Fragile ceasefires and Hormuz blockades trigger massive energy inflation, forcing central banks to maintain hawkish stances despite ongoing global uncertainty.
The Hormuz Stranglehold: Why a Ceasefire Isn’t a Solution Yet
The financial world is currently walking a tightrope between a fragile peace and a permanent energy crisis. While the announcement of a ceasefire between the US and Iran, alongside Israel-Lebanon talks, has provided some relief to risk sentiment, the “Hormuz Risk Premium” remains firmly baked into the market. The reality on the water tells a different story than the headlines in the papers: Iran’s de facto control of the Strait of Hormuz has created a logistical nightmare, with hundreds of vessels waiting to exit while only a handful are permitted passage. For gold and oil traders, this means that even though the “war” might be on pause, the supply-chain shock is not. As long as the world’s most critical energy artery remains a geopolitical bargaining chip, gold prices will likely maintain an upward bias, driven by a persistent underlying anxiety that this truce is only as strong as the next headline.
The Energy Ghost in the Inflation Machine
Today’s March CPI report serves as a cold bucket of water for those hoping that the 2024–2025 disinflation trend would continue unabated. This is the first comprehensive data set to capture the “Iran war tax”—the immediate fallout from the 40%–50% surge in crude oil prices since the conflict erupted on February 28. With headline CPI projected to jump nearly 1% in a single month, we are seeing the strongest inflationary impulse in nearly four years. While “core” inflation figures might appear shielded from the oil shock for now, the sheer velocity of the headline spike to 3.4% makes it impossible for consumers or policymakers to ignore. We are no longer debating if energy prices will hurt the economy; we are now witnessing the data reflect a world where gasoline at the pump has become a primary driver of economic instability once again.
The Death of the Dovish Pivot
The dream of a rapid return to low interest rates has effectively been shelved. In light of the current energy shock and “sticky” price pressures, the Federal Reserve and the ECB find themselves in a hawkish corner. The Fed’s March minutes revealed a central bank in no rush to ease, while the ECB is still pricing in multiple hikes despite the ceasefire news. Markets have been forced into a radical repricing, with the probability of the Fed holding rates steady through the end of the year jumping from 17% to 75% in just a few weeks. This “higher for longer” reality is the new baseline. Central bankers are signaling that they would rather risk a slowdown in growth than allow an energy-driven inflation spiral to unanchor expectations. For investors, this means the US Dollar’s dominance and the pressure on non-yielding assets like silver and gold will likely persist as the wait for monetary relief gets pushed further into the horizon.
Top upcoming economic events:
04/12/2026 – Business NZ PSI The week kicks off with the Performance of Services Index from New Zealand. This is a vital indicator of the health of the New Zealand service sector, which accounts for the majority of the nation’s economic activity. In an environment where global demand is shifting due to geopolitical tensions, this data will reveal if the domestic economy in the Pacific region is expanding or contracting.
04/13/2026 – BRC Like-For-Like Retail Sales (YoY) This British Retail Consortium report offers an early look at consumer spending patterns in the United Kingdom. Given the high energy prices and inflationary pressures discussed in recent news, this data is essential for determining if British consumers are pulling back on spending or if demand remains resilient enough to support further interest rate hikes by the Bank of England.
04/14/2026 – Producer Price Index ex Food & Energy (YoY) This “High” impact US event measures inflation at the wholesale level. It is a primary leading indicator for consumer inflation; when producers pay more for goods, those costs are eventually passed to the consumer. Traders will be watching the “Core” reading closely to see if the recent energy shock from the Middle East is starting to seep into other areas of the economy beyond just gas and oil.
04/14/2026 – BoE’s Governor Bailey speech As the head of the Bank of England, Andrew Bailey’s commentary is a major market mover for the Pound (GBP). He is expected to address the current geopolitical crisis and how the “energy tax” caused by the Iran-Israel conflict is impacting the BoE’s roadmap for interest rates. Any shift in his tone toward a more aggressive “hawkish” stance could trigger significant volatility in EUR/GBP and GBP/USD.
04/15/2026 – Fed’s Beige Book This Federal Reserve report provides a detailed, anecdotal summary of economic conditions across the 12 US districts. It is highly valued because it offers the “human” context behind the hard data, such as how small businesses are coping with labor shortages or high shipping costs through the Strait of Hormuz. It helps investors gauge the likelihood of a recession versus a “soft landing.”
04/16/2026 – Employment Change s.a. / Unemployment Rate (AUD) This is the most critical data release for Australia this week. Because the Australian economy is heavily tied to global commodity prices, the strength of the labor market is a key factor for the Reserve Bank of Australia (RBA). A low unemployment rate would give the RBA the confidence to continue raising rates to combat the inflation spillover from the global oil market.
04/16/2026 – Gross Domestic Product (YoY) (CNY) China’s GDP release is a massive driver of global market sentiment. As the world’s second-largest economy and a primary consumer of global energy, a strong GDP print would suggest that global demand remains robust despite high oil prices. Conversely, a weak reading could spark fears of a global slowdown, weighing heavily on risk-sensitive currencies like the AUD and NZD.
04/16/2026 – Gross Domestic Product (MoM) (GBP) The UK’s monthly GDP figure provides a real-time health check on the British economy. Following the manufacturing and retail data earlier in the week, this figure will confirm if the UK is managing to grow despite the current “energy shock.” It is a pivotal data point for Sterling traders looking for clues on the BoE’s next move.
04/16/2026 – Philadelphia Fed Manufacturing Survey This survey is one of the oldest and most respected indicators of US manufacturing health. It captures business conditions in a major industrial sector and often serves as a leading indicator for national manufacturing trends. A positive surprise here would reinforce the “US exceptionalism” narrative, potentially strengthening the US Dollar as it suggests the economy can handle higher interest rates.
04/17/2026 – Fed’s Waller speech Christopher Waller is a key voting member of the Federal Reserve and is often seen as a bellwether for future policy shifts. Coming at the end of the week, his speech will likely synthesize the week’s inflation and GDP data. If he leans into a “higher for longer” narrative regarding interest rates, it could cement the US Dollar’s strength heading into the weekend.
