Daily Market Outlook - Monday, April 13

Oil prices surged while stocks and bonds suffered after President Trump announced the United States' plan to implement a comprehensive naval blockade of the crucial Strait of Hormuz, accompanied by a stern warning of retaliation in case of Iranian resistance. This move intensifies a standoff that has already brought traffic through this vital waterway to a near halt, causing significant disruptions to global energy supplies. Following failed negotiations between Washington and Tehran over the weekend, oil and natural gas prices soared, further exacerbating an ongoing global energy crisis that has rattled markets worldwide. Brent crude surged by 7.4%, surpassing $102 a barrel, as fears mounted that the blockade could disrupt vital energy supplies through this key shipping lane. Asian markets experienced a 1.1% decline, and S&P 500 futures fell by 0.7%, as rising oil prices raised alarms about potential strains on global economic growth. However, technology companies like MediaTek demonstrated resilience, buoyed by robust sales figures. European markets were anticipated to open approximately 1.4% lower. The dollar, which has served as a safe haven during the ongoing conflict, gained strength against all major currencies. Meanwhile, Treasuries saw a downturn, and Japan's 10-year yield climbed to 2.49%, marking its highest point since 1997, amid concerns that escalating energy prices could stoke inflation. Trump's aggressive move dampened market sentiment following a period where global equities enjoyed their most significant weekly gain in over two years, while Brent crude experienced its largest weekly decline since 2022. Nevertheless, the relatively mild pullback on Monday indicates that investors are cautiously optimistic about the possibility of a resolution, which could mitigate broader economic repercussions. In other news, Hungary's currency appreciated against both the euro and the dollar after Prime Minister Viktor Orban was ousted in a decisive election victory for a pro-European opposition, a development seen as favourable for unlocking European Union funding. Additionally, European natural gas prices surged early in the day, with Dutch benchmark futures soaring nearly 18% to €51.30 per megawatt-hour. Gold prices dipped by 0.7% to around $4,720 per ounce as climbing oil prices bolstered expectations that interest rates might remain elevated for an extended period, diminishing the allure of non-yielding assets. Bitcoin also saw a slight decline, hovering around $71,000.

The six-week conflict continues to cast a long shadow over the markets, reinforcing a now-familiar trend: equity and bond prices are retreating while the Dollar gains ground on the back of rising energy costs. Despite the unpredictable nature of market reactions, the persistent volatility makes it increasingly challenging to ignore the economic impact of high energy prices and deep-seated uncertainty. Domestically, in in the UK, the economic narrative is becoming a tale of two surveys. The KPMG/REC jobs report offered a glimmer of hope for March, showing that permanent placements have largely stabilised. However, the broader outlook remains clouded. The latest Deloitte CFO survey captured a staggering drop in corporate confidence, with the net balance plummeting to -57% in Q1, down from -13% in the previous quarter. For leaders at major firms, the combination of geopolitical tension and energy shocks has become the primary driver of a new, cautious era focused on risk reduction and cost management.

Looking ahead to this week, the calendar is packed with central bank speakers, particularly on Wednesday and Thursday, partly due to the IIF Global Outlook Forum in Washington. At this stage, however, the focus appears more skewed toward the ECB and BoE than the Fed. Williams on Friday is expected to be the most prominent current Fed speaker of the week. Warsh’s Senate Banking Committee confirmation hearing for the Fed Chair role had also been anticipated for Thursday, but it now appears likely to be delayed. For the ECB, Lagarde is due to speak on Tuesday, followed by Schnabel, Lane, Villeroy, and Kocher on Thursday. On the BoE side, Bailey is scheduled to appear three times across Tuesday and Wednesday, while Mann and Greene will speak on Tuesday and Taylor is set for two appearances on Thursday. Much of Bailey’s commentary may avoid near-term policy rate guidance, with topics such as stablecoins likely to feature instead. Even so, the week should remain firmly on investors’ radar as a significant one for policymaker communication. It will not be long before blackout periods begin ahead of the next round of policy meetings at the end of the month, with decisions from the BoJ, Fed, ECB, BoE, and BoC all due between 28 and 30 April. Broadly speaking, many policymakers are likely to feel that the “wait-and-see” stance communicated in March has been validated, and they may signal that this approach remains appropriate for now. Beyond speeches, the central bank calendar also includes the Fed’s Beige Book on Wednesday. The data schedule, on the other hand, is rather light. In the UK, February's monthly GDP on Thursday will be the main release. Following flat growth in January, weaker retail activity in February, and disruption from doctors’ strikes in April, expectations for UK GDP in early 2026 remain subdued. On Thursday, the euro area will also release final March inflation figures.

Overnight Headlines

Trump Says US To Blockade Strait After Talks Fail
Trump Weighs Limited Strikes On Iran After Talks Collapse
Iran Will View Military Vessels Approaching Strait As Ceasefire Breach
UK Won’t Take Part In Trump’s Planned Blockade Of Hormuz Strait
Oil Advances As US Blockade Of Hormuz Escalates Energy Crisis
European Gas Prices Jump After Trump Threatens Hormuz Blockade
Global Bonds Slide As Failure Of Talks Adds To Inflation Fears
Bond Traders Snap Back To Inflation As Higher-For-Longer Sets In
Dollar Jumps As Failed US-Iran Peace Talks Spark Fresh Haven Push
IMF Chief Says Global Prices Will Take Time To Recede After War
War Casts Shadow Over IMF, World Bank Meetings
Trump’s Hormuz Blockade Risks Piling Pain On Asia Allies, China
BoJ’s Usual Stance Amid Uncertainty Is To Hold, Ex-Official Says
Bank Of Korea Governor Nominee Shin Says Rate Near Neutral Level
China’s Stocks, Bonds In Rare Sync As War Drives Haven Demand

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EURUSD: 1.1450 (€1.3bn), 1.1640 (€745m), 1.1650 (€970m), 1.1700 (€580m)
USDJPY: 157.50 ($544m)
GBPUSD: 1.3550 (£505m)
USDCAD: 1.3700 ($770m), 1.3900 ($634m)

CFTC Positions as of April 10, 2026:

Equity fund speculators increase S&P 500 CME net short position by 12,328 contracts to 228,259
Equity fund managers raise S&P 500 CME net long position by 27,168 contracts to 939,849
Speculators trim CBOT US 5-year Treasury futures net short position by 33,911 contracts to 1,552,929
Speculators increase CBOT US 10-year Treasury futures net short position by 39,561 contracts to 823,624
Speculators increase CBOT US 2-year Treasury futures net short position by 74,691 contracts to 1,712,015
Speculators trim CBOT US UltraBond Treasury futures net short position by 7,746 contracts to 260,383
Speculators increase CBOT US Treasury bonds futures net short position by 27,363 contracts to 58,996
Bitcoin net long position is 2,540 contracts
Swiss franc posts net short position of -30,694 contracts
British pound net short position is -56,354 contracts
Euro net short position is -7,541 contracts
The net short position in Japanese yen is -93,742 contracts.