Yesterday’s risk-friendly tone fades / Fed's Goolsbee, Hammack worried about inflation / Soft Japan 30Y auction & weak household spending / AU infl. expectations rise / EZ PMIs / Fed / US durables

Main News · By Dr Günter Grimm · 7 April 2026

Good morning,

I hope all is well.

Here are the main market movers and overnight stories:

Markets Briefing: Yesterday’s risk-friendly tone fades

The risk-friendly tone from yesterday receded overnight as hopes for a deal with Iran faded ahead of Tuesday night's deadline, with negotiators pessimistic that Iran will bend to meet President Trump’s demand to reopen the Strait of Hormuz before his Tuesday night 8 pm ET deadline. This would pave the way for the U.S. to target Iranian bridges and power plants in a fresh escalation of the war, the WSJ reports.

US equity futures faded Monday's ceasefire-hope rally (S&P -0.34%, Nasdaq -0.42%) while European futures held a small bid, catching up with yesterday’s up move in US stocks, and the Asian session split with ASX 200 +0.71% and KOSPI +0.27% offsetting Hang Seng -0.70% and a roughly flat Nikkei. The dollar kept was only a little changed (DXY +0.05%), Treasuries cheapened a touch (US 10Y +2bp to 4.349%), and gold idled near $4,659. Samsung Electronics' eightfold Q1 operating-profit jump on AI memory pricing was the bright spot in Asia, while ISM Services data released Monday flagged the slowest expansion of the cycle alongside a sharp jump in prices paid.

Market snapshot

Source: TradingView, 07:02 CET

Main Overnight News

Fed's Goolsbee, Hammack: Inflation flashing 'orange,' or worse

Cleveland Federal Reserve President Beth Hammack and Chicago Fed President Austan Goolsbee both see inflation as a far bigger problem than employment, underscoring their support for tighter rather than looser monetary policy as the Iran war puts upward pressure on energy prices and the job market remains stuck in low gear. The pair were asked to provide their economic assessments using a four-colour scheme, from "the house is on fire" red to "everything is looking swell" green. "At least orange. Orange with a chance of meatballs; it hasn't been great," Goolsbee said of the inflation outlook amid rising gasoline prices. "I was optimistic that we would get back to this path to 2% inflation, ⁠but yikes, it's going from orange to red lately --- we had tariffs increasing prices, that was supposed to go away, kind of didn't go away, and now we add another stagflationary shock on top ....it's a troubling moment." (RTRS – Continue Reading)

Japan 30Y bond sale sees weaker demand than 12-month average

Japan’s 30-year government bond auction drew its weakest demand since June as uncertainty about Middle East tensions damped investor appetite. The bid-to-cover ratio at Tuesday’s sale was 3.12 compared with 3.66 at the last auction and a 12-month average of 3.36. Japan’s bonds were stable after the auction. (BBG – Continue Reading)

Meanwhile, Japan’s households reduced spending for a third straight month even after real wages turned positive, underscoring the fragile state of domestic demand, Bloomberg reports.

Australia inflation expectations keep rising; household spending climbs

Australia’s Monthly Inflation Gauge, compiled by the Melbourne Institute, climbed 1.3% month-on-month in March 2026, reversing a 0.2% drop in the previous month and marking the strongest increase on record. The sharp rebound pointed to renewed price pressures since the second half of 2025, driven in part by higher fuel and transport costs and lingering supply-side frictions. (TE)

Australia’s household spending increased in February, surpassing economists’ forecasts of a 0.2% rise, with a 0.3% hike from the previous month. Yearly household expenditure grew by 4.6%, boosted by higher discretionary spending on recreational and cultural activities, as well as increased spending on air travel and accommodation services. (BBG)

Australian bond yields dropped across the curve overnight, despite the sharp rise in inflation expectations. Currently, the market prices a 65% chance of a rate hike at the May meeting.

RBNZ expected to hold rates on Wednesday

New Zealand's central bank is expected to keep interest rates at 2.25% and focus on inflation, which is projected to stay above its 1-3% target until 2026. The Reserve Bank is likely to act cautiously amid uncertainty from the Middle East conflict, with markets anticipating a 25 basis-point hike in September and further increases later this year. (BBG)

The NZIER Monetary Policy Shadow Board also recommends the Reserve Bank of New Zealand (RBNZ) keep the Official Cash Rate (OCR) at 2.25 percent in the upcoming Monetary Policy Review on 8 April 2026. Shadow Board members agreed that keeping the OCR on hold is appropriate for now, given the high degree of uncertainty over the oil price shock in the wake of the US-Israel war against Iran, when the New Zealand economy is still recovering. The members stressed that the central bank should sit tight and look through the impact of the oil price shock on inflation. (NZIER)

US-Iran conflict: Latest developments

The IMF warns the war will drag on growth and push inflation higher. Japan's PM Takaichi is preparing to speak with Iran's president ahead of the Tuesday deadline. Iran has rejected a 45-day ceasefire proposal, demanding a permanent end to the war, while Trump is escalating rhetoric — saying Iran could be "taken out" and that reopening Hormuz must be part of any deal. The US is tallying equipment losses, the UN and EU are warning against strikes on Iranian infrastructure, and Israel struck Iran's South Pars petrochemical complex on Monday. US shale drillers are expected to increase oil production due to the surge in crude prices since the US and Israel commenced attacks on Iran, according to Bloomberg.

Today’s Macro Roadmap: EZ final PMIs  / Fed speak / US durable goods

The main macro event will be the US durable goods report for February at 14:30 CET. The Reuters consensus expects a -0.5% drop, while the Bloomberg consensus is looking for a -1% decline. The range of estimates, -5% to 4.3%, is also exceptionally wide. Focusing on the ex-transportation series might make more sense as it is less distorted.

Two Fed policymakers are also due to speak. Goolsbee has recently flipped toward inflation concern and flagged the oil-supply shock as "pretty tough," while Jefferson's Mar-26 speech framed energy effects as "relatively modest" but warned they could broaden. Any divergence between Goolsbee's Detroit Q&A tone and Jefferson's prepared remarks is the most likely source of late-session volatility.

Goolsbee has struck a cautious, hold-the-course tone, saying he is now more worried about inflation than unemployment amid a "fraught but intense" climate, with risks from the Middle East/Iran conflict threatening energy prices and supply chains. He still sees scope for rate cuts by end-2026 but wants "proof" inflation is tracking back to 2% before moving. On 2 April, he said an extended rise in oil costs would be a "pretty tough supply shock" that could lift inflation expectations. In the Chicago Magazine piece, he pivoted to institutional concerns, warning about threats to Fed independence.

Jefferson said the US economy continues to grow with resilient consumption and business investment, while the labour market is roughly in balance but vulnerable as hiring slows. Inflation remains above the 2% target, and he expects it to move higher in the near term due to Middle East-driven energy prices. He supported the FOMC's decision to hold the funds rate steady, arguing the stance supports the labour market while allowing inflation to resume its decline once tariff pass-through fades. On 26 March, he characterised the recent energy effects on inflation as "relatively modest". Still, he warned that an "extended bout of elevated energy prices could put upward pressure on a variety of other products."

Good luck today, and feel free to ping me in the chat to discuss markets and views!

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