed Brent oil towards the $115 barrier. Prices ease a bit today to around $112. In a broader perspective, the current actual level of oil prices is perhaps not the worrying part. On a closing basis, they haven’t so far surpassed the pre-ceasefire peak just short of $120. But what is changing is that markets are becoming increasingly concerned on the longer-term fall out of the conflict. There are non-linear consequences tied to the duration of the (oil, fertilizer, helium, LNG …) supply disruption in terms of the time it takes to normalize and inflation. The Brent forward curve is shifting higher by the week with financial markets for example now pricing in an at least $100 price through September this year.

Markets move on the rhythm spelled by oil so we’re seeing core bond yields correct a little lower from yesterday’s surge on the slight drop in Brent today. Bund yields change -4 bps to +0.6 bps in a bull steepening move. Net daily changes in the US vary between -0.8 (30-yr) and -1.4 bps (2-yr). It is telling how ultralong maturities barely respond, highlighting the presence of risk premia. The US 30-yr yield rests at 5%, the German variant is on the verge of reaching new 15-year highs. UK markets were closed yesterday for May Day and are now catching up. Gilt yields rally 10-12 bps. The UK 30-yr yield hit its highest level since 1998. European equity markets recoup some of the 2% losses at the start of the week with gains mounting to 1.4% (EuroStoxx50). US equities open between 0.2 and 1% higher. FX markets are treading water. EUR/USD is flat on the day around 1.17. Same goes for the trade-weighted dollar index around 98.5. The yen is among the few showing some volatility. Drawing conclusions comes with caution since Japanese markets are closed through Wednesday. Last week’s interventions (reportedly) are being further undone for a third day straight. USD/JPY hit a two-month low of 156.6 but has recovered the last couple of trading sessions to 157.8 currently.

The March JOLTS report and April US services ISM were perhaps the only important event from a market point of view today. The headline number printed in line with expectations at 53.6. The new orders component retreated more than expected from March’s 60.6 to 53.5 while the unemployment gauge improved to a still contractionary 48. Prices paid stabilized at a 4-year high of 70.7, defying odds for an uptick to 73.5. March JOLTS job openings at 6.8 million were in line with the readings of the last year so far. Both the USD and yields shrugged at the outcome.

News & Views

The Swiss Statistical office today reported headline inflation in the country in April accelerated to 0.3% M/M and 0.6% Y/Y (from 0.2% M/M and 0.3% Y/Y in March). The monthly rise was due to factors including rising prices for petrol, diesel and heating oil. Prices for air transport also increased, as did international package holidays. Core inflation was unchanged M/M and even eased to 0.3% Y/Y from 0.4%. Especially inflation of domestic products (-0.1% M/M, 0.5% Y/Y) remains very modest which is also visible in subdued services inflation (0.1% M/M and 1.1% Y/Y). Imported good prices accelerated further to 1.5% M/M and 0.9% Y/Y (from 1.8% M/M and -0.3% Y/Y). Goods price deflation is gradually coming to an end (0.6% M/M and -0.2% Y/Y from -0.7%Y/Y). With inflation holding in the lower part of the 0-2% band, the SNB can feel comfortable to hold the policy rate at 0%. A risk-off spike in the franc caused EUR/CHF to test the 0.90 area early March. Strong SNB intervention warnings (and perhaps to be confirmed actual CHF) caused the franc to settle in the 0.915/0.925 trading range over the previous month.

The minority government of Romania led by Ilie Bolojan was toppled after a confidence vote supported by the nationalist far right AUR (Alliance for the Unity of Romanians) and the Social Democrats (PSD). The latter left the collation last month over disagreement with some austerity measures that PM Bolojan introduced to address a 7.65% budget deficit (2025). Reforms were a condition for the country to get access to additional EU funds. The country now faces a (potentially long) period of political uncertainty as it might not be evident for the President to bring together parties that are able/prepared to form a majority in a fractured parliament. The Romanian leu at 5.217 trades near its all-time low against the euro. A 10-y domestic government bond shows a yield near 7.25%.

US ISM Services PMI edged down from 54.0 to 53.6 in April, slightly missing expectations of 53.8 but still remaining above the 12-month average of 52.5, indicating continued expansion in the sector. Fourteen industries reported growth, one more than in March, while the number of industries in contraction held steady at three, pointing to a broadly resilient services economy.

Details of the report were mixed but generally supportive. Business activity rose from 53.9 to 55.9, signaling stronger output, while the employment index improved from 45.2 to 48.0, though it remains in contraction territory. The data suggest that while hiring is stabilizing, momentum in services output remains intact.

Inflation pressures remain a key concern. The prices index held at 70.7, its highest level since October 2022, and has stayed above 60 for 17 consecutive months. ISM noted that rising costs for materials such as aluminum, copper, lumber, and petroleum products continue to filter through supply chains, with further upward pressure expected in coming months.

Historically, a PMI reading at this level is consistent with around 1.7% annualized GDP growth.

Full US ISM Services release here.