Global Economic Snapshot
- US CPI (YoY) 3.3% (Forecast 3.4%, Previous 2.4%)
- US PCE inflation at 2.8% y/y, in line with expectations
- US Initial Jobless Claims at 219K vs 210K expected
- US Durable Goods Orders fall -1.4% vs -1.0% expected
- US ISM Services at 54.0 vs 54.9 expected
- China CPI at 1.0% y/y vs 1.2% expected
- China PPI at 0.5% y/y vs 0.4% expected
- Germany CPI at +2.7% y/y, in line with prelim
- Germany Industrial Production -0.3% vs +0.7% expected
- Germany Industrial Orders +0.9% vs +2.0% expected
- Germany Services PMI at 50.9 vs 51.2 prelim
- UK Services PMI at 50.5 vs 51.2 prelim
- Eurozone Services PMI at 50.2 vs 50.1 prelim
- Japan CGPI rises 2.6% y/y vs 2.4%
- Australia Services PMI falls to 46.3, back into contraction
Japan Adds to Energy Buffers
Japan said it will release an additional 20 days of oil reserves from May, following an earlier 50-day release initiated in March. Total reserves remain substantial at around 230 days, but Tokyo is clearly trying to reduce exposure to Hormuz-linked flows.
The plan also aims to source more than 50% of imports outside Hormuz routes, with diversification across the US, Latin America, Africa, and Asia. Fuel allocation will be prioritized for critical sectors, highlighting how energy security concerns have deepened amid the Middle East disruption.
IMF Flags Supply Shock
The IMF warned that the Iran war is creating a global negative supply shock, with inflation likely to rise and growth likely to slow. It scrapped its prior growth upgrade and said it will present three scenarios depending on ceasefire durability, while noting that central banks may be forced to tighten if inflation accelerates.
The impact is expected to be highly uneven, with oil exporters cushioned and importers under pressure, and Asia flagged as the most exposed region. The IMF also estimates $20 billion to $50 billion in additional financing needs, a reminder that high global debt is limiting policymakers’ room to respond.
Hormuz Toll Risk
US oil industry players are pushing back against a proposal that would allow Iran to impose tolls on ships transiting the Strait of Hormuz. Industry estimates suggest tolls and associated insurance costs could add about $2.5 million per shipment, which would materially raise the cost of moving crude through one of the world’s most important energy chokepoints.
Beyond the direct cost, the bigger concern is precedent. Executives warn that if Iran can charge for transit, other strategic waterways could follow, including the Strait of Malacca and Turkey’s Bosporus, creating a broader quasi-tax on global energy flows.
Fed Minutes Turn Hawkish
FOMC minutes showed a growing openness to rate hikes from some participants, with a vast majority seeing upside risks to inflation and downside risks to employment as elevated. Many judged that rate cuts would likely become appropriate if inflation continues to fall as expected, but some also saw a strong case for acknowledging that hikes could be needed if inflation reaccelerates.
A couple of participants pushed their timing for cuts further into the future, and many raised concern that persistent oil prices could call for rate increases. Most said it is still too early to know how the Middle East conflict will affect the economy, though staff built in only a small effect on activity from lower stocks and higher crude.
Market Highlights
- Saudi Arabia’s oil production capacity down by 600K bpd following recent attacks.
- SPY trading volumes exceed $60B on 29 sessions in 2026, highlighting elevated activity.
- US oil prices reverse gains, slipping back to below $100 per barrel.
- Trump signals 50% tariffs on countries supplying arms to Iran.
- Iran signals ceasefire agreement has been violated, raising fresh doubts over stability.
