Hi YXI friends,

I am no expert on Middle East geopolitics and therefore, have read the same confusing news headlines as you. It seems that both sides are being overtly “tough” but are secretly talking.

At the time of writing, the Strait of Hormuz remains closed. This means nearly the entire non-oil-producing world will run out of oil reserves at some point this month, as the last delivery cargo from March arrive soon (if not already).

Separately, we had the joy of receiving the Nonfarm Payrolls data on a market holiday. And oh my the data were laughable:

Do you spot a pattern here? Every positive report since May 2025 was followed by a nearly equally negative report, so the two-month changes were nearly flat. If I had to guess, the April report released next month will see some big job losses to offset the last set of blockbuster numbers.

As the Fed shifts its focus back to inflation, the labour market reports should not really move the needle in policy expectations unless we see consecutive negative numbers (for 3 months in a row).

The unemployment rate is around its 12-month average.

Average hourly earnings have been in a downtrend as job openings have weakened. This should put downward pressure on core inflation, although this may not be enough to offset the spike in energy prices.

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