- Drone or missile strikes reported in the UAE
- US says it 'eliminated' six Iranian small boats
- Trump: Iran is now more malleable in talks
- Trump stopped short of saying Iran violated ceasefire, notes only one missile got through
- A source tells CNN that Dubai expect US/Israeli strikes on Iran within the next 24 hours
- US March factory orders surge +1.5%, versus +0.5% consensus as core capex revised higher
- Bessent: The world is in an 8-10 million barrel oil supply deficit
- Eight reasons why the US is headed towards an inflation problem
Markets:
- WTI crude oil up $3.19 to $105.13
- US 10-year yields up 6 bps to 4.44%, 30-year breaks 5%
- S&P 500 down 0.4%
- Gold down $98 to $4515
- USD leads, AUD lags
The trouble started in Europe with various reports and denials about Iran firing on, or hitting a US frigate in the Strait. It later became more clear that there were some warning shots but it's not clear what happened beyond that. Trump said the US sank 7 Iranian fast boats while Iran denied it. Iran also launched a surprise attack against the US oil route that bypasses the Strait of Hormuz.
That last even saw WTI spike to a session high of $107.48 and stocks fell to a session low. However Trump mostly waved off the attack in a somewhat surprising move. There is talk of retaliation though and they could just be trying to maintain some element of surprise. What's clear is that Iran is not eager to let any ships cross through Hormuz, even if Trump says it's just to relieve crews.
The extension of the war -- with no end in sight -- weighed on gold prices and bonds. Gold is back flirting with $4500 on heavy selling on fears that emerging markets will need to sell gold reserves to pay for oil or stabilize FX. US 30-year yields rose above 5% for the first time since August.
In FX, there was a moderate bid in the US dollar across the board with some extra volatility in the yen that saw USD/JPY briefly fall to 155.91 in a spike lower that could have been intervention. It later completely recovered.
