Senator Katie Britt: “I think we would all say you are absolutely the right man for the job at the right time in our country’s history, and I am excited about your leadership at the Fed.”
Senator Dave McCormick: “He is the right man for this pivotal moment.”
I am reminded of 2018 when Jay Powell took the reins of the Federal Reserve - in what was a pivotal period for monetary policy. Fed assets had inflated $1.6 TN (56%) over the previous five (non-crisis) years to surpass $4.4 TN. The new Chair’s plan was to significantly shrink the Fed’s balance sheet. I strongly supported what I believed was Powell’s intention to reduce the Federal Reserve’s footprint, while beginning the process of forcing distorted markets to stand on their own. Well, QT was abruptly abandoned the following year. In a major policy error, the Powell Fed inflated holdings by $400 billion in the months leading to the pandemic. Fed assets surpassed $7 TN by June 2020 - on their way to the $8.924 TN March 2022 peak.
As much as I respect Jay Powell as a dedicated public servant and man of integrity, his chairmanship was a failure. Much was out of his control – the pandemic, speculative markets, and historic Bubble dynamics. He will now hand the controls to Kevin Warsh, with highly levered markets more speculative and Bubble inflation only more precarious.
Listening to Kevin Warsh’s Tuesday Senate confirmation hearing, my thoughts also drifted back to Ben Bernanke. Dr. Bernanke was welcomed into the Board of Governors as the foremost expert in reflationary policymaking. The tech Bubble had burst, and Washington was in pursuit of academic theories to support aggressive stimulus measures. The incredible “success” of Bubble resuscitation ensured Bernanke as successor to “The Maestro” Alan Greenspan. An unthinkable $1 TN crisis-period expansion of the Fed’s balance sheet seemed almost normal.
Pendulums can swing. These days, it’s a Federal Reserve system in desperate need of reform. Everything’s a mess. Inflation has become a major political issue. Much of the American population is aghast at the cost of living and egregious inequality. The American dream is being shattered. Uncertainty and instability seem to have infected all aspects of life, from the economy to markets and politics. The country is so deeply divided. And over recent decades, the Fed has evolved from miracle-maker to the root of all problems. Kevin Warsh, apparently, is the guy to fix our central bank and solve our problems.
I never had the sense that anyone really understood Ben Bernanke’s radical inflationist analytical framework and its ramifications. Back even further, to this day few appreciate the nuance of Alan Greenspan’s transformative central banking and the momentous role it played in fostering unchecked non-bank Credit expansion, fundamentally loosened financial conditions, and resulting asset inflation, speculation, and Bubbles.
Warsh: “I think the biggest economic policy error in 40 or 50 years happened just a few years ago, and we’re still living with the remnants of it. I think inflation is less problematic than it was a couple of years ago…”
The harsh reality is that major policy errors have been compounding for decades. Myriad inflationary issues have significantly worsened over recent years, having become deeply embedded in market, financial and economic structures.
I appreciate John Authers’ Friday Bloomberg piece, “The Shape of a Deal to Come - Warsh Needed to be Asked about the Treasury Takeover of Monetary Policy.” I’ve viewed Warsh as a man of integrity and character. I don’t doubt he seeks to do what’s best for our nation. But we live in most unusual times. The Fed remains hostage to market Bubbles. The Trump orbit is powerfully coercive and pernicious.
Mr. Warsh, of course, was peppered with questions regarding commitments he might have made to secure the President’s appointment.
Warsh: “The president never asked me to predetermine, commit, fix, decide on any interest rate decision in any of our discussions, nor would I ever agree to do so.”
“Now, the President, as you might know, much like virtually all presidents I’ve either known or studied, presidents tend to be for cutting rates. I think the difference is President Trump expresses it quite publicly without surrogates or subterfuge, but presidents want lower rates.”
“Like everyone else in the committee in the world, I’ve heard his view on interest rates. It sounded very similar to me to every other president in economic history that I’ve studied.”
I’ll take Kevin Warsh at his word that he did not commit to President Trump to cut rates. But Warsh’s repeated attempts to normalize the unprecedented pressure levied on Chair Powell and the Board of Governors fell flat.
I have no idea what meeting of the minds on rate policy developed between Warsh and Secretary Bessent. But there should be little doubt that the two of them came to terms with expectations for major reform – I hate to say “disruption” – at the Federal Reserve. Expect an extraordinarily close working relationship between the Chair and Treasury Secretary.
Warsh: “The economic statecraft agenda led by Secretary Bessent and Secretary Rubio is an important one. On that, the Fed will play a supporting role in ensuring that the financial system is as safe as it can be and work with them, because it’s outside of the conduct of monetary policy, to ensure the U.S. is on its front foot and in a position of strength during this period of rivalry between the U.S. and another nation around the world.”
“So, the sooner that we can hit the ground running on reform agenda, the better.”
“Working with the Treasury Secretary, we’re going to have to find a way in which we can take the balance sheet and make it smaller, because a large balance sheet where the Fed owns more outstanding debt than many parts of the financial markets, that’s fiscal policy in disguise. The Fed needs to get out of the fiscal business, focus on the monetary business, so the Fed can deliver on the remit you gave us.”
Kevin Warsh and Scott Bessent have important connections and philosophical influences. Legendary hedge fund operator Stanley Druckenmiller was instrumental in Bessent’s hiring at George Soros’ Quantum Fund in 1991. Warsh has been employed for years by Duckenmiller's family office.
“In the last 15 years, I’ve gained deep experience in macro and in markets working with Stan Druckenmiller. He never held a position in government, but is no less a patriot.”
Listening to Warsh’s confirmation hearing, one hears Druckenmiller undertones. I admire and respect Druckenmiller’s macro analysis and share key aspects of his analytical framework. He believes that central bank independence and credibility are critical. In the markets, liquidity analysis is key. Druckenmiller is skeptical of “easy money,” and views central bank liquidity as fundamental to asset inflation and Bubbles. He is said to closely monitor the Fed’s balance sheet.
While having agreed in 2008 with Bernanke’s $1 TN QE program, Warsh has since become an outspoken critic of QE and the Fed’s bloated balance sheet.
Warsh: “The balance sheet tool disproportionately helps those with financial assets. The interest rate tool hits the entire economy.”
“The Fed balance sheet has played a particularly, I think, unhelpful role in helping the Fed achieve its dual mandate… The Fed is not blameless in that as it’s grown - the Fed’s balance sheet has grown its imprimatur on the economy. Those with financial assets have benefited from it. The reason why I prefer monetary policy to use interest rates as the dominant force is interest rates affect a far broader cross-section of the economy. Interest rates get in the cracks. If we were to cut rates, then broader number of people will benefit from it versus quantitative easing, which tends to move through financial assets first. Half of our fellow Americans don’t own any financial assets, so they’re wondering what’s in it for them.”
“My view is the interest rate tool gets in the cracks. It’s fairer.”
Kevin Warsh’s focus on the Fed’s balance sheet is a red herring. First, the likelihood of meaningful contraction in Federal Reserve assets is remote. More likely, the prospect of balance sheet restraint will be used as justification for lower rates. And the argument that the Fed’s balance sheet is the culprit behind extraordinary wealth inequality, with lower rates an equalizing force, is much too simplistic at best.
Truth be told, the Fed’s balance sheet is today not the critical issue. Fighting the last war. No matter how much he excoriates QE and a big balance sheet, markets have no doubt that Chair Warsh will champion open-ended QE at the first indication of destabilizing market liquidity issues.
Let’s examine some numbers: From its March 23, 2022, peak to the December 10, 2025 trough, Fed Credit contracted $2.206 TN (25%) to $6.490 TN. Meanwhile, over the same period, the S&P500 inflated 63%, the Nasdaq100 84%, the Semiconductor Index 132%, the MAG7 Index 165%, and Nvidia 618%.
Over the past few years, the thesis that the Fed’s balance sheet dictates marketplace liquidity, asset inflation and wealth distribution has completely broken down.
More numbers: From March 23, 2022, to December 10th, 2025, Money Market Fund Assets inflated $3.094 TN, or 68%, to $7.655 TN. It is market-based finance - rather than the Fed – that has been behind historic liquidity creation, asset inflation, speculative Bubbles, and socially-destructive wealth inequality. More specifically, from Q2 ’22 through Q4 ’25, Broker/Dealer Repo liabilities surged $1.201 TN (74%) to $2.828 TN, while Rest of World Repo liabilities inflated $793 billion (68%) to $1.954 TN.
Even more granular, Hedge Fund Prime Brokerage Borrowing surged $1.616 TN (98%) between the end of 2022 through 2025 - to $3.262 TN, while Hedge Fund Repo Borrowing inflated $2.152 TN (175%) to $3.379 TN.
Ballooning Wall Street and hedge fund balance sheets have left the Fed in the dust. It’s also worth noting that since the Fed began cutting rates on September 18, 2024, the S&P500 has returned 29.7%, the Nasdaq100 42.1%, the MAG7 Index 54.6%, Nvidia 80.3%, and the Semiconductor Index 116.8%.
The Fed has repeatedly reduced rates despite exceptionally loose financial conditions and speculative markets. Consequences have been predictable. Speculative Bubbles have gone to only greater excess, while inflation has remained elevated. We’re now into the sixth year of inflation above the Fed’s target, with little prospect for price stability.
Warsh: “Inflation is the Fed’s choice.”
The Fed refused to sufficiently tighten monetary policy to break inflationary pressures. Moreover, each passing year of elevated inflation only increases the pain and dislocation necessary to force inflation back down to 2%. No one sees a hawkish Chair Warsh marshaling such an effort.
Warsh: “I think the essential elements of a new policy for the Federal Reserve is to get access to better data and to dig deeper into the productivity possibilities that can come out of this new investment wave.”
“What I’m most interested in is what’s the underlying inflation rate, not what’s the one-time change in prices because of a change in geopolitics or a change in beef, but what’s the underlying generalized change in prices in the economy. And my broad sense is that these inflation risks and the inflation damage the last several years is improving somewhat. It has improved somewhat in the last year. The measures I prefer are looking at things that are called trimmed averages, where we take out all of the tail risks, all of the one-off items, and we ask ourselves whether the generalized change in prices is having second order effects on the economy. Again, they’re not where they should be, but I think that the trend is quite favorable.”
“And what I’m really most interested…, what’s the change of that 500 millionth and one price? Because that’s inflation. That’s a change in the generalized level. In a market economy, prices change all the time. And I don’t want to be confused by that. I want to know what inflation really is. And I still think there’s some work to do.”
“I don’t think inflation comes about when the economy grows too much or hardworking Americans get an increase in their wages. I think inflation comes about when the government prints too much, by which I mean the central bank. And broadly speaking, the government spends too much.”
“If I can clarify two things: One, there’s a difference between the change in prices and inflation. The change in prices happened in a market economy. When inflation moves up, that’s because the Fed had something to do with it.”
“I’m going to paraphrase former Chairman Paul Volcker, where he said something along the following lines: You would need to have a Ph.D. from an elite institution to believe that inflation doesn’t have something to do with money.”
Kevin Warsh’s analysis of inflation lacks cohesion and clarity. At this point, escape all the confounding complexity and subterfuge - and just focus on headline inflation. Issues related to climate change and geopolitical instability have become fundamental to enduring inflationary pressures. Considering the inflationary backdrop and worsening national affordability crisis, the lack of resolve to seriously address this most critical issue is problematic.
Inflation is fundamentally a consequence of Credit excess. It’s always easy to scapegoat the expansion of Fed “money.” But today’s broad-based inflationary pressures - from CPI to stock/securities/asset prices - are the upshot of precariously loose financial conditions. Market liquidity excess is primarily due to the expansion of repo borrowings and other sources of speculative leverage. Booming markets then foment self-reinforcing debt issuance, lending, and risk-taking excesses. At this point, a problematic tightening of conditions will be necessary to quash deep-rooted inflationary dynamics.
Warsh: “Interest rates are the much better way to be using monetary policy than buying bonds and mortgages, some of which are issued from the United States Treasury Department. That is a confusion of roles. That leads to a set of mission creep. So, interest rates are the dominant tool, and interest rates, as I mentioned, get in the cracks.”
“But in the ordinary course, the central bank, an independent body, should not be adopting a set of policies that have that kind of distributional consequence. That’s why interest rates are a better way to be setting monetary policy.”
Going back to the nineties Bubble period, through the mortgage finance Bubble, and over recent years, Fed interest-rate policy has been a primary catalyst for asset inflation and resulting “distributional consequences.” Greenspan in the early nineties used aggressive rate slashing and yield curve manipulation to spur market-based Credit growth and asset inflation. A powerful tool was unleashed that evolved into QE and myriad reflationary measures.
It was interesting. During Mr. Warsh’s confirmation hearing, the only mention of “Credit” was with “Credit default swaps” and “Credit cards”. “Financial conditions” went unspoken. Of course, hedge funds, private Credit, speculative leverage, and Wall Street excess were MIA. Warsh did, however, make an interesting reference to mortgage finance Bubble excess:
“I think subprime mortgages then, subprime assets then, were indicative of prices of almost every financial asset that were mispriced. What I suggested then and what I believe now is that subprime mortgages were just indicative of a set of prices that were incorrect, and they all repriced.”
It’s the type of sound analysis I expect from Warsh - that similarly applies today to “private Credit” and prices of almost every financial asset (at home and abroad).
It’s not as if today’s Bubble is inconspicuous. I can imagine Warsh, Bessent and Druckenmiller huddled in discussion of the state of today’s unprecedented Bubble environment. They surely recognize the devastating consequences of Bubble collapse. And I assume they would put the interests of our nation ahead of theirs and the hedge fund industry. But I do envisage the billionaire contingent strategizing a sophisticated scheme for holding Bubble collapse at bay. Further delaying the day of reckoning is such risky business – only ensuring a greater cataclysm.
The Trump administration will undoubtedly do anything and everything to sustain the boom. They have a plan. Furthermore, Trump, Bessent, and the team have been fixated on harnessing the great power of the Federal Reserve to further their ambitions. He may not have been the President’s first choice, but Kevin is now their man.
Warsh: “America’s economic growth potential is rising as we sit here today… The supply side of the economy is changing dramatically. I think the economy’s potential is growing quite quickly.”
“The potential of the economy, the real results of the economy are improving, but I think it can improve more. And I think in the years ahead, I think the economy’s potential is strengthening.”
“We don’t have a long time to do new studies and contemplate what reform should be. We have a short window to try to bring inflation back down to where it should be to ensure price stability, and because AI that Senator Kennedy referenced is so consequential and AI is quickly becoming at something like escape velocity, it’s important to revisit the Fed’s models and see whether this innovation cycle, while it could have over time improvements in the price level and make the Fed’s job on inflation easier, there’s a question about what that means for employment, which is another part of the Fed's mandate.”
Senator Lisa Blunt Rochester: “Well, I think there’s been a lot of conversation here about concerns that in your record, in your history, you have been hawkish on inflation rates and keeping them low. And now we’re looking at AI. What I don’t want to see is us use AI as an excuse...”
Warsh: “Yes.”
Rochester: “...for making good policy. Too much depends on it. Too many families’ lives depend on it. And in our conversation, I also talked about the fact that I know Wall Street is going to be okay. But who we’re concerned about as well is Main Street.”
Warsh: “Yeah.”
This “AI productivity will support lower interest rates” theorizing is reminiscent of Alan Greenspan’s nineties bubble notion, where technology advancement was to have raised the economy’s “speed limit” – allowing the Fed to accommodate a hotter running (Bubble) economy.
Today, more than ever, the backdrop demands a Fed laser-focused on controlling inflation. We need sound, conservative, traditional monetary management – sans experimentation and New Paradigm ruminations. I’ll add that dynamics which foster loose conditions – certainly including the AI arms race – should be countered by higher Fed policy rates.
I wish nothing but great success for Chair Warsh. I hope he is indeed the right person for such a pivotal period. But I fear a polarized Fed. This may in theory be an opportune juncture for policy regime change. In reality, there are fragilities that make a major overhaul an especially risky proposition. The new Chair needs to maintain healthy distance from the Trump administration. It’s anything but clear that will be possible.
For the Week:
The S&P500 added 0.5% (up 4.7% y-t-d), while the Dow slipped 0.4% (up 2.4%). The Utilities increased 0.6% (up 8.7%). The Banks declined 1.2% (up 1.9%), and the Broker/Dealers dropped 3.1% (up 6.8%). The Transports sank 6.8% (up 20.4%). The S&P 400 Midcaps were little changed (up 10.2%), while the small cap Russell 2000 added 0.4% (up 12.3%). The Nasdaq100 rose 2.4% (up 8.1%). The Semiconductors surged 10.0% (up 48.4%). The Biotechs dropped 2.8% (down 0.7%). With bullion down $121, the HUI gold index sank 6.3% (up 14.3%).
Three-month Treasury bill rates ended the week at 3.59%. Two-year government yields rose seven bps to 3.78% (up 31bps y-t-d). Five-year T-note yields gained seven bps to 3.91% (up 19bps). Ten-year Treasury yields increased five bps to 4.30% (up 13bps). Long bond yields added two bps to 4.91% (up 6bps). Benchmark Fannie Mae MBS yields jumped eight bps to 5.20% (up16 bps).
Italian 10-year yields jumped 10 bps to 3.78% (up 23bps y-t-d). Greek 10-year yields rose nine bps to 3.74% (up 30bps). Spain's 10-year yields gained six bps to 3.44% (up 16bps). German bund yields added three bps to 2.99% (up 14bps). French yields rose six bps to 3.64% (up 7bps). The French to German 10-year bond spread widened three to 65 bps. U.K. 10-year gilt yields jumped 15 bps to 4.91% (up 43bps). U.K.’s FTSE equities index fell 2.7% (up 4.4% y-t-d).
Japan’s Nikkei 225 Equities Index rose 2.1% (up 18.6% y-t-d). Japan’s 10-year “JGB” yields added two bps to 2.44% (up 37bps y-t-d). France’s CAC40 dropped 3.2% (unchanged). The German DAX equities index fell 2.3% (down 1.5%). Spain’s IBEX 35 equities index sank 4.3% (up 2.2%). Italy’s FTSE MIB index lost 2.5% (up 6.0%). EM equities were mixed. Brazil’s Bovespa index dropped 2.7% (up 18.2%), and Mexico’s Bolsa index declined 0.9% (up 7.6%). South Korea’s Kospi surged 4.6% (up 53.7%). India’s Sensex equities index fell 2.3% (down 10.0%). China’s Shanghai Exchange Index increased 0.7% (up 2.8%). Turkey’s Borsa Istanbul National 100 index declined 1.2% (up 27.9%).
Federal Reserve Credit expanded $4.3 billion last week to $6.654 TN, with a 19-week expansion of $163 billion. Fed Credit was down $2.236 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.927 TN, or 79%. Fed Credit inflated $3.843 TN, or 137%, since November 7, 2012 (702 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt recovered $27.5 billion last week to $3.018 TN - up from the low back to October 2010. “Custody holdings” were down $277 billion y-o-y, or 8.4%.
Total money market fund assets (MMFA) dipped $5.6 billion to $7.637 TN. MMFA were up $725 billion, or 10.5%, y-o-y - having ballooned a historic $3.053 TN, or 67%, since October 26, 2022.
Total Commercial Paper increased $5.6 billion to $1.419 TN. CP gained $18 billion, or 1.3%, y-o-y.
Freddie Mac 30-year fixed mortgage rates fell seven bps to 6.23% (down 58bps y-o-y). Fifteen-year rates declined seven bps to 5.58% (down 36bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate down two bps to 6.51% (down 43bps).
Currency Watch:
For the week, the U.S. Dollar Index increased 0.4% to 98.533 (up 0.2% y-t-d). On the upside, the Norwegian krone increased 0.6%, the Canadian dollar 0.2%, and the British pound 0.1%. On the downside, the South African rand declined 1.2%, the South Korean won 1.1%, the Swedish krona 0.6%, the Japanese yen 0.5%, the Singapore dollar 0.5%, the Swiss franc 0.4%, the Mexican peso 0.4%, the euro 0.4%, the Australian dollar 0.3%, and the Brazilian real 0.1%. China's (onshore) renminbi declined 0.20% versus the dollar (up 2.28% y-t-d).
Commodities Watch:
April 20 – Bloomberg (Yihui Xie): “China’s imports of silver surged to an all-time high in March as demand from retail investors and the country’s massive solar industry pushed purchases well above the seasonal average. The world’s biggest silver consumer imported around 836 tons last month, extending a strong run of inbound shipments so far this year… That compares with a 10-year seasonal average for March of about 306 tons.”
The Bloomberg Commodities Index jumped 3.5% (up 24.1% y-t-d). Spot Gold retreated 2.5% to $4,710 (up 9.0%). Silver dropped 6.4% to $75.729 (up 5.7%). WTI Crude rallied $10.55, or 12.6%, to $94.40 (up 64%). Gasoline surged 15.2% (up 102%), while Natural Gas dropped 5.6% to $2.523 (down 32%). Copper declined 1.4% (up 7%). Wheat jumped 2.9% (up 20%), and Corn gained 1.4% (up 3%). Bitcoin increased $500, or 0.6%, to $77,600 (down 11.4%).
Market Instability Watch:
April 20 – Financial Times (Malcolm Moore and Verity Ratcliffe): “Citadel’s head of commodities has said Donald Trump’s social media posts during the Iran war have transformed how oil markets behave, leaving traders struggling to adjust to the volatility sparked by the US president’s frequent messages. Sebastian Barrack, who has helped build Ken Griffin’s hedge fund into one of the world’s most influential energy traders, told the FT… he had a screen solely to monitor the president’s social media posts... ‘Volatility in oil and gas in the first few weeks of the event increased by roughly 300%. It’s an enormous victim of mispricing in terms of the view of how fast and how far the markets would move,’ Barrack said… ‘You need to understand that the market is moving [based on] this information,” Barrack said, adding that traders also needed to bear in mind ‘the fact it may not be fully thought through’.”
April 19 – Financial Times (Patrick Jenkins): “Since the earliest days of human civilisation, the world has been hooked on Middle Eastern exports, from textiles and spices in ancient times to oil and holidays today. The disruption to those physical trade flows — and the risk of an inflationary spike — is a well-documented consequence of the war being waged by the US and Israel against Iran. Less analysed is the prospective hit to the Middle East’s export of capital. The region’s sovereign wealth funds — from Saudi Arabia’s Public Investment Fund to the Qatar Investment Authority and the Abu Dhabi Investment Authority — are among the biggest investors in the world… According to Global SWF, a research organisation, sovereign investors channelled more than $140bn into the US economy last year, lifting the share of global sovereign deal activity accounted for by US investment to more than 50%.”
April 22 – Bloomberg (Archie Hunter and Alex Longley): “The chief financial officers of some of the world’s top commodity trading houses warned that the protracted closure of the Strait of Hormuz may lead to a wave of disputes stemming from lost supply. Several oil and gas producing giants in the Middle East declared force majeure since the war began, a legal clause allowing them to not honor contractual commitments. Hundreds of millions of barrels of cargoes have gone undelivered, refineries have been forced to scale back output, and there’s been chaos across shipping markets. ‘We expect a lot of financial disputes and a lot of force majeure,’ Mercuria Energy Group Ltd. CFO Guillaume Vermersch said…”
U.S. Credit Trouble Watch:
April 18 – Financial Times (Antoine Gara, Amelia Pollard, Eric Platt and Harriet Clarfelt): “Wealth advisers at banks and independent brokerages generated billions of dollars in fees by steering individual investors into private market funds, which many retail investors are now trying to flee. Sixteen funds, including those managed by Blackstone, Blue Owl, Apollo and KKR, have generated more than $2bn in servicing fees for wealth advisers since 2017 even before lucrative upfront commissions… The data shows how big banks such as Morgan Stanley, UBS and Bank of America Merrill Lynch and other independent wealth managers benefited from the boom in private funds targeting individual investors before it started to sour last year…. ‘The advisers themselves are stuck in this incentive structure where their behaviour is going to be aligned with pushing clients into these products,’ said Shang Chou, the co-founder of… Dishmi Capital. ‘It’s not a surprise that this stuff has been over-allocated to the retail investor base’.”
April 20 – Financial Times (Lee Harris): “One of the US’s top insurance regulators has warned that a ‘transformation’ in the sector has pushed insurers into riskier private investments that are ‘less appropriate’ for retirees. Iowa insurance commissioner Doug Ommen told the FT that the change in the retirement insurance business dated back to when ‘companies like Apollo, that had come out of private equity… got directly into the business of having an ownership interest in insurance companies’. Iowa’s capital… has become a hub for the life insurance and annuity businesses of private capital groups. The state plays host to $1.3tn of insurance assets… Insurers guaranteeing the retirement income of millions of Americans have in recent years shifted the investments backing those promises from government and corporate bonds into higher-yielding private credit loans and complex bundled securities. They have also moved more than $1tn of policyholder obligations to fast-growing offshore reinsurance hubs such as Bermuda and the Cayman Islands.”
April 20 – Financial Times (Eric Platt, Michelle Chan and Jill R Shah): “Private credit funds are getting squeezed by higher borrowing costs, with banks tightening terms on the leverage they provide and investors demanding higher payouts before they lend to the industry. The premium debt investors demand to lend to private credit funds has risen 0.34 percentage points since the start of the year and is up 0.83 percentage points since the beginning of 2025, amid concerns over the credit quality of the industry’s investment portfolios… The rising costs have coincided with a decline in bond sales by flagship private credit funds, as the vehicles look to other funding sources to minimise their borrowing costs. They are also facing higher costs when borrowing from traditional banks, as Wall Street lenders take a more conservative approach to financing the $2tn industry.”
April 21 – Bloomberg (Lydia Beyoud): “The Securities and Exchange Commission is closely monitoring the ‘emerging pressures’ in the private credit market as redemption requests persist amid rising default-rate projections, Chairman Paul Atkins said... ‘Let me be clear that opacity in this space can be an issue. That valuation, transparency, and credit quality are key,’ Atkins said… As the market has grown, some lawmakers and regulators have raised concerns about oversight of the $1.8 trillion market and potentially hidden leverage… Atkins also said… private credit has also helped fill a credit gap and the SEC is working to advance the broader administration’s aim to expand access to it for retail investors ‘guided by their fiduciaries’.”
April 22 – Wall Street Journal (Dave Michaels, Dylan Tokar and Gina Heeb): “Wall Street’s watchdogs are ramping up their inquiries into how much risk has built up in the $3 trillion private-credit industry, just as investor angst has sparked some backers to head to the exits. The Securities and Exchange Commission in recent months has opened several enforcement investigations of large private-credit managers… The Treasury Department has requested information from private fund managers and insurance firms about their business models. Bank regulators, too, have stepped up their focus on the risks posed by the industry, with the Federal Reserve querying banks about their lending and exposure to private credit. Regulators have been watching for risks stemming from the growing private-credit market for years, but the recent outreach adds to scrutiny amid a wave of withdrawals, slowing inflows and dropping stocks, people familiar with the latest actions said.”
April 22 – Bloomberg (Rene Ismail): “Private credit funds with outsized exposure to software and tech loans face rising refinancing and credit risks as a wave of debt maturities loom from 2028, according to Moody’s... Business development companies, which lend directly to middle-market businesses, may see ‘a particular challenge’ for leveraged software borrowers amid fresh concerns about inflation and the threat of AI disruption, according to… the credit-rating company. ‘An important test for BDCs will be how the sector addresses loan maturities,” Clay Montgomery, a vice president at Moody’s…, said... The maturities start to accelerate in 2028 and 2029, he said, and until then, BDCs’ exposure to software ‘will continue to shape sentiment and will be monitored for any signs of weakening and underperformance.’”
April 22 – Reuters (Isla Binnie): “New money flows into a popular category of private credit funds for wealthy investors dropped by 45% in the first three months of this year from the same period of 2025, according to… investment bank RA Stanger. Fears about artificial intelligence disrupting software businesses have filtered through to the private credit and private equity firms that lent to and bought them during many years of low interest rates. Questions have also been raised about lending standards and the transparency of valuation practices.”
Global Credit Watch:
April 20 – Reuters (Charlie Conchie and Andres Gonzalez): “The value of global dealmaking has rebounded after a sharp slump in the weeks after the start of the war in Iran… The value of deals announced globally in the second week of March fell to around $39 billion as the U.S. and Israel’s strikes on Iran roiled markets. It was the lowest weekly level since the wake of the ‘Liberation Day’ announcement…, according to LSEG data… In the four weeks from March 15, the average weekly value of global mergers and acquisitions rose to around $117 billion, eclipsing the about $93 billion weekly run-rate seen through January and February…”
April 23 – Bloomberg (Gowri Gurumurthy): “US junk bonds rebounded as the indefinite extension of the ceasefire lifted risk sentiment. Equities climbed to an all-time high. Yields and spreads held steady backed by strong corporate profits, the revival of the artificial-intelligence sector and an overall resilient economy… Supply boom led by data centers drove the month’s volume to nearly $30b, the busiest April since 2021 and on track to be the busiest month for supply since last September…”
Iran War Watch:
April 22 – Washington Post (Dan Lamothe, Noah Robertson and Ellen Nakashima): “It could take six months to fully clear the Strait of Hormuz of mines deployed by the Iranian military, and any such operation is unlikely to be carried out until the U.S. war with Iran ends, the Pentagon has informed Congress… A senior Defense Department official shared the estimate during a classified briefing Tuesday for members of the House Armed Services Committee… The timeline… is the latest sign that gasoline and oil prices could remain elevated long after any peace deal is reached.”
April 23 – Reuters (Jonathan Saul): “Iran’s use of a swarm of small, fast boats to seize two container ships near the Strait of Hormuz could undermine suggestions U.S. forces have disabled its naval threat and reveals the challenges facing reopening one of the world’s most important oil export routes… Donald Trump… acknowledged that while Iran’s conventional navy had been largely destroyed, its ‘fast-attack ships’ had not been considered much of a threat… Speedboat attacks now form part of a ‘layered system of threats,’ alongside ‘shore-based missiles, drones, mines and electronic interference to create uncertainty and slow decision-making,’ Greek maritime security company Diaplous told Reuters. Iran was estimated to have hundreds, if not thousands, of these boats before the war, often hidden in coastal tunnels, naval bases or among civilian vessels, according to maritime security specialists.”
April 22 – New York Times (Peter Eavis): “The number of ships passing through the Strait of Hormuz has become a barometer of how the U.S.-Israeli war on Iran is affecting the global economy. On Tuesday, after nearly eight weeks of war, that number was one, according to S&P Global Market Intelligence. Then Wednesday, more ships tried and Iran attacked two cargo vessels in the strait. ‘They are reminding us that their threats to attack ships are genuine, and that’s enough to suppress traffic through the strait,’ said Rosemary Kelanic, a director at Defense Priorities… Ships linked to Iran have passed through the strait, ship tracking data shows. The latest attacks show that Tehran still has a stranglehold on the strait that allows it to ratchet up the pain on the global economy, even though the U.S. military has struck some 13,000 targets in Iran and set up a naval blockade against it.”
April 20 – Wall Street Journal (Stephen Kalin): “Iraqi militias backed by Iran launched dozens of explosive drones at Saudi Arabia and other Gulf states during more than five weeks of fighting, in what is becoming a shadowy war within a war pushing some of the world’s largest oil producers toward open conflict. According to at least one Saudi assessment described by a person familiar with it, up to half of the nearly 1,000 drone attacks on the kingdom came from inside Iraq… They also targeted Bahrain after President Trump announced a cease-fire earlier this month… Militias went after Gulf assets inside Iraq as well, including the Kuwaiti consulate in Basra and the United Arab Emirates’s consulate in Kurdistan.”
April 22 – The Hill (Filip Timotija): “The U.S. military has used up nearly half of its stockpile of Patriot air defense interceptor missiles and heavily expended six other key missile stockpiles during its seven-week strike campaign against Iran, according to… think tank Center for Strategic and International Studies (CSIS). The U.S. fired almost 50% of its Patriot missile stockpile; more than half of Terminal High Altitude Area Defenses (THAADs), which are used to protect against short, medium and intermediate-range missiles; and over 45% of its Precision Strike Missiles (PrSMs) stockpiles during the air and missile campaign in Iran… Rebuilding the stockpiles of the missiles, including Tomahawks and JASSMs, precision-guided cruise missiles, to pre-Operation Epic Fury levels will take one to four years and these munitions will be critical for a potential conflict in the Western Pacific... ‘Even before the Iran war, stockpiles were deemed insufficient for a peer competitor fight. That shortfall is now even more acute and building stockpiles to levels adequate for a war with China will take additional time,’ the… authors wrote.”
Iran War Ramifications Watch:
April 23 – CNBC (Holly Ellyatt): “‘We are facing the biggest energy security threat in history,’ Fatih Birol, the head of the International Energy Agency, or IEA, told CNBC... ‘As of today, we’ve lost 13 million barrels per day of oil… and there are major disruptions in vital commodities’… Birol has previously warned that the Iran war and ongoing closure of the Strait of Hormuz would result in ‘the largest energy crisis we have ever faced’ and urged governments to bolster their resilience with alternative energy sources. ‘I expect, first of all, nuclear power, will get a boost. Renewables will grow very strongly — solar, wind and others — [and] I expect electric cars will benefit from this,’ he noted… ‘In some countries.’”
April 21 – Financial Times (Susannah Savage, Malcolm Moore and Verity Ratcliffe): “Disruption to energy flows through the Strait of Hormuz is exacerbating the risk of a global food shock, as higher gas prices squeeze fertiliser production and other sectors outbid agricultural producers for key inputs and logistics, traders have warned... ‘We are on borrowed time,’ said Pablo Galante Escobar, head of LNG at Vitol… Reduced LNG flows through the strait have already curbed industrial consumption. Escobar said about 40% of the decline in gas demand had come from factories, particularly fertiliser plants, since the US and Israel launched strikes on Iran in late February.”
April 22 – Reuters (Florence Tan and Siyi Liu): “Safe and sustainable passage through the Strait of Hormuz is what top shipping companies require before the world’s sees much oil or cargo leave or enter the Gulf, two top sector executives said… ‘Two weeks ago when the ceasefire, said to be temporary, came into picture, we thought there was hope. But in reality, the agreement was not translated into the safety and passage (of the vessels),’ Jotaro Tamura, chief executive of Japan’s Mitsui O.S.K. Lines, told Reuters… ‘It’s a question of the definition of open. Is it really open, or is it half open? Is it open, but there is risk?... At some point in time, it (voyages) will resume, and normalisation comes into picture. But it’s hard to foresee how reality would be’.”
April 21 – Bloomberg (Grant Smith, Alex Longley, Jack Farchy, and Archie Hunter): “The world’s top oil traders warned that the ongoing closure of the Strait of Hormuz is increasing the risk of a global recession as fuel demand takes a hit… Consumer nations have been using up buffer inventories that they hold for emergencies to cope with the shortfall. While international forecasters already acknowledge that conflict is sapping economic growth and oil demand, merchants including Vitol Group, Gunvor Group and Trafigura Group warned… the situation will get even worse if Hormuz doesn’t open up soon. ‘We’ve borrowed supply,’ Vitol Group Chief Executive Officer Russell Hardy said…, pointing to drawdowns of inventories from a variety of sources. ‘But you can’t do that forever. There are recessionary consequences from having to ration that demand’.”
April 21 – Bloomberg (Serene Cheong): “Asia’s largest oil buyers have been able to lean on workarounds to limit the impact of more than seven weeks of war in the Persian Gulf, shielding not only their own economies but those of neighbors competing for cargoes. That luck is beginning to run out. To cope with an unprecedented energy shock, China and India have turned to everything from bilateral agreements with Tehran to tapping cargoes of Russian and Iranian oil already on the water. But now those floating supplies are slowly drying up and — to make matters worse — traffic through the Strait of Hormuz is at a standstill... India is unquestionably the more vulnerable of the two.”
April 21 – Reuters (Mireia Merino, Marleen Kaesebier, Bernadette Hogg, Dimitri Rhodes and Aishwarya Jain): “A surge in jet fuel prices driven by the U.S.-Israeli war on Iran has upended the global aviation industry, forcing airlines to raise fares and revise their financial outlooks. Jet fuel prices have soared from $85 to $90 per barrel to $150 to $200 per barrel in recent weeks, a financial hit for an industry where fuel accounts for up to a quarter of operating expenses.”
April 22 – Financial Times (Guy Chazan): “Farmer John Yeley watched fertiliser prices spiral after the start of the Iran war with dismay. That quickly gave way to anger. Before hostilities broke out in February, the anhydrous ammonia he spreads on his cornfields cost $800 a ton. Now it’s $1,050. That means he’ll have to fork out $53,000 more for the stuff than before the war — ‘a cost increase that was not anticipated at all’, Yeley said. ‘I’m upset that in these trying times, when the ag sector is already hurting bad, it was the last thing we needed stacked on top of us,’ he added. Yeley… is not alone. Across the US, farmers are reeling from a huge surge in the price of crop nutrients triggered by the Iran war — at a time when the economics of farming were already under pressure.”
April 18 – Bloomberg (Danny Lee, Kate Duffy, and Sri Taylor): “Airline passengers should brace for more aggravation in the next few months as carriers around the world deepen cancellations and ground planes to cope with stratospheric increases in jet-fuel prices. Dutch flag carrier KLM is the latest company to cut its schedule… That puts it in the same league as United Airlines Holdings Inc., Deutsche Lufthansa AG and Cathay Pacific Airways Ltd. which have all pruned itineraries to contain the damage. Global capacity for May has been reduced by about 3 percentage points, with all but one of the 20 largest airlines slashing flights…”
April 22 – New York Times (Peter S. Goodman): “In economics textbooks, higher energy prices from the war in the Middle East display the power of the markets to efficiently decide who gets what. Yet in the real world, a cruder sort of power appears at work. The conflict has severely constricted the supply of oil from the Persian Gulf. Countries with the financial means — China, Japan, Europe, the United States — are securing much of what they need, paying whatever it takes. Some are restricting exports to hold on to what they have. That has pushed prices higher everywhere. At the same time, shortages threaten less affluent nations in Asia, sub-Saharan Africa and Latin America. Some economists are describing this as hoarding. ‘The market is not some harmonious allocating mechanism, but ends up being the law of the jungle,’ said Isabella Weber, an economist at the University of Massachusetts…”
April 20 – Politico (Zia Weise and Sara Schonhardt): “America’s allies, stung by soaring energy costs due to Washington’s attacks on Iran, are confronting an uncomfortable truth: The escape route from fossil fuel shocks leads straight into China’s arms. From the European Union and the United Kingdom to South Korea and the Philippines, numerous countries have responded to the war-driven spike in oil and gas prices with calls to accelerate electrification and the rollout of clean energy infrastructure. While that doesn’t offer an immediate fix to higher costs, governments see clean, domestic energy sources, such as renewables and nuclear power, as the obvious long-term solution to protect their economies from the ups and downs of global fossil fuel markets.”
April 22 – Financial Times (Stephanie Findlay, Jamie Smyth and Oliver Roeder): “Charges for the busiest shipping lanes in the Panama Canal have hit a record high as Asian buyers desperate for oil and gas scramble global shipping routes upended by the Iran war. Daily auctions for transit lanes in the waterway have attracted five times as many bids compared to pre-conflict levels, with prices for the most commonly used Panamax locks in the canal averaging $837,500, according to data compiled by Argus Media.”
Trump Administration Watch:
April 21 – Axios (Barak Ravid): “President Trump announced… that he is extending the ceasefire with Iran, with no set deadline, giving diplomacy another chance to produce a deal. The announcement… landed hours before the ceasefire was set to expire — averting a potential resumption of the war and a massive regional escalation. It also came as Vice President Vance’s planned trip to Islamabad on Tuesday was delayed — then postponed indefinitely… The extension contradicts Trump’s own statement… that he didn’t want to extend the ceasefire. While the move signals he is not ready to resume the war, it risks undercutting his leverage… ‘Based on the fact that the Government of Iran is seriously fractured… we have been asked to hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal,’ Trump wrote. The ceasefire will last ‘until such time as their proposal is submitted, and discussions are concluded, one way or the other.’ Trump said he directed the U.S. military to continue the naval blockade on Iran’s ports and ‘remain ready and able’ to resume the war if needed.”
April 20 – Axios (Marc Caputo, Dave Lawler and Barak Ravid): “President Trump told reporters to expect a peace deal with Iran by Monday, and said Monday morning that Vice President Vance was heading to Islamabad for talks. But Vance was actually still in Washington, waiting for a signal from Tehran before boarding his plane… Trump wants the war to end, now, on his terms. But there’s only one day left before the ceasefire expires, Iran still controls the Strait of Hormuz, and the sides have thus far been unable to even set a meeting. The war may therefore be on the precipice of a massive expansion. ‘He’s over it. He wants it done. He doesn’t like Iran holding [its control of the strait] over the Middle East. He doesn’t like them holding this over our heads. He doesn’t want to fight anymore. But he will if he feels he has to,’ an administration official told Axios.”
April 20 – Axios (Rebecca Falconer): “President Trump railed against Iran war critics in a series of Truth Social posts, insisting he’s under ‘no pressure’ to make a deal with Tehran… Ahead of a looming deadline for the ceasefire ending, Trump denied that Israel had dragged the U.S. into the war, saying ‘Time is not my adversary,’ for ending it and his eventual deal will be ‘FAR BETTER’ than former President Obama’s 2015 nuclear deal… On Israel: ‘Israel never talked me into the war with Iran, the results of Oct. 7th, added to my lifelong opinion that IRAN CAN NEVER HAVE A NUCLEAR WEAPON,’ Trump wrote… On the media: ‘The Anti-America Fake News Media is rooting for Iran to win, but it’s not going to happen, because I’m in charge!’… Iran nuclear deal: ‘The DEAL that we are making with Iran will be FAR BETTER than the JCPOA,’ Trump said of Obama’s Joint Comprehensive Plan of Action nuclear deal…, which Trump called ‘dangerous.’ Trump added: ‘It was a guaranteed Road to a Nuclear Weapon, which will not, and cannot, happen with the Deal we’re working on.’ Deal pressure: ‘I read the Fake News saying that I am under ‘pressure’ to make a Deal. THIS IS NOT TRUE! I am under no pressure whatsoever, although, it will all happen, relatively quickly!’”
April 23 – Bloomberg (Salma El Wardany, Ben Bartenstein, Mirette Magdy and Patrick Sykes): “The prospect of Iran agreeing to more in-person peace talks with the US is being hindered by President Donald Trump’s threats and brash social media posts, according to several officials with knowledge of the diplomatic efforts to end their war. Trump’s Truth Social posts — as well as his decision to continue with a naval blockade of Iranian ports — have been detrimental to ongoing negotiations through mediators such as Pakistan… Iranian negotiators have also said those posts, in which Trump’s said he may ‘blow up the rest of their country’ and send it ‘back to the Stone Ages,’ are aimed at humiliating Tehran’s leaders and making them less inclined to strike a deal, according to an Iranian official and an Arab diplomat.”
April 20 – Bloomberg (David E. Sanger): “President Trump views himself as the master of coercive diplomacy, forcing his opponents to capitulate quickly to American demands or face the threat of attack. But in dealing with Iran over the past six weeks, Mr. Trump has discovered that he is up against a nation that prides itself on resilience and delay. And never has that been more obvious than in recent days, when Mr. Trump has tried jawboning the Iranians by contending that they already surrendered — they ‘agreed to everything’ he insisted on Friday, including turning over their ‘nuclear dust’ — only to discover that patter doesn’t work with Iranian officials, who took to social media to declare he had made it all up… ‘Trump is impulsive and temperamental; Iran’s leadership is stubborn and tenacious,’ said Robert Malley, who negotiated with the Iranians in the lead-up to the 2015 nuclear deal and again in a failed effort by the Biden administration.”
The S&P500 added 0.5% (up 4.7% y-t-d), while the Dow slipped 0.4% (up 2.4%). The Utilities increased 0.6% (up 8.7%). The Banks declined 1.2% (up 1.9%), and the Broker/Dealers dropped 3.1% (up 6.8%). The Transports sank 6.8% (up 20.4%). The S&P 400 Midcaps were little changed (up 10.2%), while the small cap Russell 2000 added 0.4% (up 12.3%). The Nasdaq100 rose 2.4% (up 8.1%). The Semiconductors surged 10.0% (up 48.4%). The Biotechs dropped 2.8% (down 0.7%). With bullion down $121, the HUI gold index sank 6.3% (up 14.3%).
Three-month Treasury bill rates ended the week at 3.59%. Two-year government yields rose seven bps to 3.78% (up 31bps y-t-d). Five-year T-note yields gained seven bps to 3.91% (up 19bps). Ten-year Treasury yields increased five bps to 4.30% (up 13bps). Long bond yields added two bps to 4.91% (up 6bps). Benchmark Fannie Mae MBS yields jumped eight bps to 5.20% (up16 bps).
Italian 10-year yields jumped 10 bps to 3.78% (up 23bps y-t-d). Greek 10-year yields rose nine bps to 3.74% (up 30bps). Spain's 10-year yields gained six bps to 3.44% (up 16bps). German bund yields added three bps to 2.99% (up 14bps). French yields rose six bps to 3.64% (up 7bps). The French to German 10-year bond spread widened three to 65 bps. U.K. 10-year gilt yields jumped 15 bps to 4.91% (up 43bps). U.K.’s FTSE equities index fell 2.7% (up 4.4% y-t-d).
Japan’s Nikkei 225 Equities Index rose 2.1% (up 18.6% y-t-d). Japan’s 10-year “JGB” yields added two bps to 2.44% (up 37bps y-t-d). France’s CAC40 dropped 3.2% (unchanged). The German DAX equities index fell 2.3% (down 1.5%). Spain’s IBEX 35 equities index sank 4.3% (up 2.2%). Italy’s FTSE MIB index lost 2.5% (up 6.0%). EM equities were mixed. Brazil’s Bovespa index dropped 2.7% (up 18.2%), and Mexico’s Bolsa index declined 0.9% (up 7.6%). South Korea’s Kospi surged 4.6% (up 53.7%). India’s Sensex equities index fell 2.3% (down 10.0%). China’s Shanghai Exchange Index increased 0.7% (up 2.8%). Turkey’s Borsa Istanbul National 100 index declined 1.2% (up 27.9%).
Federal Reserve Credit expanded $4.3 billion last week to $6.654 TN, with a 19-week expansion of $163 billion. Fed Credit was down $2.236 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.927 TN, or 79%. Fed Credit inflated $3.843 TN, or 137%, since November 7, 2012 (702 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt recovered $27.5 billion last week to $3.018 TN - up from the low back to October 2010. “Custody holdings” were down $277 billion y-o-y, or 8.4%.
Total money market fund assets (MMFA) dipped $5.6 billion to $7.637 TN. MMFA were up $725 billion, or 10.5%, y-o-y - having ballooned a historic $3.053 TN, or 67%, since October 26, 2022.
Total Commercial Paper increased $5.6 billion to $1.419 TN. CP gained $18 billion, or 1.3%, y-o-y.
Freddie Mac 30-year fixed mortgage rates fell seven bps to 6.23% (down 58bps y-o-y). Fifteen-year rates declined seven bps to 5.58% (down 36bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate down two bps to 6.51% (down 43bps).
Currency Watch:
For the week, the U.S. Dollar Index increased 0.4% to 98.533 (up 0.2% y-t-d). On the upside, the Norwegian krone increased 0.6%, the Canadian dollar 0.2%, and the British pound 0.1%. On the downside, the South African rand declined 1.2%, the South Korean won 1.1%, the Swedish krona 0.6%, the Japanese yen 0.5%, the Singapore dollar 0.5%, the Swiss franc 0.4%, the Mexican peso 0.4%, the euro 0.4%, the Australian dollar 0.3%, and the Brazilian real 0.1%. China's (onshore) renminbi declined 0.20% versus the dollar (up 2.28% y-t-d).
Commodities Watch:
April 20 – Bloomberg (Yihui Xie): “China’s imports of silver surged to an all-time high in March as demand from retail investors and the country’s massive solar industry pushed purchases well above the seasonal average. The world’s biggest silver consumer imported around 836 tons last month, extending a strong run of inbound shipments so far this year… That compares with a 10-year seasonal average for March of about 306 tons.”
The Bloomberg Commodities Index jumped 3.5% (up 24.1% y-t-d). Spot Gold retreated 2.5% to $4,710 (up 9.0%). Silver dropped 6.4% to $75.729 (up 5.7%). WTI Crude rallied $10.55, or 12.6%, to $94.40 (up 64%). Gasoline surged 15.2% (up 102%), while Natural Gas dropped 5.6% to $2.523 (down 32%). Copper declined 1.4% (up 7%). Wheat jumped 2.9% (up 20%), and Corn gained 1.4% (up 3%). Bitcoin increased $500, or 0.6%, to $77,600 (down 11.4%).
Market Instability Watch:
April 20 – Financial Times (Malcolm Moore and Verity Ratcliffe): “Citadel’s head of commodities has said Donald Trump’s social media posts during the Iran war have transformed how oil markets behave, leaving traders struggling to adjust to the volatility sparked by the US president’s frequent messages. Sebastian Barrack, who has helped build Ken Griffin’s hedge fund into one of the world’s most influential energy traders, told the FT… he had a screen solely to monitor the president’s social media posts... ‘Volatility in oil and gas in the first few weeks of the event increased by roughly 300%. It’s an enormous victim of mispricing in terms of the view of how fast and how far the markets would move,’ Barrack said… ‘You need to understand that the market is moving [based on] this information,” Barrack said, adding that traders also needed to bear in mind ‘the fact it may not be fully thought through’.”
April 19 – Financial Times (Patrick Jenkins): “Since the earliest days of human civilisation, the world has been hooked on Middle Eastern exports, from textiles and spices in ancient times to oil and holidays today. The disruption to those physical trade flows — and the risk of an inflationary spike — is a well-documented consequence of the war being waged by the US and Israel against Iran. Less analysed is the prospective hit to the Middle East’s export of capital. The region’s sovereign wealth funds — from Saudi Arabia’s Public Investment Fund to the Qatar Investment Authority and the Abu Dhabi Investment Authority — are among the biggest investors in the world… According to Global SWF, a research organisation, sovereign investors channelled more than $140bn into the US economy last year, lifting the share of global sovereign deal activity accounted for by US investment to more than 50%.”
April 22 – Bloomberg (Archie Hunter and Alex Longley): “The chief financial officers of some of the world’s top commodity trading houses warned that the protracted closure of the Strait of Hormuz may lead to a wave of disputes stemming from lost supply. Several oil and gas producing giants in the Middle East declared force majeure since the war began, a legal clause allowing them to not honor contractual commitments. Hundreds of millions of barrels of cargoes have gone undelivered, refineries have been forced to scale back output, and there’s been chaos across shipping markets. ‘We expect a lot of financial disputes and a lot of force majeure,’ Mercuria Energy Group Ltd. CFO Guillaume Vermersch said…”
U.S. Credit Trouble Watch:
April 18 – Financial Times (Antoine Gara, Amelia Pollard, Eric Platt and Harriet Clarfelt): “Wealth advisers at banks and independent brokerages generated billions of dollars in fees by steering individual investors into private market funds, which many retail investors are now trying to flee. Sixteen funds, including those managed by Blackstone, Blue Owl, Apollo and KKR, have generated more than $2bn in servicing fees for wealth advisers since 2017 even before lucrative upfront commissions… The data shows how big banks such as Morgan Stanley, UBS and Bank of America Merrill Lynch and other independent wealth managers benefited from the boom in private funds targeting individual investors before it started to sour last year…. ‘The advisers themselves are stuck in this incentive structure where their behaviour is going to be aligned with pushing clients into these products,’ said Shang Chou, the co-founder of… Dishmi Capital. ‘It’s not a surprise that this stuff has been over-allocated to the retail investor base’.”
April 20 – Financial Times (Lee Harris): “One of the US’s top insurance regulators has warned that a ‘transformation’ in the sector has pushed insurers into riskier private investments that are ‘less appropriate’ for retirees. Iowa insurance commissioner Doug Ommen told the FT that the change in the retirement insurance business dated back to when ‘companies like Apollo, that had come out of private equity… got directly into the business of having an ownership interest in insurance companies’. Iowa’s capital… has become a hub for the life insurance and annuity businesses of private capital groups. The state plays host to $1.3tn of insurance assets… Insurers guaranteeing the retirement income of millions of Americans have in recent years shifted the investments backing those promises from government and corporate bonds into higher-yielding private credit loans and complex bundled securities. They have also moved more than $1tn of policyholder obligations to fast-growing offshore reinsurance hubs such as Bermuda and the Cayman Islands.”
April 20 – Financial Times (Eric Platt, Michelle Chan and Jill R Shah): “Private credit funds are getting squeezed by higher borrowing costs, with banks tightening terms on the leverage they provide and investors demanding higher payouts before they lend to the industry. The premium debt investors demand to lend to private credit funds has risen 0.34 percentage points since the start of the year and is up 0.83 percentage points since the beginning of 2025, amid concerns over the credit quality of the industry’s investment portfolios… The rising costs have coincided with a decline in bond sales by flagship private credit funds, as the vehicles look to other funding sources to minimise their borrowing costs. They are also facing higher costs when borrowing from traditional banks, as Wall Street lenders take a more conservative approach to financing the $2tn industry.”
April 21 – Bloomberg (Lydia Beyoud): “The Securities and Exchange Commission is closely monitoring the ‘emerging pressures’ in the private credit market as redemption requests persist amid rising default-rate projections, Chairman Paul Atkins said... ‘Let me be clear that opacity in this space can be an issue. That valuation, transparency, and credit quality are key,’ Atkins said… As the market has grown, some lawmakers and regulators have raised concerns about oversight of the $1.8 trillion market and potentially hidden leverage… Atkins also said… private credit has also helped fill a credit gap and the SEC is working to advance the broader administration’s aim to expand access to it for retail investors ‘guided by their fiduciaries’.”
April 22 – Wall Street Journal (Dave Michaels, Dylan Tokar and Gina Heeb): “Wall Street’s watchdogs are ramping up their inquiries into how much risk has built up in the $3 trillion private-credit industry, just as investor angst has sparked some backers to head to the exits. The Securities and Exchange Commission in recent months has opened several enforcement investigations of large private-credit managers… The Treasury Department has requested information from private fund managers and insurance firms about their business models. Bank regulators, too, have stepped up their focus on the risks posed by the industry, with the Federal Reserve querying banks about their lending and exposure to private credit. Regulators have been watching for risks stemming from the growing private-credit market for years, but the recent outreach adds to scrutiny amid a wave of withdrawals, slowing inflows and dropping stocks, people familiar with the latest actions said.”
April 22 – Bloomberg (Rene Ismail): “Private credit funds with outsized exposure to software and tech loans face rising refinancing and credit risks as a wave of debt maturities loom from 2028, according to Moody’s... Business development companies, which lend directly to middle-market businesses, may see ‘a particular challenge’ for leveraged software borrowers amid fresh concerns about inflation and the threat of AI disruption, according to… the credit-rating company. ‘An important test for BDCs will be how the sector addresses loan maturities,” Clay Montgomery, a vice president at Moody’s…, said... The maturities start to accelerate in 2028 and 2029, he said, and until then, BDCs’ exposure to software ‘will continue to shape sentiment and will be monitored for any signs of weakening and underperformance.’”
April 22 – Reuters (Isla Binnie): “New money flows into a popular category of private credit funds for wealthy investors dropped by 45% in the first three months of this year from the same period of 2025, according to… investment bank RA Stanger. Fears about artificial intelligence disrupting software businesses have filtered through to the private credit and private equity firms that lent to and bought them during many years of low interest rates. Questions have also been raised about lending standards and the transparency of valuation practices.”
Global Credit Watch:
April 20 – Reuters (Charlie Conchie and Andres Gonzalez): “The value of global dealmaking has rebounded after a sharp slump in the weeks after the start of the war in Iran… The value of deals announced globally in the second week of March fell to around $39 billion as the U.S. and Israel’s strikes on Iran roiled markets. It was the lowest weekly level since the wake of the ‘Liberation Day’ announcement…, according to LSEG data… In the four weeks from March 15, the average weekly value of global mergers and acquisitions rose to around $117 billion, eclipsing the about $93 billion weekly run-rate seen through January and February…”
April 23 – Bloomberg (Gowri Gurumurthy): “US junk bonds rebounded as the indefinite extension of the ceasefire lifted risk sentiment. Equities climbed to an all-time high. Yields and spreads held steady backed by strong corporate profits, the revival of the artificial-intelligence sector and an overall resilient economy… Supply boom led by data centers drove the month’s volume to nearly $30b, the busiest April since 2021 and on track to be the busiest month for supply since last September…”
Iran War Watch:
April 22 – Washington Post (Dan Lamothe, Noah Robertson and Ellen Nakashima): “It could take six months to fully clear the Strait of Hormuz of mines deployed by the Iranian military, and any such operation is unlikely to be carried out until the U.S. war with Iran ends, the Pentagon has informed Congress… A senior Defense Department official shared the estimate during a classified briefing Tuesday for members of the House Armed Services Committee… The timeline… is the latest sign that gasoline and oil prices could remain elevated long after any peace deal is reached.”
April 23 – Reuters (Jonathan Saul): “Iran’s use of a swarm of small, fast boats to seize two container ships near the Strait of Hormuz could undermine suggestions U.S. forces have disabled its naval threat and reveals the challenges facing reopening one of the world’s most important oil export routes… Donald Trump… acknowledged that while Iran’s conventional navy had been largely destroyed, its ‘fast-attack ships’ had not been considered much of a threat… Speedboat attacks now form part of a ‘layered system of threats,’ alongside ‘shore-based missiles, drones, mines and electronic interference to create uncertainty and slow decision-making,’ Greek maritime security company Diaplous told Reuters. Iran was estimated to have hundreds, if not thousands, of these boats before the war, often hidden in coastal tunnels, naval bases or among civilian vessels, according to maritime security specialists.”
April 22 – New York Times (Peter Eavis): “The number of ships passing through the Strait of Hormuz has become a barometer of how the U.S.-Israeli war on Iran is affecting the global economy. On Tuesday, after nearly eight weeks of war, that number was one, according to S&P Global Market Intelligence. Then Wednesday, more ships tried and Iran attacked two cargo vessels in the strait. ‘They are reminding us that their threats to attack ships are genuine, and that’s enough to suppress traffic through the strait,’ said Rosemary Kelanic, a director at Defense Priorities… Ships linked to Iran have passed through the strait, ship tracking data shows. The latest attacks show that Tehran still has a stranglehold on the strait that allows it to ratchet up the pain on the global economy, even though the U.S. military has struck some 13,000 targets in Iran and set up a naval blockade against it.”
April 20 – Wall Street Journal (Stephen Kalin): “Iraqi militias backed by Iran launched dozens of explosive drones at Saudi Arabia and other Gulf states during more than five weeks of fighting, in what is becoming a shadowy war within a war pushing some of the world’s largest oil producers toward open conflict. According to at least one Saudi assessment described by a person familiar with it, up to half of the nearly 1,000 drone attacks on the kingdom came from inside Iraq… They also targeted Bahrain after President Trump announced a cease-fire earlier this month… Militias went after Gulf assets inside Iraq as well, including the Kuwaiti consulate in Basra and the United Arab Emirates’s consulate in Kurdistan.”
April 22 – The Hill (Filip Timotija): “The U.S. military has used up nearly half of its stockpile of Patriot air defense interceptor missiles and heavily expended six other key missile stockpiles during its seven-week strike campaign against Iran, according to… think tank Center for Strategic and International Studies (CSIS). The U.S. fired almost 50% of its Patriot missile stockpile; more than half of Terminal High Altitude Area Defenses (THAADs), which are used to protect against short, medium and intermediate-range missiles; and over 45% of its Precision Strike Missiles (PrSMs) stockpiles during the air and missile campaign in Iran… Rebuilding the stockpiles of the missiles, including Tomahawks and JASSMs, precision-guided cruise missiles, to pre-Operation Epic Fury levels will take one to four years and these munitions will be critical for a potential conflict in the Western Pacific... ‘Even before the Iran war, stockpiles were deemed insufficient for a peer competitor fight. That shortfall is now even more acute and building stockpiles to levels adequate for a war with China will take additional time,’ the… authors wrote.”
Iran War Ramifications Watch:
April 23 – CNBC (Holly Ellyatt): “‘We are facing the biggest energy security threat in history,’ Fatih Birol, the head of the International Energy Agency, or IEA, told CNBC... ‘As of today, we’ve lost 13 million barrels per day of oil… and there are major disruptions in vital commodities’… Birol has previously warned that the Iran war and ongoing closure of the Strait of Hormuz would result in ‘the largest energy crisis we have ever faced’ and urged governments to bolster their resilience with alternative energy sources. ‘I expect, first of all, nuclear power, will get a boost. Renewables will grow very strongly — solar, wind and others — [and] I expect electric cars will benefit from this,’ he noted… ‘In some countries.’”
April 21 – Financial Times (Susannah Savage, Malcolm Moore and Verity Ratcliffe): “Disruption to energy flows through the Strait of Hormuz is exacerbating the risk of a global food shock, as higher gas prices squeeze fertiliser production and other sectors outbid agricultural producers for key inputs and logistics, traders have warned... ‘We are on borrowed time,’ said Pablo Galante Escobar, head of LNG at Vitol… Reduced LNG flows through the strait have already curbed industrial consumption. Escobar said about 40% of the decline in gas demand had come from factories, particularly fertiliser plants, since the US and Israel launched strikes on Iran in late February.”
April 22 – Reuters (Florence Tan and Siyi Liu): “Safe and sustainable passage through the Strait of Hormuz is what top shipping companies require before the world’s sees much oil or cargo leave or enter the Gulf, two top sector executives said… ‘Two weeks ago when the ceasefire, said to be temporary, came into picture, we thought there was hope. But in reality, the agreement was not translated into the safety and passage (of the vessels),’ Jotaro Tamura, chief executive of Japan’s Mitsui O.S.K. Lines, told Reuters… ‘It’s a question of the definition of open. Is it really open, or is it half open? Is it open, but there is risk?... At some point in time, it (voyages) will resume, and normalisation comes into picture. But it’s hard to foresee how reality would be’.”
April 21 – Bloomberg (Grant Smith, Alex Longley, Jack Farchy, and Archie Hunter): “The world’s top oil traders warned that the ongoing closure of the Strait of Hormuz is increasing the risk of a global recession as fuel demand takes a hit… Consumer nations have been using up buffer inventories that they hold for emergencies to cope with the shortfall. While international forecasters already acknowledge that conflict is sapping economic growth and oil demand, merchants including Vitol Group, Gunvor Group and Trafigura Group warned… the situation will get even worse if Hormuz doesn’t open up soon. ‘We’ve borrowed supply,’ Vitol Group Chief Executive Officer Russell Hardy said…, pointing to drawdowns of inventories from a variety of sources. ‘But you can’t do that forever. There are recessionary consequences from having to ration that demand’.”
April 21 – Bloomberg (Serene Cheong): “Asia’s largest oil buyers have been able to lean on workarounds to limit the impact of more than seven weeks of war in the Persian Gulf, shielding not only their own economies but those of neighbors competing for cargoes. That luck is beginning to run out. To cope with an unprecedented energy shock, China and India have turned to everything from bilateral agreements with Tehran to tapping cargoes of Russian and Iranian oil already on the water. But now those floating supplies are slowly drying up and — to make matters worse — traffic through the Strait of Hormuz is at a standstill... India is unquestionably the more vulnerable of the two.”
April 21 – Reuters (Mireia Merino, Marleen Kaesebier, Bernadette Hogg, Dimitri Rhodes and Aishwarya Jain): “A surge in jet fuel prices driven by the U.S.-Israeli war on Iran has upended the global aviation industry, forcing airlines to raise fares and revise their financial outlooks. Jet fuel prices have soared from $85 to $90 per barrel to $150 to $200 per barrel in recent weeks, a financial hit for an industry where fuel accounts for up to a quarter of operating expenses.”
April 22 – Financial Times (Guy Chazan): “Farmer John Yeley watched fertiliser prices spiral after the start of the Iran war with dismay. That quickly gave way to anger. Before hostilities broke out in February, the anhydrous ammonia he spreads on his cornfields cost $800 a ton. Now it’s $1,050. That means he’ll have to fork out $53,000 more for the stuff than before the war — ‘a cost increase that was not anticipated at all’, Yeley said. ‘I’m upset that in these trying times, when the ag sector is already hurting bad, it was the last thing we needed stacked on top of us,’ he added. Yeley… is not alone. Across the US, farmers are reeling from a huge surge in the price of crop nutrients triggered by the Iran war — at a time when the economics of farming were already under pressure.”
April 18 – Bloomberg (Danny Lee, Kate Duffy, and Sri Taylor): “Airline passengers should brace for more aggravation in the next few months as carriers around the world deepen cancellations and ground planes to cope with stratospheric increases in jet-fuel prices. Dutch flag carrier KLM is the latest company to cut its schedule… That puts it in the same league as United Airlines Holdings Inc., Deutsche Lufthansa AG and Cathay Pacific Airways Ltd. which have all pruned itineraries to contain the damage. Global capacity for May has been reduced by about 3 percentage points, with all but one of the 20 largest airlines slashing flights…”
April 22 – New York Times (Peter S. Goodman): “In economics textbooks, higher energy prices from the war in the Middle East display the power of the markets to efficiently decide who gets what. Yet in the real world, a cruder sort of power appears at work. The conflict has severely constricted the supply of oil from the Persian Gulf. Countries with the financial means — China, Japan, Europe, the United States — are securing much of what they need, paying whatever it takes. Some are restricting exports to hold on to what they have. That has pushed prices higher everywhere. At the same time, shortages threaten less affluent nations in Asia, sub-Saharan Africa and Latin America. Some economists are describing this as hoarding. ‘The market is not some harmonious allocating mechanism, but ends up being the law of the jungle,’ said Isabella Weber, an economist at the University of Massachusetts…”
April 20 – Politico (Zia Weise and Sara Schonhardt): “America’s allies, stung by soaring energy costs due to Washington’s attacks on Iran, are confronting an uncomfortable truth: The escape route from fossil fuel shocks leads straight into China’s arms. From the European Union and the United Kingdom to South Korea and the Philippines, numerous countries have responded to the war-driven spike in oil and gas prices with calls to accelerate electrification and the rollout of clean energy infrastructure. While that doesn’t offer an immediate fix to higher costs, governments see clean, domestic energy sources, such as renewables and nuclear power, as the obvious long-term solution to protect their economies from the ups and downs of global fossil fuel markets.”
April 22 – Financial Times (Stephanie Findlay, Jamie Smyth and Oliver Roeder): “Charges for the busiest shipping lanes in the Panama Canal have hit a record high as Asian buyers desperate for oil and gas scramble global shipping routes upended by the Iran war. Daily auctions for transit lanes in the waterway have attracted five times as many bids compared to pre-conflict levels, with prices for the most commonly used Panamax locks in the canal averaging $837,500, according to data compiled by Argus Media.”
Trump Administration Watch:
April 21 – Axios (Barak Ravid): “President Trump announced… that he is extending the ceasefire with Iran, with no set deadline, giving diplomacy another chance to produce a deal. The announcement… landed hours before the ceasefire was set to expire — averting a potential resumption of the war and a massive regional escalation. It also came as Vice President Vance’s planned trip to Islamabad on Tuesday was delayed — then postponed indefinitely… The extension contradicts Trump’s own statement… that he didn’t want to extend the ceasefire. While the move signals he is not ready to resume the war, it risks undercutting his leverage… ‘Based on the fact that the Government of Iran is seriously fractured… we have been asked to hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal,’ Trump wrote. The ceasefire will last ‘until such time as their proposal is submitted, and discussions are concluded, one way or the other.’ Trump said he directed the U.S. military to continue the naval blockade on Iran’s ports and ‘remain ready and able’ to resume the war if needed.”
April 20 – Axios (Marc Caputo, Dave Lawler and Barak Ravid): “President Trump told reporters to expect a peace deal with Iran by Monday, and said Monday morning that Vice President Vance was heading to Islamabad for talks. But Vance was actually still in Washington, waiting for a signal from Tehran before boarding his plane… Trump wants the war to end, now, on his terms. But there’s only one day left before the ceasefire expires, Iran still controls the Strait of Hormuz, and the sides have thus far been unable to even set a meeting. The war may therefore be on the precipice of a massive expansion. ‘He’s over it. He wants it done. He doesn’t like Iran holding [its control of the strait] over the Middle East. He doesn’t like them holding this over our heads. He doesn’t want to fight anymore. But he will if he feels he has to,’ an administration official told Axios.”
April 20 – Axios (Rebecca Falconer): “President Trump railed against Iran war critics in a series of Truth Social posts, insisting he’s under ‘no pressure’ to make a deal with Tehran… Ahead of a looming deadline for the ceasefire ending, Trump denied that Israel had dragged the U.S. into the war, saying ‘Time is not my adversary,’ for ending it and his eventual deal will be ‘FAR BETTER’ than former President Obama’s 2015 nuclear deal… On Israel: ‘Israel never talked me into the war with Iran, the results of Oct. 7th, added to my lifelong opinion that IRAN CAN NEVER HAVE A NUCLEAR WEAPON,’ Trump wrote… On the media: ‘The Anti-America Fake News Media is rooting for Iran to win, but it’s not going to happen, because I’m in charge!’… Iran nuclear deal: ‘The DEAL that we are making with Iran will be FAR BETTER than the JCPOA,’ Trump said of Obama’s Joint Comprehensive Plan of Action nuclear deal…, which Trump called ‘dangerous.’ Trump added: ‘It was a guaranteed Road to a Nuclear Weapon, which will not, and cannot, happen with the Deal we’re working on.’ Deal pressure: ‘I read the Fake News saying that I am under ‘pressure’ to make a Deal. THIS IS NOT TRUE! I am under no pressure whatsoever, although, it will all happen, relatively quickly!’”
April 23 – Bloomberg (Salma El Wardany, Ben Bartenstein, Mirette Magdy and Patrick Sykes): “The prospect of Iran agreeing to more in-person peace talks with the US is being hindered by President Donald Trump’s threats and brash social media posts, according to several officials with knowledge of the diplomatic efforts to end their war. Trump’s Truth Social posts — as well as his decision to continue with a naval blockade of Iranian ports — have been detrimental to ongoing negotiations through mediators such as Pakistan… Iranian negotiators have also said those posts, in which Trump’s said he may ‘blow up the rest of their country’ and send it ‘back to the Stone Ages,’ are aimed at humiliating Tehran’s leaders and making them less inclined to strike a deal, according to an Iranian official and an Arab diplomat.”
April 20 – Bloomberg (David E. Sanger): “President Trump views himself as the master of coercive diplomacy, forcing his opponents to capitulate quickly to American demands or face the threat of attack. But in dealing with Iran over the past six weeks, Mr. Trump has discovered that he is up against a nation that prides itself on resilience and delay. And never has that been more obvious than in recent days, when Mr. Trump has tried jawboning the Iranians by contending that they already surrendered — they ‘agreed to everything’ he insisted on Friday, including turning over their ‘nuclear dust’ — only to discover that patter doesn’t work with Iranian officials, who took to social media to declare he had made it all up… ‘Trump is impulsive and temperamental; Iran’s leadership is stubborn and tenacious,’ said Robert Malley, who negotiated with the Iranians in the lead-up to the 2015 nuclear deal and again in a failed effort by the Biden administration.”
April 22 – Financial Times (Peter Eavis): “The US is considering providing currency swap lines to the United Arab Emirates and other allies in the Gulf and Asia whose economies have been hit by the fallout of Donald Trump’s war with Iran. US Treasury secretary Scott Bessent said the UAE and ‘numerous’ other countries had requested support from Washington as the conflict sends shockwaves through economies in the Middle East and beyond. ‘Swap lines, whether it’s from the Federal Reserve or the Treasury, are to maintain order in the dollar-funding markets and to prevent the sale of the US assets in a disorderly way,’ Bessent said… of the financial tools, which are used to ensure access to dollars and help maintain financial stability.”
April 21 – Wall Street Journal (David S. Cloud and Robbie Gramer): “The Trump administration has suspended U.S. dollar shipments to Iraq and frozen security cooperation programs with its military, escalating the pressure on Baghdad to dismantle powerful Iranian-backed militias… A cargo-plane delivery of nearly $500 million in U.S. banknotes, the proceeds from Iraqi oil sales from Federal Reserve… accounts, was blocked recently by Treasury Department officials… It came after weeks of militia attacks on American facilities in Iraq and neighboring countries in a show of support for Tehran.”
April 20 – New York Times (Tony Romm and Ana Swanson): “When President Trump unveiled his sprawling global tariffs last spring, he boasted that they would generate windfall profits and ‘make America wealthy again.’ But after suffering a significant Supreme Court defeat, Mr. Trump is about to pay the money back. The Trump administration on Monday took its first steps toward returning more than $166 billion collected from tariffs that were struck down in February. Just over a year after imposing many of the duties, the government began accepting requests for refunds, surrendering its prized source of revenue — plus interest.”
April 22 – Axios (Colin Demarest and Marc Caputo): “Defense Secretary Pete Hegseth has fired Navy Secretary John Phelan. The Pentagon framed it… as an immediate departure. The ouster of the Navy’s top civilian caught many off-guard and adds to the pile of military officials who have either abruptly exited or been pushed out of their posts under Trump 2.0. ‘Phelan didn’t understand he wasn’t the boss. His job is to follow orders given, not follow the orders he thinks should be given,’ a person familiar… told Axios. The same person said Phelan and Hegseth did not ‘get along.’”
April 22 – Reuters (Pete Schroeder and Douglas Gillison): “Housing finance giants Fannie Mae and Freddie Mac are now accepting additional credit scores that take into account rent and utility payments, a U.S. government official overseeing the agencies announced… The move is aimed at boosting access to affordable mortgages, a goal of President Donald Trump's administration.”
April 19 – Associated Press (Eric Tucker and Alanna Durkin Richer): “The FBI and Justice Department are scrambling to rebuild a depleted workforce after a wave of departures over the past year, with leaders easing hiring requirements and accelerating recruitment in ways that some current and former officials see as a lowering of long-accepted standards. The FBI has used social media campaigns to attract applicants, offered abbreviated training for candidates from other federal agencies and relaxed requirements for support staff seeking to become agents... At the same time, the Justice Department has opened the door to hiring prosecutors right out of law school to help fill vacancies in U.S. attorney’s offices across the country.”
April 21 – Wall Street Journal (Sadie Gurman): “An investigation into whether government officials engaged in a conspiracy to undermine President Trump is advancing under newly installed acting Attorney General Todd Blanche. Blanche was in Florida on Monday and met with Joe diGenova, a former Trump campaign lawyer he named to lead the probe. It is a shake-up after the career prosecutor who had been running the investigation cited doubts about the strength of a potential criminal case against one of the targets, former Central Intelligence Agency Director John Brennan. Earlier, Blanche also sent one of his own top aides, Christopher-James DeLorenz… to Florida… The probe is looking at whether intelligence and law-enforcement officials who investigated Trump committed crimes. While it has largely been unfolding in the Southern District of Florida, it has now widened to include events that took place in Washington, D.C.”
Trade War Watch:
April 23 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney said officials are ready to either negotiate with the Trump administration on trade or wait it out until the U.S. addresses some of his country’s concerns. Trade-related barbs and threats between Ottawa and Washington have picked up steam over the past week, as talks between the two countries on a renewed North American trade pact, known as USMCA, have hit a stalemate. Meanwhile, negotiations between the U.S. and Mexico are at an advanced stage, with formal talks tied to the trilateral trade treaty set for late May... Carney said at a press conference there won’t be progress until the U.S. begins to ease hefty tariffs, which run up to 50%, on key Canadian industrial goods such as steel, aluminum, automobiles and forest products.”
Constitution Watch:
April 22 – Bloomberg (Chris Strohm): “US Attorney Jeanine Pirro said she is continuing her controversial investigation into building-renovation cost overruns by the Federal Reserve. Pirro… has been fighting a legal battle to serve subpoenas to the central bank as part of a criminal investigation into the cost overruns and congressional testimony Chair Jerome Powell provided on the matter. ‘The cost overruns on that building are well over $1 billion,’ Pirro told reporters… ‘This investigation continues. I am in the legal lane. There are others who are in the political lane.’”
Budget Watch:
April 21 - Associated Press (Konstantin Toropin, Ben Finley and David Klepper): “U.S. military officials… called for spending tens of billions of dollars in the next budget year on drones, air defense systems and fighter jets that have been a key part of fighting the Iran war. As part of President Donald Trump’s push to boost defense spending to $1.5 trillion in the 2027 budget, the Pentagon wants to triple spending on drones and related technology to more than $74 billion and invest over $30 billion into more critical munitions, including missile interceptors, whose stockpiles have become critically low during the Iran war.”
New World Order Watch:
April 21 – Politico (Nahal Toosi, Zack Colman and Paul McLeary): “The Iran war is damaging America’s influence around the world and exacerbating tensions with countries already whipsawed by President Donald Trump’s second term — an erosion of power that could be tough to reverse as U.S. adversaries such as China take advantage. From Bangladesh to Slovenia, fuel rationing has throttled transportation, frustrating leaders dealing with the fallout of a war they did not want. In Muslim-majority countries, anti-U.S. narratives are flooding the airwaves, often with tacit permission from governments. Even America’s allies in NATO have limited their help to the U.S., with some stressing the Trump administration did not consult them before launching the fight with Iran. The war appears to be accelerating what some see as a U.S. break-up with much of the rest of the planet since Trump returned to office and began flexing U.S. economic and military might in haphazard ways, including tariffs.”
April 20 – Reuters (Amanda Stephenson): “Canada’s close ties to the United States were once a strength but have become a weakness, Prime Minister Mark Carney said…, in a video message to his country in which he also praised the heroism of military leaders who fought against U.S. invasion more than two centuries ago. Holding up a small toy soldier depiction of General Isaac Brock, the British military leader who died defending what is now Canada from a U.S. invasion in the War of 1812, Carney said Canada can’t control the disruption coming from its U.S. neighbors, and can’t bet its future on the hope that it will suddenly stop.”
April 22 – The Guardian (Dan Sabbagh): “Britain’s high military dependence on the US ‘is no longer tenable’ and the UK has to become increasingly independent of the special relationship with Washington, a former Nato chief has warned. Lord Robertson, who last week accused British leaders of a ‘corrosive complacency’ towards defence, said… the traditional allies were diverging over values – and that even after Donald Trump, the separation was likely to continue.”
U.S./Russia/China/Europe/Iran Watch:
April 21 – Bloomberg (Magdalena Del Valle and Josh Wingrove): “President Donald Trump made cryptic comments Tuesday about China possibly providing weapons or other potentially lethal war supplies to Iran, a move that would test a US red line on aiding Tehran during the war. The president suggested… the US caught a boat with a ‘gift’ from China, after talking about the US restocking its munitions, hinting — without explicitly saying — that the present was some form of lethal aid for Tehran. ‘We caught a ship yesterday that had some things on it, which wasn’t very nice — a gift from China, perhaps, I don’t know,’ Trump said. ‘I thought I had an understanding with President Xi, but that’s alright. That’s the way the war goes right?’”
April 23 – Financial Times (Demetri Sevastopulo and Cristina Criddle): “The White House has accused China of undertaking industrial-scale theft of American artificial intelligence labs’ intellectual property and warned that it would crack down on a practice that exploits US innovation. ‘The US government has information indicating that foreign entities, principally based in China, are engaged in deliberate, industrial-scale campaigns to distil US frontier AI systems,’ Michael Kratsios, director of the White House Office of Science and Technology Policy, wrote… The accusation marks the latest escalation in tensions around Chinese groups allegedly raiding advanced American AI research amid an arms race to lead in the technology.”
April 19 – Bloomberg (Soo-hyang Choi and Sam Kim): “North Korea said it tested a variant of its flagship ballistic missile in a launch hailed by leader Kim Jong Un, as the US shifts its focus to the Middle East while reports that Washington is restricting intelligence sharing with Seoul add to security concerns in the region. The country fired five tactical ballistic missiles, variants of its Hwasong-11, that hit their target area near an island about 84.5 miles away with ‘high precision’ on Sunday, the Korean Central News Agency said. Kim expressed ‘great satisfaction’ over the results produced after five years of research, it said.”
Ukraine Watch:
April 22 – Bloomberg (Andrea Palasciano and Zoltan Simon): “Ukraine will finally start receiving a €90 billion ($106bn) loan from the European Union after Hungary lifted its veto, bringing an end to years of Prime Minister Viktor Orban’s obstructionism over aid to a war-torn Kyiv. EU ambassadors gave preliminary approval for the loan’s disbursement during a meeting on Wednesday... They also approved a fresh package of Russian sanctions at the meeting, which Hungary and Slovakia had separately been blocking.”
Taiwan Watch:
April 22 – Reuters (Michael Martina): “The United States is concerned that several African countries revoked overflight clearances for Taiwan's president at China's behest, the State Department said…, calling the incident an abuse of the international civil aviation system. Taiwan this week said the Seychelles, Mauritius and Madagascar unilaterally revoked flight permits for its presidential aircraft to cross airspace they manage on a planned trip to Eswatini, one of Taiwan’s allies.”
AI Bubble/Arms Race Watch:
April 21 – Wall Street Journal (Dan Gallagher): “The AI spending race among the world’s largest companies is now in its third year—with no end in sight. When Microsoft, Amazon, Meta Platforms and Google-parent Alphabet report their quarterly results on the same afternoon next week, investors will scrutinize the capital expenditures line item… Those four companies spent a combined $410 billion on capex last year, which is nearly triple what they spent in 2022… Microsoft remains the wild card… But Wall Street analysts still expect a 31% jump in Microsoft’s total capital spending for 2026… That would make for as much as $674 billion in total capital spending for the four companies this year. And it would mark the third year in a row that total combined spending growth has exceeded 60%.”
April 20 – Financial Times (George Hammond and Rafe Rosner-Uddin): “Anthropic has committed to spend more than $100bn on chips and computing power from Amazon as it seeks to bulk up its capacity after running up against supply constraints. The $380bn AI lab will receive up to 5 gigawatts of new capacity to train and run its model Claude over the next decade, with close to a fifth of that arriving this year… Amazon will invest $5bn into Anthropic immediately at its current valuation and up to a further $20bn over time.”
April 21 – Bloomberg (Katherine Schwartz and Rachel Graf): “Investors, worried about artificial intelligence disrupting software companies, are skirting the most-troubled US junk debt even as they embrace risk in other markets. The lowest-rated junk bonds that often trade, those in the CCC tier, have gained 1.38% this year but are slightly lagging securities in the B and BB tiers… The amount of distressed leveraged loans, or those trading at yields 10 percentage points or more than benchmarks, is close to the highest level in about three years…”
Bubble Watch:
April 23 – Reuters (Shashwat Chauhan, Purvi Agarwal and Medha Singh): “SpaceX, OpenAI and Anthropic are shaping up to deliver the largest wave of initial public offerings in history and the three companies are losing money, a combination without precedent in U.S. market debuts. The trio could add $3 trillion in combined market value to the more than $69 trillion U.S. equity market, LPL Financial estimates, in listings likely to deliver the most consequential test of investor appetite for high-growth technology stocks in the recent decade.”
April 19 – Wall Street Journal (AnnaMaria Andriotis): “When Wells Fargo told the fintech Bilt that it would no longer be the lender for its rent-rewards credit card, Bilt scrambled to find another large bank partner. When that failed, Bilt wound up with private-credit funding. In February, Bilt struck a deal to move roughly $1.2 billion of credit-card balances with funding arranged by a group including Blue Owl Capital and Stone Point Capital as well as Goldman Sachs and TD… The companies also agreed to fund hundreds of millions of dollars of credit-card balances that Bilt cardholders will incur in the future, the people said. Consumer debt has become one of the hottest categories in private credit, increasingly sought after by funds and investment arms of insurance companies on the hunt for high-yielding investments.”
April 18 – Financial Times (Stephanie Findlay): “US oil and gas producers are turning to Wall Street wizardry to fuel acquisitions in a race for growth, selling future revenue from well production to investors for billions of dollars in upfront cash. The companies are bundling thousands of wells into investment vehicles and selling slices of them to US investors, following the model long used for mortgages, car loans and other securitised revenue streams. The number of securitised well deals has rapidly increased in recent years with industry experts estimating the amount of total debt issued to be from about $20bn to as much as $30bn, with billions of dollars of deals in the pipeline for this year. The market is opaque, with the bulk of transactions done privately. ‘That strategy has really exploded,’ said Will Ulrich, chair and co-chief executive of Presidio Petroleum…”
Crypto Bubble Watch:
April 20 – Bloomberg (Sidhartha Shukla): “A weekend hack that saw almost $300 million drained from a little-known crypto project has triggered a crisis of confidence among decentralized-finance investors, with users pulling billions of dollars from DeFi’s biggest lending platform. The hackers deposited about $200 million of the tokens they stole on Aave as collateral for borrowing another cryptocurrency… That move sparked fears among depositors about possibly worthless collateral on Aave, causing a rush for the exit… All told, Aave has recorded some $9 billion of net outflows since Saturday, when news of the heist first emerged… Total value locked on the platform — a measure of assets held there — plunged by more than a third to $17.5 billion.”
Inflation Watch:
April 22 – Reuters (Dimitri Rhodes, Yadarisa Shabong and Tharuniyaa Lakshmi): “Companies from consumer goods to travel and mining warned on Wednesday that the U.S.-Israeli war with Iran is driving up costs, disrupting supply chains and hurting consumer confidence, clouding financial outlooks. The cautious tone so far in the earnings season highlights the pressure on businesses already hit by U.S. tariffs, higher input costs and weak demand before the conflict erupted... While some companies stuck to their full‑year forecasts, executives flagged rising transport and raw material costs… Dulux paint maker AkzoNobel said the conflict was pushing up supply costs… ‘Our raw material basket is going to go up by something like the high teens (percentage), given the disruption of the Strait of Hormuz,’ CEO Greg Poux‑Guillaume told Reuters, saying the full impact would be felt over the next two quarters.”
April 22 – Bloomberg (Weilun Soon and Serene Cheong): “The impact of the Middle East conflict on the shipping industry and global supply chains will linger long after the war ends, according to the head of one of the world’s largest tanker owners. ‘It’s a bit naive to say that, after this has ended, that things will go back to pre-war situations,’ Jotaro Tamura, president and chief executive officer of Mitsui O.S.K. Lines Ltd., said... ‘We will not go back to the world where we used to.’”
April 23 – Wall Street Journal (Giulia Petroni): “U.S. airlines are raising fares and baggage fees to offset higher fuel costs from the Iran war. Some are also cutting capacity heading into the busy summer travel season. Average jet fuel prices for delivery into major U.S. hubs have climbed since the start of the war—rising to $4.23 a gallon currently from around $2.50 before the conflict, according to Argus price data—reflecting how heavily global supply depends on refining capacity in the Persian Gulf.”
April 22 – Reuters (Pratima Desai): “The global aluminium market is experiencing a ‘black swan’ event as disruptions due to the Middle East war trigger a supply shock that will lead to major shortages this year, according to the top metals analyst at commodity trader Mercuria. The region accounts for about 7 million metric tons of annual aluminium smelting capacity, or roughly 9% of the estimated global supply this year. Aluminium is a key material for the transport, construction and packaging industries.”
April 21 – Bloomberg (Mark Gongloff): “Financial experts say you shouldn’t spend more than a quarter of your income on housing. This gets trickier when the cost of insuring that housing against being burned down or ruined in a flood or storm keeps rising. Americans in several counties are paying more than 7% of their household income on home insurance alone, according to a Bloomberg Intelligence study. Many of these counties are in places you would expect, such as coastal Florida and California fire country, which are on the front lines of an attritional war against an increasingly dangerous climate. But many more are scattered across vast swaths of the Midwest and South, making it clear this is a national economic problem.”
April 19 – Axios (Kelly Tyko): “U.S. beef supplies are shrinking, imports are rising and prices are stuck near record highs — with little relief in sight. The all-American hamburger is becoming a luxury item, nudging consumers toward cheaper proteins like chicken and pork. U.S. beef production is forecast to fall again in 2026, to about 25.79 billion pounds, according to a new USDA outlook. Prices are holding near record levels, with cattle expected to average roughly $241 per hundredweight this year — about 8% higher than 2025, per USDA estimates.”
April 21 – Wall Street Journal (Anne Tergesen): “Americans are getting more worried about having enough money for a comfortable retirement, thanks to rising costs and fears about the health of entitlement programs. Some 61% of workers are very or somewhat confident in having enough resources for retirement, down from 67% in 2025, and a recent high of 72% in 2021, according to a long-running survey… by the nonprofit Employee Benefit Research Institute. The measure is at its lowest point in nearly a decade.”
Federal Reserve Watch:
April 21 – Reuters (Ann Saphir): “Kevin Warsh… has big plans for the central bank once he takes the helm. Regime change. A lower policy rate. A new approach to inflation. A smaller balance sheet. An independent Fed. A narrower remit. More coordination with the Treasury Department. Less ‘cacophony’ from the Fed's 19 policymakers. As San Francisco Fed President Mary Daly said Friday, ‘he'll come in with an idea of what he would like to think about and do. And then the economy will deliver what we actually work on, and that will be the journey of every Fed chair and all the Fed policymakers and all the Fed employees’.”
April 21 - Associated Press (Christopher Rugaber): “President Donald Trump’s nominee to chair the Federal Reserve said… he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so. ‘The president never once asked me to commit to any particular interest rate decision, period,’ Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. ‘Nor would I ever agree to do so if he had. ... I will be an independent actor if confirmed as chair of the Federal Reserve.’ Warsh’s comments came just hours after Trump… was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, ‘I would’.”
April 21 – Bloomberg (Amara Omeokwe): “Federal Reserve Governor Christopher Waller called for a shakeup in the US central bank’s operations, arguing that key functions should be centralized and subject to less consensus-building among its 12 regional reserve banks. ‘Decisions about HR administration, IT architecture, procurement strategy, and facilities standards need to be made at the system level and not decided district by district,’ Waller said… ‘That requires not just delegation of authority but a genuine shift away from consensus-based operational decisionmaking.’”
U.S. Economic Bubble Watch:
April 21 – Associated Press (Anne D’Innocenzio): “Shoppers accelerated their spending in March from February, but they spent a good chunk of their money at the gas pump. A spike in gas prices… resulted in a hefty 1.7% gain in retail sales in March after a revised 0.7% increase in February… The figure marked the fastest one-month increase in retail sales in more than three years… Excluding gas prices, retail sales were up 0.6%, helped in part by government tax refunds and warm weather. Business at gas stations rose 15.5%. Elsewhere, shoppers were still willing to spend. Sales at department stores rose 4.2%, while sales at furniture and home furnishings stores were up 2.2%. Online retailers saw a 1% gain. Consumer electronics and appliance stores posted a 0.9% increase.”
April 23 – Bloomberg (Julia Fanzeres): “US business activity picked up in April, fueled by the strongest manufacturing growth in nearly four years as war-related supply disruptions prompted a scramble for supplies. The S&P Global flash composite index rose 1.7 points to a three-month high of 52… A measure of prices charged by manufacturers and service providers accelerated to the highest level since mid-2022. Output at manufacturers grew sharply as new orders expanded by the most since May 2022… Businesses are quickly passing those costs along, as the composite measure of selling prices increased to 59.9, the highest since July 2022. ‘Not surprisingly, prices are already spiking higher in this environment, and not just for energy but for a wide variety of goods and services. The overall inflation picture is now the most worrying for almost four years,’ said [S&P Global Market Intelligence chief economist Chris] Williamson.”
April 23 – Associated Press (Matt Ott): “The number of Americans filing for unemployment benefits inched up last week but remains within the historically healthy range of recent years. U.S. jobless aid applications for the week ending April 18 rose by 6,000 to 214,000, up from the previous week’s 208,000… The total number of Americans filing for unemployment benefits for the previous week ending April 11 rose by 12,000 to 1.82 million.”
April 22 – CNBC (Diana Olick): “Mortgage rates dropped for the third straight week, boosting demand from both homeowners and homebuyers. The spring housing market had been looking like a letdown, but there appears to now be new life. Total mortgage application volume rose 7.9% last week compared with the previous week… Applications for a mortgage to purchase a home rose 10% for the week and were 14% higher than the same week one year ago. This, after buyer demand had briefly sunk below year-ago levels.”
April 23 – Wall Street Journal (Nicole Friedman): “The housing market is slow. Mortgage rates and home prices remain prohibitively high for many buyers. But some homes are still flying off the shelves. These houses are often in the Midwest or Northeast, where the lack of new construction keeps a lid on supply. Certain homes in other markets are selling quickly, too… The most sought-after properties are selling unusually quickly compared with the rest of the market for this time of year. The typical home for sale in March had been listed for 56 days, according to Zillow. But homes that went under contract in March spent a median of only 19 days on the market.”
China Watch:
April 20 – Financial Times (Leo Lewis in Tokyo and Edward White): “China said it had dispatched warships to test ‘operational capabilities’ in the western Pacific on the same day that Japan for the first time joined a massive annual display of military strength by the US and Philippines. China’s deployment of a naval destroyer group…, follows months of rising tensions with Japan and what it views as Tokyo’s more assertive military positioning under Prime Minister Sanae Takaichi.”
Europe Watch:
April 22 – Associated Press (Pan Pylas): “Inflation in the U.K. climbed in March after a sharp jump in prices at the petrol pump… The annual consumer price inflation rate increased to a three-month high of 3.3%, from 3% the previous month… The main reason behind the inflation spike was higher motor fuel, which increased by a monthly 8.7% — the largest increase since June 2022, shortly after the Russian invasion of Ukraine. Airfares and food prices, both related to the spike in energy prices, were also higher.”
Japan Watch:
April 19 – Bloomberg (Nicholas Takahashi): “Japan’s reliance on the Middle East for aluminum is forcing companies to cut back on production and scramble for alternative supply sources after key shipping routes were severed due to the Iran conflict. Among the most exposed are auto and parts makers such as Toyota Motor Corp. and Denso Corp. Domestic carmakers get about 70% of their aluminum imports from the Middle East… The price of the lightweight alloy — used in everything from engine parts to wheels — has jumped about 13% since hostilities started in late February.”
April 21 – Bloomberg (Mia Glass): “The Bank of Japan cautioned that a potential unwinding of positions by hedge funds globally may spread to Japan’s bond market. Overseas hedge funds ‘have been increasing their presence in Japan’s bond market,’ the BOJ said… ‘Close attention is needed to the possibility that, if foreign hedge funds were to unwind positions globally in an event of stress, the impact could spread to Japan’s bond market through, for instance, a decline in market liquidity.’ Overseas investors accounted for 60% of Japanese government bond trading last month… They were even more dominant in JGB futures, making up 78% of trading in March.”
Emerging Market Watch:
April 20 – Bloomberg (Selcuk Gokoluk): “Emerging-market bond sales are roaring back from last month’s doldrums, as issuers from Brazil to Turkey take advantage of rebounding markets to raise fresh financing. Sales of dollar- and euro-denominated bonds from developing nations this month are already running some 200% above volumes seen last April… A total of $46 billion was raised through Friday, as governments and companies raced to capitalize on improved market sentiment amid hopes of a US-Iran peace deal.”
Leveraged Speculation Watch:
April 24 – Bloomberg (Katherine Doherty, Sridhar Natarajan and Paula Seligson): “Jane Street Group reeled in a Wall Street record $39.6 billion of trading revenue last year, capping a stunning ascent to the peak of the industry. The firm flew past global investment banks after reaping $15.5 billion in the year’s final quarter… With only 3,500 employees, it beat nearest rival JPMorgan… by 11% during the year. Jane Street’s profits are being lifted by surging valuations of its stakes in privately held companies, while the firm’s main business matching buyers and sellers across assets thrives on bouts of market volatility.”
April 21 – Financial Times (Robin Wigglesworth): “It may seem mad at a time when several firms are routinely paying interns more than the Federal Reserve chair makes, but less than a decade ago high-frequency trading was considered a struggling industry… What a difference a few years can make. HRT, Jane Street, Citadel Securities together notched up net trading revenues of over $50bn over 2025. Throw in the likes of XTX, DRW, Susquehanna, G-Research, Optiver, Jump Trading, Virtu, GTS, and Tower Research and the numbers get even more obscene.”
April 24 – Bloomberg (Hema Parmar and Zeke Faux): “Hedge fund veteran Ricky Sandler is shuttering Eminence Capital and returning cash to investors after a 27-year run. ‘Over the last few years, it has become increasingly difficult to apply our rigorous bottom-up investment process to rapidly shifting market conditions and an evolving market structure,’ Sandler wrote... ‘We believe that in recent years we have fallen short of our very high standard and your expectations.’”
April 19 – Bloomberg (Bei Hu and David Ramli): “To see how Asian hedge funds got blindsided by the Iran war, look no further than Trivest Advisors Ltd. Through its almost 16 years of existence, the firm’s TAL China Focus Fund has weathered the country’s stock market routs, geopolitical spats and handling of the pandemic — only to have its worst ever monthly loss in March, slumping 10.2%. Trivest manages $5.4 billion in that strategy. March ‘is likely to go down in history as one of the most challenging months for investors,’ Trivest said… ‘Global markets have gone through an awfully painful pattern where risk-on and risk-off trades turned very wrong within hours as news of war escalation or ceasefire negotiations changed constantly’.”
April 19 – Bloomberg (Nishant Kumar): “Millennium Management just got ‘gazumped.’ A big-deal new hire, Tarun Tyagi, recently quit before even starting his new job at Millennium. The currency trader jumped back to his previous firm Capula Investment Management, undeterred by a penalty tied to tearing up his contract with billionaire Izzy Englander’s giant hedge fund firm. His old-employer-turned-new-employer even defrayed the cost of what Millennium offered him to sit out during his gardening leave. So it goes across the hedge-fund industry these days as the fight for talent reaches new extremes… Some traders now are securing pay packages of $50 million or more, recruiters say. A senior portfolio manager was recently lured by a New York hedge fund with guaranteed payouts totaling $120 million.”
April 23 – Bloomberg (Saijel Kishan and Grant Smith): “Energy trader Pierre Andurand’s largest hedge fund plunged about 52% in the first half of April, wiping out first quarter gains made on bullish oil bets at the start of the Iran war. His fund slumped this month through April 17 and is now down almost 37% for the year…”
April 21 – Bloomberg (Betty Hou and Dave Sebastian): “A lucrative hedge fund trade in Taiwanese convertible bonds has been derailed by regulatory changes, disrupting issuance in one of the hottest capital markets for the island’s tech sector. About $2.7 billion in planned US dollar-denominated convertible bond sales filed over the past six months remain stalled and have had to file for extensions… Offshore hedge funds, the primary buyers of these instruments, typically use offshore Taiwan dollar forwards to lock in exchange rates.”
Social, Political, Environmental, Cybersecurity Instability Watch:
April 18 – Associated Press (Seth Borenstein): “Drought in the contiguous United States has reached record levels for this time of year… Meteorologists said it’s a bad sign for the upcoming wildfire season, food prices and western water issues. More than 61% of the Lower 48 states is in moderate to exceptional drought — including 97% of the Southeast and two-thirds of the West — according to the U.S. Drought Monitor. It’s the highest levels for this time of year since the drought monitor began in 2000. The National Oceanic and Atmospheric Administration’s comprehensive Palmer Drought Severity Index not only hit its highest level for March since records started in 1895, but last month was the third-driest month recorded regardless of time of year. It trailed only the famed Dust Bowl months of July and August 1934.”
April 23 – Associated Press (Emilie Megnien, Russ Bynum and Jeff Martin): “Wildfires tearing through the South have forced hundreds of Georgia residents to flee in minutes… The fires that spread this week during an extreme drought in Georgia and Florida have blanketed cities hundreds of miles away in smoke, leading to more air quality warnings Thursday across the Southeast. Driven by strong winds and low humidity, the two biggest fires in southern Georgia have spread rapidly over the past two days and destroyed more than 50 homes in rural areas. But the growing threat led to more evacuations and school closings on Wednesday.”
April 21 – Financial Times (Stephanie Walton): “The US cattle and beef industry is in a bad way. The megadrought currently plaguing the western states has been going on for 22 years, with no signs of abating. The quality of grazing land has declined, raising feed costs and driving the cattle herd to its lowest numbers since 1951. Meatpackers are paying high prices for live cattle, which would normally cause ranchers to increase herd sizes — but that’s not happening. Costs are passed on to consumers, but meatpacking plants are also closing. Despite all this turmoil, there has been a stubborn refusal within the industry to acknowledge that it is the source of its own destruction… We are in this situation for two reasons: rising temperatures and groundwater depletion. Rising temperatures are the result of greenhouse gas emissions — a not insubstantial amount of which comes from cattle.”
April 21 – Wall Street Journal (David S. Cloud and Robbie Gramer): “The Trump administration has suspended U.S. dollar shipments to Iraq and frozen security cooperation programs with its military, escalating the pressure on Baghdad to dismantle powerful Iranian-backed militias… A cargo-plane delivery of nearly $500 million in U.S. banknotes, the proceeds from Iraqi oil sales from Federal Reserve… accounts, was blocked recently by Treasury Department officials… It came after weeks of militia attacks on American facilities in Iraq and neighboring countries in a show of support for Tehran.”
April 20 – New York Times (Tony Romm and Ana Swanson): “When President Trump unveiled his sprawling global tariffs last spring, he boasted that they would generate windfall profits and ‘make America wealthy again.’ But after suffering a significant Supreme Court defeat, Mr. Trump is about to pay the money back. The Trump administration on Monday took its first steps toward returning more than $166 billion collected from tariffs that were struck down in February. Just over a year after imposing many of the duties, the government began accepting requests for refunds, surrendering its prized source of revenue — plus interest.”
April 22 – Axios (Colin Demarest and Marc Caputo): “Defense Secretary Pete Hegseth has fired Navy Secretary John Phelan. The Pentagon framed it… as an immediate departure. The ouster of the Navy’s top civilian caught many off-guard and adds to the pile of military officials who have either abruptly exited or been pushed out of their posts under Trump 2.0. ‘Phelan didn’t understand he wasn’t the boss. His job is to follow orders given, not follow the orders he thinks should be given,’ a person familiar… told Axios. The same person said Phelan and Hegseth did not ‘get along.’”
April 22 – Reuters (Pete Schroeder and Douglas Gillison): “Housing finance giants Fannie Mae and Freddie Mac are now accepting additional credit scores that take into account rent and utility payments, a U.S. government official overseeing the agencies announced… The move is aimed at boosting access to affordable mortgages, a goal of President Donald Trump's administration.”
April 19 – Associated Press (Eric Tucker and Alanna Durkin Richer): “The FBI and Justice Department are scrambling to rebuild a depleted workforce after a wave of departures over the past year, with leaders easing hiring requirements and accelerating recruitment in ways that some current and former officials see as a lowering of long-accepted standards. The FBI has used social media campaigns to attract applicants, offered abbreviated training for candidates from other federal agencies and relaxed requirements for support staff seeking to become agents... At the same time, the Justice Department has opened the door to hiring prosecutors right out of law school to help fill vacancies in U.S. attorney’s offices across the country.”
April 21 – Wall Street Journal (Sadie Gurman): “An investigation into whether government officials engaged in a conspiracy to undermine President Trump is advancing under newly installed acting Attorney General Todd Blanche. Blanche was in Florida on Monday and met with Joe diGenova, a former Trump campaign lawyer he named to lead the probe. It is a shake-up after the career prosecutor who had been running the investigation cited doubts about the strength of a potential criminal case against one of the targets, former Central Intelligence Agency Director John Brennan. Earlier, Blanche also sent one of his own top aides, Christopher-James DeLorenz… to Florida… The probe is looking at whether intelligence and law-enforcement officials who investigated Trump committed crimes. While it has largely been unfolding in the Southern District of Florida, it has now widened to include events that took place in Washington, D.C.”
Trade War Watch:
April 23 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney said officials are ready to either negotiate with the Trump administration on trade or wait it out until the U.S. addresses some of his country’s concerns. Trade-related barbs and threats between Ottawa and Washington have picked up steam over the past week, as talks between the two countries on a renewed North American trade pact, known as USMCA, have hit a stalemate. Meanwhile, negotiations between the U.S. and Mexico are at an advanced stage, with formal talks tied to the trilateral trade treaty set for late May... Carney said at a press conference there won’t be progress until the U.S. begins to ease hefty tariffs, which run up to 50%, on key Canadian industrial goods such as steel, aluminum, automobiles and forest products.”
Constitution Watch:
April 22 – Bloomberg (Chris Strohm): “US Attorney Jeanine Pirro said she is continuing her controversial investigation into building-renovation cost overruns by the Federal Reserve. Pirro… has been fighting a legal battle to serve subpoenas to the central bank as part of a criminal investigation into the cost overruns and congressional testimony Chair Jerome Powell provided on the matter. ‘The cost overruns on that building are well over $1 billion,’ Pirro told reporters… ‘This investigation continues. I am in the legal lane. There are others who are in the political lane.’”
Budget Watch:
April 21 - Associated Press (Konstantin Toropin, Ben Finley and David Klepper): “U.S. military officials… called for spending tens of billions of dollars in the next budget year on drones, air defense systems and fighter jets that have been a key part of fighting the Iran war. As part of President Donald Trump’s push to boost defense spending to $1.5 trillion in the 2027 budget, the Pentagon wants to triple spending on drones and related technology to more than $74 billion and invest over $30 billion into more critical munitions, including missile interceptors, whose stockpiles have become critically low during the Iran war.”
New World Order Watch:
April 21 – Politico (Nahal Toosi, Zack Colman and Paul McLeary): “The Iran war is damaging America’s influence around the world and exacerbating tensions with countries already whipsawed by President Donald Trump’s second term — an erosion of power that could be tough to reverse as U.S. adversaries such as China take advantage. From Bangladesh to Slovenia, fuel rationing has throttled transportation, frustrating leaders dealing with the fallout of a war they did not want. In Muslim-majority countries, anti-U.S. narratives are flooding the airwaves, often with tacit permission from governments. Even America’s allies in NATO have limited their help to the U.S., with some stressing the Trump administration did not consult them before launching the fight with Iran. The war appears to be accelerating what some see as a U.S. break-up with much of the rest of the planet since Trump returned to office and began flexing U.S. economic and military might in haphazard ways, including tariffs.”
April 20 – Reuters (Amanda Stephenson): “Canada’s close ties to the United States were once a strength but have become a weakness, Prime Minister Mark Carney said…, in a video message to his country in which he also praised the heroism of military leaders who fought against U.S. invasion more than two centuries ago. Holding up a small toy soldier depiction of General Isaac Brock, the British military leader who died defending what is now Canada from a U.S. invasion in the War of 1812, Carney said Canada can’t control the disruption coming from its U.S. neighbors, and can’t bet its future on the hope that it will suddenly stop.”
April 22 – The Guardian (Dan Sabbagh): “Britain’s high military dependence on the US ‘is no longer tenable’ and the UK has to become increasingly independent of the special relationship with Washington, a former Nato chief has warned. Lord Robertson, who last week accused British leaders of a ‘corrosive complacency’ towards defence, said… the traditional allies were diverging over values – and that even after Donald Trump, the separation was likely to continue.”
U.S./Russia/China/Europe/Iran Watch:
April 21 – Bloomberg (Magdalena Del Valle and Josh Wingrove): “President Donald Trump made cryptic comments Tuesday about China possibly providing weapons or other potentially lethal war supplies to Iran, a move that would test a US red line on aiding Tehran during the war. The president suggested… the US caught a boat with a ‘gift’ from China, after talking about the US restocking its munitions, hinting — without explicitly saying — that the present was some form of lethal aid for Tehran. ‘We caught a ship yesterday that had some things on it, which wasn’t very nice — a gift from China, perhaps, I don’t know,’ Trump said. ‘I thought I had an understanding with President Xi, but that’s alright. That’s the way the war goes right?’”
April 23 – Financial Times (Demetri Sevastopulo and Cristina Criddle): “The White House has accused China of undertaking industrial-scale theft of American artificial intelligence labs’ intellectual property and warned that it would crack down on a practice that exploits US innovation. ‘The US government has information indicating that foreign entities, principally based in China, are engaged in deliberate, industrial-scale campaigns to distil US frontier AI systems,’ Michael Kratsios, director of the White House Office of Science and Technology Policy, wrote… The accusation marks the latest escalation in tensions around Chinese groups allegedly raiding advanced American AI research amid an arms race to lead in the technology.”
April 19 – Bloomberg (Soo-hyang Choi and Sam Kim): “North Korea said it tested a variant of its flagship ballistic missile in a launch hailed by leader Kim Jong Un, as the US shifts its focus to the Middle East while reports that Washington is restricting intelligence sharing with Seoul add to security concerns in the region. The country fired five tactical ballistic missiles, variants of its Hwasong-11, that hit their target area near an island about 84.5 miles away with ‘high precision’ on Sunday, the Korean Central News Agency said. Kim expressed ‘great satisfaction’ over the results produced after five years of research, it said.”
Ukraine Watch:
April 22 – Bloomberg (Andrea Palasciano and Zoltan Simon): “Ukraine will finally start receiving a €90 billion ($106bn) loan from the European Union after Hungary lifted its veto, bringing an end to years of Prime Minister Viktor Orban’s obstructionism over aid to a war-torn Kyiv. EU ambassadors gave preliminary approval for the loan’s disbursement during a meeting on Wednesday... They also approved a fresh package of Russian sanctions at the meeting, which Hungary and Slovakia had separately been blocking.”
Taiwan Watch:
April 22 – Reuters (Michael Martina): “The United States is concerned that several African countries revoked overflight clearances for Taiwan's president at China's behest, the State Department said…, calling the incident an abuse of the international civil aviation system. Taiwan this week said the Seychelles, Mauritius and Madagascar unilaterally revoked flight permits for its presidential aircraft to cross airspace they manage on a planned trip to Eswatini, one of Taiwan’s allies.”
AI Bubble/Arms Race Watch:
April 21 – Wall Street Journal (Dan Gallagher): “The AI spending race among the world’s largest companies is now in its third year—with no end in sight. When Microsoft, Amazon, Meta Platforms and Google-parent Alphabet report their quarterly results on the same afternoon next week, investors will scrutinize the capital expenditures line item… Those four companies spent a combined $410 billion on capex last year, which is nearly triple what they spent in 2022… Microsoft remains the wild card… But Wall Street analysts still expect a 31% jump in Microsoft’s total capital spending for 2026… That would make for as much as $674 billion in total capital spending for the four companies this year. And it would mark the third year in a row that total combined spending growth has exceeded 60%.”
April 20 – Financial Times (George Hammond and Rafe Rosner-Uddin): “Anthropic has committed to spend more than $100bn on chips and computing power from Amazon as it seeks to bulk up its capacity after running up against supply constraints. The $380bn AI lab will receive up to 5 gigawatts of new capacity to train and run its model Claude over the next decade, with close to a fifth of that arriving this year… Amazon will invest $5bn into Anthropic immediately at its current valuation and up to a further $20bn over time.”
April 21 – Bloomberg (Katherine Schwartz and Rachel Graf): “Investors, worried about artificial intelligence disrupting software companies, are skirting the most-troubled US junk debt even as they embrace risk in other markets. The lowest-rated junk bonds that often trade, those in the CCC tier, have gained 1.38% this year but are slightly lagging securities in the B and BB tiers… The amount of distressed leveraged loans, or those trading at yields 10 percentage points or more than benchmarks, is close to the highest level in about three years…”
Bubble Watch:
April 23 – Reuters (Shashwat Chauhan, Purvi Agarwal and Medha Singh): “SpaceX, OpenAI and Anthropic are shaping up to deliver the largest wave of initial public offerings in history and the three companies are losing money, a combination without precedent in U.S. market debuts. The trio could add $3 trillion in combined market value to the more than $69 trillion U.S. equity market, LPL Financial estimates, in listings likely to deliver the most consequential test of investor appetite for high-growth technology stocks in the recent decade.”
April 19 – Wall Street Journal (AnnaMaria Andriotis): “When Wells Fargo told the fintech Bilt that it would no longer be the lender for its rent-rewards credit card, Bilt scrambled to find another large bank partner. When that failed, Bilt wound up with private-credit funding. In February, Bilt struck a deal to move roughly $1.2 billion of credit-card balances with funding arranged by a group including Blue Owl Capital and Stone Point Capital as well as Goldman Sachs and TD… The companies also agreed to fund hundreds of millions of dollars of credit-card balances that Bilt cardholders will incur in the future, the people said. Consumer debt has become one of the hottest categories in private credit, increasingly sought after by funds and investment arms of insurance companies on the hunt for high-yielding investments.”
April 18 – Financial Times (Stephanie Findlay): “US oil and gas producers are turning to Wall Street wizardry to fuel acquisitions in a race for growth, selling future revenue from well production to investors for billions of dollars in upfront cash. The companies are bundling thousands of wells into investment vehicles and selling slices of them to US investors, following the model long used for mortgages, car loans and other securitised revenue streams. The number of securitised well deals has rapidly increased in recent years with industry experts estimating the amount of total debt issued to be from about $20bn to as much as $30bn, with billions of dollars of deals in the pipeline for this year. The market is opaque, with the bulk of transactions done privately. ‘That strategy has really exploded,’ said Will Ulrich, chair and co-chief executive of Presidio Petroleum…”
Crypto Bubble Watch:
April 20 – Bloomberg (Sidhartha Shukla): “A weekend hack that saw almost $300 million drained from a little-known crypto project has triggered a crisis of confidence among decentralized-finance investors, with users pulling billions of dollars from DeFi’s biggest lending platform. The hackers deposited about $200 million of the tokens they stole on Aave as collateral for borrowing another cryptocurrency… That move sparked fears among depositors about possibly worthless collateral on Aave, causing a rush for the exit… All told, Aave has recorded some $9 billion of net outflows since Saturday, when news of the heist first emerged… Total value locked on the platform — a measure of assets held there — plunged by more than a third to $17.5 billion.”
Inflation Watch:
April 22 – Reuters (Dimitri Rhodes, Yadarisa Shabong and Tharuniyaa Lakshmi): “Companies from consumer goods to travel and mining warned on Wednesday that the U.S.-Israeli war with Iran is driving up costs, disrupting supply chains and hurting consumer confidence, clouding financial outlooks. The cautious tone so far in the earnings season highlights the pressure on businesses already hit by U.S. tariffs, higher input costs and weak demand before the conflict erupted... While some companies stuck to their full‑year forecasts, executives flagged rising transport and raw material costs… Dulux paint maker AkzoNobel said the conflict was pushing up supply costs… ‘Our raw material basket is going to go up by something like the high teens (percentage), given the disruption of the Strait of Hormuz,’ CEO Greg Poux‑Guillaume told Reuters, saying the full impact would be felt over the next two quarters.”
April 22 – Bloomberg (Weilun Soon and Serene Cheong): “The impact of the Middle East conflict on the shipping industry and global supply chains will linger long after the war ends, according to the head of one of the world’s largest tanker owners. ‘It’s a bit naive to say that, after this has ended, that things will go back to pre-war situations,’ Jotaro Tamura, president and chief executive officer of Mitsui O.S.K. Lines Ltd., said... ‘We will not go back to the world where we used to.’”
April 23 – Wall Street Journal (Giulia Petroni): “U.S. airlines are raising fares and baggage fees to offset higher fuel costs from the Iran war. Some are also cutting capacity heading into the busy summer travel season. Average jet fuel prices for delivery into major U.S. hubs have climbed since the start of the war—rising to $4.23 a gallon currently from around $2.50 before the conflict, according to Argus price data—reflecting how heavily global supply depends on refining capacity in the Persian Gulf.”
April 22 – Reuters (Pratima Desai): “The global aluminium market is experiencing a ‘black swan’ event as disruptions due to the Middle East war trigger a supply shock that will lead to major shortages this year, according to the top metals analyst at commodity trader Mercuria. The region accounts for about 7 million metric tons of annual aluminium smelting capacity, or roughly 9% of the estimated global supply this year. Aluminium is a key material for the transport, construction and packaging industries.”
April 21 – Bloomberg (Mark Gongloff): “Financial experts say you shouldn’t spend more than a quarter of your income on housing. This gets trickier when the cost of insuring that housing against being burned down or ruined in a flood or storm keeps rising. Americans in several counties are paying more than 7% of their household income on home insurance alone, according to a Bloomberg Intelligence study. Many of these counties are in places you would expect, such as coastal Florida and California fire country, which are on the front lines of an attritional war against an increasingly dangerous climate. But many more are scattered across vast swaths of the Midwest and South, making it clear this is a national economic problem.”
April 19 – Axios (Kelly Tyko): “U.S. beef supplies are shrinking, imports are rising and prices are stuck near record highs — with little relief in sight. The all-American hamburger is becoming a luxury item, nudging consumers toward cheaper proteins like chicken and pork. U.S. beef production is forecast to fall again in 2026, to about 25.79 billion pounds, according to a new USDA outlook. Prices are holding near record levels, with cattle expected to average roughly $241 per hundredweight this year — about 8% higher than 2025, per USDA estimates.”
April 21 – Wall Street Journal (Anne Tergesen): “Americans are getting more worried about having enough money for a comfortable retirement, thanks to rising costs and fears about the health of entitlement programs. Some 61% of workers are very or somewhat confident in having enough resources for retirement, down from 67% in 2025, and a recent high of 72% in 2021, according to a long-running survey… by the nonprofit Employee Benefit Research Institute. The measure is at its lowest point in nearly a decade.”
Federal Reserve Watch:
April 21 – Reuters (Ann Saphir): “Kevin Warsh… has big plans for the central bank once he takes the helm. Regime change. A lower policy rate. A new approach to inflation. A smaller balance sheet. An independent Fed. A narrower remit. More coordination with the Treasury Department. Less ‘cacophony’ from the Fed's 19 policymakers. As San Francisco Fed President Mary Daly said Friday, ‘he'll come in with an idea of what he would like to think about and do. And then the economy will deliver what we actually work on, and that will be the journey of every Fed chair and all the Fed policymakers and all the Fed employees’.”
April 21 - Associated Press (Christopher Rugaber): “President Donald Trump’s nominee to chair the Federal Reserve said… he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so. ‘The president never once asked me to commit to any particular interest rate decision, period,’ Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. ‘Nor would I ever agree to do so if he had. ... I will be an independent actor if confirmed as chair of the Federal Reserve.’ Warsh’s comments came just hours after Trump… was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, ‘I would’.”
April 21 – Bloomberg (Amara Omeokwe): “Federal Reserve Governor Christopher Waller called for a shakeup in the US central bank’s operations, arguing that key functions should be centralized and subject to less consensus-building among its 12 regional reserve banks. ‘Decisions about HR administration, IT architecture, procurement strategy, and facilities standards need to be made at the system level and not decided district by district,’ Waller said… ‘That requires not just delegation of authority but a genuine shift away from consensus-based operational decisionmaking.’”
U.S. Economic Bubble Watch:
April 21 – Associated Press (Anne D’Innocenzio): “Shoppers accelerated their spending in March from February, but they spent a good chunk of their money at the gas pump. A spike in gas prices… resulted in a hefty 1.7% gain in retail sales in March after a revised 0.7% increase in February… The figure marked the fastest one-month increase in retail sales in more than three years… Excluding gas prices, retail sales were up 0.6%, helped in part by government tax refunds and warm weather. Business at gas stations rose 15.5%. Elsewhere, shoppers were still willing to spend. Sales at department stores rose 4.2%, while sales at furniture and home furnishings stores were up 2.2%. Online retailers saw a 1% gain. Consumer electronics and appliance stores posted a 0.9% increase.”
April 23 – Bloomberg (Julia Fanzeres): “US business activity picked up in April, fueled by the strongest manufacturing growth in nearly four years as war-related supply disruptions prompted a scramble for supplies. The S&P Global flash composite index rose 1.7 points to a three-month high of 52… A measure of prices charged by manufacturers and service providers accelerated to the highest level since mid-2022. Output at manufacturers grew sharply as new orders expanded by the most since May 2022… Businesses are quickly passing those costs along, as the composite measure of selling prices increased to 59.9, the highest since July 2022. ‘Not surprisingly, prices are already spiking higher in this environment, and not just for energy but for a wide variety of goods and services. The overall inflation picture is now the most worrying for almost four years,’ said [S&P Global Market Intelligence chief economist Chris] Williamson.”
April 23 – Associated Press (Matt Ott): “The number of Americans filing for unemployment benefits inched up last week but remains within the historically healthy range of recent years. U.S. jobless aid applications for the week ending April 18 rose by 6,000 to 214,000, up from the previous week’s 208,000… The total number of Americans filing for unemployment benefits for the previous week ending April 11 rose by 12,000 to 1.82 million.”
April 22 – CNBC (Diana Olick): “Mortgage rates dropped for the third straight week, boosting demand from both homeowners and homebuyers. The spring housing market had been looking like a letdown, but there appears to now be new life. Total mortgage application volume rose 7.9% last week compared with the previous week… Applications for a mortgage to purchase a home rose 10% for the week and were 14% higher than the same week one year ago. This, after buyer demand had briefly sunk below year-ago levels.”
April 23 – Wall Street Journal (Nicole Friedman): “The housing market is slow. Mortgage rates and home prices remain prohibitively high for many buyers. But some homes are still flying off the shelves. These houses are often in the Midwest or Northeast, where the lack of new construction keeps a lid on supply. Certain homes in other markets are selling quickly, too… The most sought-after properties are selling unusually quickly compared with the rest of the market for this time of year. The typical home for sale in March had been listed for 56 days, according to Zillow. But homes that went under contract in March spent a median of only 19 days on the market.”
China Watch:
April 20 – Financial Times (Leo Lewis in Tokyo and Edward White): “China said it had dispatched warships to test ‘operational capabilities’ in the western Pacific on the same day that Japan for the first time joined a massive annual display of military strength by the US and Philippines. China’s deployment of a naval destroyer group…, follows months of rising tensions with Japan and what it views as Tokyo’s more assertive military positioning under Prime Minister Sanae Takaichi.”
Europe Watch:
April 22 – Associated Press (Pan Pylas): “Inflation in the U.K. climbed in March after a sharp jump in prices at the petrol pump… The annual consumer price inflation rate increased to a three-month high of 3.3%, from 3% the previous month… The main reason behind the inflation spike was higher motor fuel, which increased by a monthly 8.7% — the largest increase since June 2022, shortly after the Russian invasion of Ukraine. Airfares and food prices, both related to the spike in energy prices, were also higher.”
Japan Watch:
April 19 – Bloomberg (Nicholas Takahashi): “Japan’s reliance on the Middle East for aluminum is forcing companies to cut back on production and scramble for alternative supply sources after key shipping routes were severed due to the Iran conflict. Among the most exposed are auto and parts makers such as Toyota Motor Corp. and Denso Corp. Domestic carmakers get about 70% of their aluminum imports from the Middle East… The price of the lightweight alloy — used in everything from engine parts to wheels — has jumped about 13% since hostilities started in late February.”
April 21 – Bloomberg (Mia Glass): “The Bank of Japan cautioned that a potential unwinding of positions by hedge funds globally may spread to Japan’s bond market. Overseas hedge funds ‘have been increasing their presence in Japan’s bond market,’ the BOJ said… ‘Close attention is needed to the possibility that, if foreign hedge funds were to unwind positions globally in an event of stress, the impact could spread to Japan’s bond market through, for instance, a decline in market liquidity.’ Overseas investors accounted for 60% of Japanese government bond trading last month… They were even more dominant in JGB futures, making up 78% of trading in March.”
Emerging Market Watch:
April 20 – Bloomberg (Selcuk Gokoluk): “Emerging-market bond sales are roaring back from last month’s doldrums, as issuers from Brazil to Turkey take advantage of rebounding markets to raise fresh financing. Sales of dollar- and euro-denominated bonds from developing nations this month are already running some 200% above volumes seen last April… A total of $46 billion was raised through Friday, as governments and companies raced to capitalize on improved market sentiment amid hopes of a US-Iran peace deal.”
Leveraged Speculation Watch:
April 24 – Bloomberg (Katherine Doherty, Sridhar Natarajan and Paula Seligson): “Jane Street Group reeled in a Wall Street record $39.6 billion of trading revenue last year, capping a stunning ascent to the peak of the industry. The firm flew past global investment banks after reaping $15.5 billion in the year’s final quarter… With only 3,500 employees, it beat nearest rival JPMorgan… by 11% during the year. Jane Street’s profits are being lifted by surging valuations of its stakes in privately held companies, while the firm’s main business matching buyers and sellers across assets thrives on bouts of market volatility.”
April 21 – Financial Times (Robin Wigglesworth): “It may seem mad at a time when several firms are routinely paying interns more than the Federal Reserve chair makes, but less than a decade ago high-frequency trading was considered a struggling industry… What a difference a few years can make. HRT, Jane Street, Citadel Securities together notched up net trading revenues of over $50bn over 2025. Throw in the likes of XTX, DRW, Susquehanna, G-Research, Optiver, Jump Trading, Virtu, GTS, and Tower Research and the numbers get even more obscene.”
April 24 – Bloomberg (Hema Parmar and Zeke Faux): “Hedge fund veteran Ricky Sandler is shuttering Eminence Capital and returning cash to investors after a 27-year run. ‘Over the last few years, it has become increasingly difficult to apply our rigorous bottom-up investment process to rapidly shifting market conditions and an evolving market structure,’ Sandler wrote... ‘We believe that in recent years we have fallen short of our very high standard and your expectations.’”
April 19 – Bloomberg (Bei Hu and David Ramli): “To see how Asian hedge funds got blindsided by the Iran war, look no further than Trivest Advisors Ltd. Through its almost 16 years of existence, the firm’s TAL China Focus Fund has weathered the country’s stock market routs, geopolitical spats and handling of the pandemic — only to have its worst ever monthly loss in March, slumping 10.2%. Trivest manages $5.4 billion in that strategy. March ‘is likely to go down in history as one of the most challenging months for investors,’ Trivest said… ‘Global markets have gone through an awfully painful pattern where risk-on and risk-off trades turned very wrong within hours as news of war escalation or ceasefire negotiations changed constantly’.”
April 19 – Bloomberg (Nishant Kumar): “Millennium Management just got ‘gazumped.’ A big-deal new hire, Tarun Tyagi, recently quit before even starting his new job at Millennium. The currency trader jumped back to his previous firm Capula Investment Management, undeterred by a penalty tied to tearing up his contract with billionaire Izzy Englander’s giant hedge fund firm. His old-employer-turned-new-employer even defrayed the cost of what Millennium offered him to sit out during his gardening leave. So it goes across the hedge-fund industry these days as the fight for talent reaches new extremes… Some traders now are securing pay packages of $50 million or more, recruiters say. A senior portfolio manager was recently lured by a New York hedge fund with guaranteed payouts totaling $120 million.”
April 23 – Bloomberg (Saijel Kishan and Grant Smith): “Energy trader Pierre Andurand’s largest hedge fund plunged about 52% in the first half of April, wiping out first quarter gains made on bullish oil bets at the start of the Iran war. His fund slumped this month through April 17 and is now down almost 37% for the year…”
April 21 – Bloomberg (Betty Hou and Dave Sebastian): “A lucrative hedge fund trade in Taiwanese convertible bonds has been derailed by regulatory changes, disrupting issuance in one of the hottest capital markets for the island’s tech sector. About $2.7 billion in planned US dollar-denominated convertible bond sales filed over the past six months remain stalled and have had to file for extensions… Offshore hedge funds, the primary buyers of these instruments, typically use offshore Taiwan dollar forwards to lock in exchange rates.”
Social, Political, Environmental, Cybersecurity Instability Watch:
April 18 – Associated Press (Seth Borenstein): “Drought in the contiguous United States has reached record levels for this time of year… Meteorologists said it’s a bad sign for the upcoming wildfire season, food prices and western water issues. More than 61% of the Lower 48 states is in moderate to exceptional drought — including 97% of the Southeast and two-thirds of the West — according to the U.S. Drought Monitor. It’s the highest levels for this time of year since the drought monitor began in 2000. The National Oceanic and Atmospheric Administration’s comprehensive Palmer Drought Severity Index not only hit its highest level for March since records started in 1895, but last month was the third-driest month recorded regardless of time of year. It trailed only the famed Dust Bowl months of July and August 1934.”
April 23 – Associated Press (Emilie Megnien, Russ Bynum and Jeff Martin): “Wildfires tearing through the South have forced hundreds of Georgia residents to flee in minutes… The fires that spread this week during an extreme drought in Georgia and Florida have blanketed cities hundreds of miles away in smoke, leading to more air quality warnings Thursday across the Southeast. Driven by strong winds and low humidity, the two biggest fires in southern Georgia have spread rapidly over the past two days and destroyed more than 50 homes in rural areas. But the growing threat led to more evacuations and school closings on Wednesday.”
April 21 – Financial Times (Stephanie Walton): “The US cattle and beef industry is in a bad way. The megadrought currently plaguing the western states has been going on for 22 years, with no signs of abating. The quality of grazing land has declined, raising feed costs and driving the cattle herd to its lowest numbers since 1951. Meatpackers are paying high prices for live cattle, which would normally cause ranchers to increase herd sizes — but that’s not happening. Costs are passed on to consumers, but meatpacking plants are also closing. Despite all this turmoil, there has been a stubborn refusal within the industry to acknowledge that it is the source of its own destruction… We are in this situation for two reasons: rising temperatures and groundwater depletion. Rising temperatures are the result of greenhouse gas emissions — a not insubstantial amount of which comes from cattle.”
