Category: Inflation

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S&P 500 Rallies on Job Gains, But Peace Deal Hopes Crash

Key Points

  • President Trump rejects Iran’s peace proposal.
  • Iran continued attacks on its Gulf neighbors.
  • Brent crude July futures jump to $104.50 per barrel.
  • Confidential intelligence sources say that Iran can survive a US blockade for at least 3-4 months.
  • The US labor market added 115,000 jobs in April 2026, while unemployment held steady at 4.3%.
  • The S&P 500 reached a new high, while the Dow Jones Industrial Average threatens a breakout.

DUBAI/WASHINGTON, May 10 (Reuters) – President Donald Trump on Sunday rejected Iran’s response to a US proposal for peace talks, dashing hopes for an imminent end to the 10-week-old conflict….

“I don’t like it — TOTALLY UNACCEPTABLE,” Trump wrote on Truth Social, without giving further detail. Oil prices rose $3 a barrel after the United States and Iran failed to reach agreement.

Iran’s proposal includes a demand for compensation for war damages and an ​emphasis on Iranian sovereignty over the strait, state media said. It also calls on the US to end its naval blockade, guarantee no further attacks, lift sanctions and end a US ban on Iranian oil ​sales, the semi-official Tasnim news agency said.

Brent Crude July’26 (Nymex) futures jumped to $104.50 per barrel while December’26 futures (orange) rallied to $89.25 per barrel. December prices reflect the oil market’s longer-term assessment of crude shortages. Damage to existing production and shipping facilities will take time to repair, even if the Strait of Hormuz is reopened.

Brent Crude Nymex Futures (July'26 & Dec'26)

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Trump Talks “Peace Deal” But Nothing Stops This Train

Key Points

  • President Trump again baits financial markets with the prospect of a peace agreement.
  • Brent Crude (July’26 futures) is testing support at $100 per barrel.
  • However, the crude market faces critical shortages even if a peace deal is signed.
  • The S&P 500 rallied to a new high at 7365, while the Dow threatens a breakout above 50,000.
  • The ISM Services PMI warns that growth is slowing, while soaring prices signal inflationary pressures.
  • Lithium is in a strong uptrend, while Copper, Critical Materials, and Uranium show signs of a recovery.
  • The RBA hiked rates this week and would like to hold for a while, but rising prices may force further hikes.

ISLAMABAD/WASHINGTON/TEL AVIV, May 7 (Reuters) – U.S. President Donald Trump predicted a swift end to the ​war with Iran as Tehran considered a U.S. peace proposal that sources said would formally end the conflict while leaving unresolved key U.S. demands that Iran suspend ‌its nuclear program and reopen the Strait of Hormuz.

An Iranian foreign ministry spokesperson cited by Iran’s ISNA news agency said Tehran would convey its response, while Iranian lawmaker Ebrahim Rezaei, a spokesperson for parliament’s powerful foreign policy and national security committee, described the proposal as “more of an American wish-list than a reality.”

“They want to make a deal. We’ve had very good talks over the last 24 hours, and it’s very possible that we’ll make ​a deal,” Trump told reporters in the Oval Office on Wednesday, saying later “it’ll be over quickly.”

Trump has repeatedly played up the prospect of an agreement to end the war ​that started on February 28, so far without success. The two sides remain at odds over a variety of difficult issues, such as Iran’s nuclear ⁠ambitions and its control of the Strait of Hormuz, which before the war handled one-fifth of the world’s oil and gas supply.

A Pakistani source and another source briefed on the mediation ​said an agreement was close on a one-page memorandum that would formally end the conflict. That would kick off discussions to unblock shipping through the strait, lift U.S. sanctions on Iran and set ​curbs on Iran’s nuclear program, the sources said.

A separate senior Pakistani official involved in the talks told Reuters on Thursday that negotiators were hopeful of reaching a deal but noted gaps between the sides remained.

Brent Crude (July futures), buoyed by optimism over a prospective peace deal, is retracing to test support at $100 per barrel.

Brent Crude Futures (ICE July'26)

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S&P 500 Uptrend Against Gold

Key Points

  • The S&P 500 index made a new high at 7230, reversing its long-term downtrend against Gold.
  • However, the Dow is struggling to break resistance at 50,000.
  • The ISM Manufacturing PMI indicates the sector is expanding, but producer prices are soaring.
  • Lithium is in a strong uptrend, while Copper remains rangebound.
  • Japanese intervention to support the Yen underlines the long-term reason for buying Gold.
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Australian Bear Alert

Key Points

  • Headline CPI jumped by 1.1% in the month of March, lifting the annual increase to 4.6%.
  • Australian business and consumer confidence are falling.

Australia’s headline consumer price index jumped by 1.1% in March 2026. Automotive fuel was the main contributor, rising 32.8 percent in March, the strongest monthly increase since the series began in 2017. The annual CPI increase lifted to 4.6%, below the expected 4.7%, but March is too early for pass-through effects to be felt in other sectors of the economy.

Australian CPI - Monthly & Annual

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First Wave of Gulf War Hits CPI

Key Points

  • CPI jumped by almost 0.9% in March, fueled by a steep rise in crude oil prices.
  • A 21.2% jump in gasoline prices accounted for nearly three quarters of the monthly ​CPI increase.
  • We expect further waves as rising costs reach agriculture, mining, and transportation before filtering through to the broader economy.
  • The S&P 500 stalled at 6800.
  • University of Michigan consumer sentiment plunged to its lowest level since the late 1970s.

The first wave of price hikes hit CPI in March, with the index jumping 0.865%, fueled by a steep rise in crude oil prices driven by the war in the Persian Gulf.
CPI & Core CPI - Monthly

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Ceasefire Falls Apart

Key Points

  • Israel stepped up airstrikes on Hezbollah targets in Lebanon.
  • Iran’s lead negotiator says a bilateral ceasefire is unreasonable in such a situation.
  • Iran attacked Saudi Arabia’s East-West Pipeline, which bypasses the Strait of Hormuz, just hours after the ceasefire ‌was agreed.
  • The United Arab Emirates carried out air strikes on Iranian production and refining facilities. Iran retaliates with a barrage of missiles and drones.
  • Ukraine defies calls to stop striking Russian energy facilities.
  • Brent crude bids for spot delivery at $144 per barrel, but no sellers.
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Australian PMI Dives to Recession Levels

Key Points

  • The S&P Global Australia Composite PMI dived to 46.6 in March, from 52.4 in February.

The S&P Global Australia Composite PMI dived to 46.6 in March, from 52.4 in February. The fall below 49.0 marks our first recession warning since December 2023.

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Brent Crude Spot at $141 per barrel

Key Points

  • Brent crude spot prices reached $141.36 per barrel on Thursday.
  • ISM Services PMI declined to 54% in March, reflecting slowing growth.
  • However, the ISM Services Prices index accelerated to 70.7%, warning of an inflation shock.

CNBC reports that Brent crude spot prices reached $141.36 per barrel on Thursday, the highest level since the 2008 financial crisis.

Brent Crude Spot Price

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Jobs Rise but Prices Soar, Growth Slows and Liquidity Tightens

Key Points

  • Non-farm employment jumped by 178,000 in March, well above the expected 60,000.
  • The unemployment rate declined to 4.3%.
  • Growth in aggregate hours worked, however, slowed to 0.4% over the past year.
  • The ISM Manufacturing Prices index jumped to 78.3%, warning of a price shock.
  • Aluminium prices soared to nearly $3,600/tonne due to supply shortages caused by the war in the Persian Gulf.
  • Brent crude closed the week at $109 per barrel, with no end to the Iran war in sight.

The BLS reported a 178,000 increase in non-farm payroll in March, well above the 60,000 forecast. Employment growth has been erratic, averaging less than 15,000 over the past 6 months.

Employment Growth

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Australian CPI Shock Ahead

Key Points

  • The Australian Consumer Price Index (CPI) rose 3.7% for the 12 months to February, down from 3.8% in January 2026.
  • The average wholesale price of diesel jumped to $2.83 per liter by Friday, March 20, compared to $1.62 in February.

The Australian Consumer Price Index (CPI) rose 3.7% for the 12 months to February, down from 3.8% in January 2026, while the Trimmed Mean held steady at 3.7%. While above the RBA’s target of 3.0%, the seasonally adjusted increase of just 0.2% in February offered a glimmer of hope that inflation is easing.

Australian CPI & Trimmed Mean CPI

A breakdown shows that most inflationary pressure comes from non-tradables (5.0%) compared to tradables (1.3%). Tradables are goods and services that are largely influenced by international trade prices, such as auto fuel, most food items, clothing, and footwear. Non-tradables such as household rents, health care, and education are mostly influenced by domestic factors.

Australian CPI: Tradables & Non-Tradables
However, we expect a sharp rise in tradables CPI in March, driven by a massive spike in crude oil prices.

Wholesale diesel prices (TGP) jumped to an average of 283.1 cents per liter by Friday, March 20, compared to an average of 162.3 cents for the week ended February 22—an increase of nearly 75% in just four weeks.

Australian Diesel TGP & Singapore Gasoil

Conclusion

We expect a steep rise in March CPI, which increases the chance of further rate increases from the RBA.

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