While equities posted solid gains for the week, oil (WTI up 11.9%!) markets were much more circumspect. Circumspect was prescient. Tuesday’s war optimism was by Friday troubling war escalation, with two downed U.S. aircraft and a missing crew member. CNN: “US Intelligence Assesses Iran Maintains Significant Missile Launching Capability, Sources Say.” NYT: “Iran Is Quickly Repairing Missile Bunkers, U.S. Intelligence Says.” WP: “An Emboldened Iran is Driving a Hard Bargain.” It seems almost at the point where a miracle would be required to end this war in Trump’s two-to-three-week timeframe. The President’s high-risk “escalate-to-deescalate” gambit has global markets and economies hanging in the balance.
Let’s knock out analysis of the Fed’s Q4 2025 Z.1 “flow of funds” report.
Non-Financial Debt (NFD) expanded $3.987 TN during 2025, greater than all years excluding pandemic stimulus periods 2020 and 2021. Prior to 2020’s $6.862 TN debt monstrosity, 2007 held the record for annual NFD growth at $2.527 TN. Last year’s debt growth significantly exceeded 2024’s $3.501 TN. For further perspective, annual NFD growth averaged $1.874 TN for the decade 2010 through 2019. In the 15 years since the 2008 crisis, NFD has more than doubled (107%) to $80.719 TN, or 262% of GDP. This compares to 233% in 2007 and 192% to end the nineties.
At $1.930 TN, the increase in Treasury Securities accounted for almost half of 2025’s NFD growth – surpassed only in 2023 ($2.382 TN) and 2020 ($4.317 TN). Since the end of 2007, Treasury Securities have inflated an astonishing $25.576 TN, or 569%, to a record $36.054 TN. In one of history’s greatest Credit inflations, Treasury Securities as a percentage of GDP surged from 31% to 98%. Including the Agencies’ $12.843 TN, total Treasury/GSE debt has ballooned to a record 119% of GDP.
For Q4 2025, NFD expanded a seasonally adjusted and annualized rate (SAAR) of $3.915 TN, up significantly from Q4 2024’s $3.218 TN. Combined with Q3’s blistering SAAR $6.875 TN, it was the strongest six months of NFD expansion since the pandemic. Indicative of reckless Washington’s financial dominance, Federal Government debt expanded SAAR $2.682 TN during Q4. This compares to Household debt’s SAAR $688 billion increase, Total Business’s $522 billion, and State & Local Governments’ SAAR $23 billion. Curiously, Rest of World U.S. borrowings expanded SAAR $770 billion (second only to Q3 2021).
Bank Assets expanded nominal $379 billion during Q4, up from Q3’s $200 billion - and compared to Q4 2024’s $18 billion. Loan assets surged $344 billion, up from Q3’s $165 billion and Q4 ‘24’s $192 billion – for the strongest loan growth since Q4 2022. Mortgage Loans increased $63 billion (3.5% annualized), with Consumer Credit gaining $60 billion - the strongest quarter since Q4 ’22. Business loans (“not elsewhere classified”) rose $220 billion – over the past four years second only to Q4 ’24. Debt Securities holdings declined $33 billion to $6.413 TN, the first contraction in a year – led by the $42 billion fall in Corporate bonds (to a one-year low $906bn). Treasury holdings increased $21 billion to a record $1.962 TN, with one-year growth of $239 billion, or 13.9%.
As the banking system lends aggressively, Wall Street ballooning is unrelenting. Securities Broker/Dealer assets expanded another $147 billion, or 9.6% annualized, during Q4 – with one-year growth of $1.006 TN, or 19.1%. This easily surpassed 2006’s previous record $839 billion expansion. Broker/Dealer Loan assets surged $187 billion, or 25.5%, last year – second only to 2020’s $233 billion. Debt Securities holdings jumped a record $270 billion in 2025 – having more than doubled (116%) in 13 quarters to $1.299 TN.
When it comes to Bubble Dynamics, few areas compare to Broker/Dealer “repo” activities (repurchase agreements/securities lending). For 2025, Broker/Dealer “repo” assets expanded $300 billion, or 17.7%, to a record $1.990 TN - surpassing 2004’s previous record quarterly expansion ($279bn). Broker/Dealer “repo” liabilities ballooned $492 billion, or 21.1%, to a record $2.828 TN – surpassing record 2023’s $484 billion and 2006’s $387 billion. Over 13 quarters, “repo” liabilities ballooned $1.214 TN, or 75%.
In a separate Z.1 category, Other Financial Businesses (the old “Funding Corps”) – Wall Street “funding subsidiaries, custodial accounts for reinvested collateral of securities lending operations” – jumped $67 billion, or 19.4% annualized, during the quarter to a record $1.444 TN – with one-year growth of $259 billion, or 21.8% (second only to 2020’s $360 billion).
System (total) “repo” (“Federal Funds and Securities Repurchase Agreements”) assets expanded $1.064 TN, or 15%, last year to a record $8.168 TN – second only to 2021’s $1.354 TN rise. Repo assets gained $297 billion, or 15.1% annualized, during Q4. Over 24 quarters, repo assets ballooned $3.355 TN, or 70%. Money fund “repo” holdings jumped $222 billion, or 32% annualized, during the quarter, and $374 billion, 14.3%, y-o-y – to a record $2.994 TN (6-yr gain $1.752 TN, or 141%). Interestingly, ROW “repo” holdings fell $130 billion during the quarter to $1.473 TN (up $136bn, or 10.2%, in ’25).
Total Money Market Fund assets (MMFA) expanded $947 billion, or 13.1%, during 2025 to a record $8.190 TN (second to ‘23’s $1.134 TN). For Q4, MMFA jumped $416 billion, or 21.4% annualized – with historic 12-quarter ballooning of $2.967 TN, or 56.8%. MMFA Treasury holdings surged $285 billion during the quarter to a record $2.454 TN.
Total Debt Securities inflated $3.250 TN in 2025 to a record $65.151 TN, while Equities Securities inflated $17.533 TN to a record $111.355 TN. This pushed the inflation of Total Securities to an annual record $20.783 TN. Total Securities ballooned an unprecedented $55.293 TN, or 46%, over three historic Bubble years. For the quarter, Debt Securities increased another $628 billion and Total Equities $3.143 TN. Total Equities ended 2025 at a record 362% of GDP, up from previous annual peaks 182% (’07) and 207% (’99). At an unmatched 574%, Total Securities-to-GDP compares to previous cycle peaks 375% (’07) and 358% (’99).
ETFs inflated another $3.068 TN, or 29.8%, last year to a record $13.373 TN. Domestic Equities jumped $1.724 TN, or 25%, to $8.611 TN, with Taxable Bond ETFs rising $433 billion, or 26.7%, to $2.053 TN.
The Household balance sheet remains a fundamental Bubble manifestation and analytical focal point. Household Assets inflated $15.149 TN during 2025 to a record $205.613 TN. And with Liabilities increasing $662 billion (to $21.508 TN), Household Net Worth surged another $14.486 TN to a record $184.106 TN. Household Net Worth ended 2007 at a then record $68.272 TN. At 598% of GDP, Net Worth-to-GDP ended the year at a record (excluding pandemic 2020/2021). This compares to peak cycle years 2007 (483%) and 1999 (449%).
Explaining consumer spending resilience, Household Net Worth added another $2.173 TN during Q4. Net Worth inflated an unprecedented $40.358 TN, or 28%, over three years. For perspective, Net Worth expanded $24.0 TN over five mortgage finance Bubble years (2003 through 2007).
Household holdings of Financial Assets inflated $13.485 TN, or 10.3%, during 2025 to a record $143.866 TN – with three-year growth of $34.992 TN, or 32.1%. Household Financial Asset holdings ended the year at a (non-pandemic period) record 458% of GDP, up from cycle peaks 372% (Q3 ’07) and 353% (Q1 2000). Equities holdings rose another $8.131 TN last year to a record $47.186 TN, and Mutual Funds added $1.352 TN to a record $13.680 TN. Equities/Mutual Funds ended the year at a record 194% of GDP, up from cycle peaks 105% (Q3 ’07) and 116% (Q1 2000). Real Estate holdings added $1.052 TN for the year to $52.067 TN.
For 2025, Household Total Deposits expanded $705 billion to a record $15.144 TN, while Money Fund holdings rose $611 billion to a record $5.321 TN. Treasury holdings gained $318 billion to a record $2.945 TN. Over three historic years of monetary inflation, Treasury holdings inflated $1.286 TN (77.5%), Total Deposits $280 billion (2%), and Money Market Funds $2.224 TN (71.8%).
Also Bubble integral, Rest of World (ROW) holdings of U.S. financial assets inflated an annual record $8.388 TN (surpassing ‘24’s record $7.571 TN), or 14.7%, to an unprecedented $65.473 TN. Over nine quarters, ROW holdings inflated $19.787 TN, or 43.3%. Over this period, Total Equities surged $8.373 TN, or 69%, to $22.177 TN. Total Equities ended 2019 at $9.178 TN. In one of the more incredible data points, ROW U.S. holdings inflated $49.965 TN, or 322%, since 2008. It’s worth noting that ROW “repo” liabilities jumped $324 billion, or 19.9%, last year to $1.953 TN – with nine quarter growth of $480 billion, or 33%.
In short, it was another quarter of Federal Reserve data that further corroborated the Bubble thesis. I expect major deviations in Z.1 data over the coming quarters.
For the Week:The S&P500 rallied 3.4% (down 3.8% y-t-d), and the Dow recovered 3.0% (down 3.2%). The Utilities increased 1.3% (up 8.9%). The Banks surged 5.2% (down 4.7%), and the Broker/Dealers rose 4.7% (down 2.0%). The Transports advanced 5.0% (up 10.0%). The S&P 400 Midcaps rallied 2.9% (up 3.1%), and the small cap Russell 2000 recovered 3.3% (up 1.9%). The Nasdaq100 gained 3.9% (down 4.8%). The Semiconductors jumped 5.0% (up 10.6%). The Biotechs surged 6.2% (down 1.8%). With bullion recovering $183, the HUI gold index rallied 10.5% (up 15.3%).
Three-month Treasury bill rates ended the week at 3.6097%. Two-year government yields declined seven bps to 3.84% (up 37bps y-t-d). Five-year T-note yields fell eight bps to 3.98% (up 26bps). Ten-year Treasury yields dropped nine bps to 4.34% (up 17bps). Long bond yields slipped six bps to 4.91% (up 7bps). Benchmark Fannie Mae MBS yields sank 22 bps to 5.32% (up 28bps).
Italian 10-year yields dropped 20 bps to 3.85% (up 30bps y-t-d). Greek 10-year yields sank 20 bps to 3.79% (up 35bps). Spain's 10-year yields fell 16 bps to 3.47% (up 19bps). German bund yields dropped 10 bps to 2.99% (up 14bps). French yields fell 15 bps to 3.68% (up 12bps). The French to German 10-year bond spread narrowed five to 69 bps. U.K. 10-year gilt yields dropped 14 bps to 4.83% (up 35bps). U.K.’s FTSE equities index rallied 4.7% (up 5.0% y-t-d).
Japan’s Nikkei 225 Equities Index dipped 0.5% (up 5.5% y-t-d). Japan’s 10-year “JGB” yields were unchanged at 2.39% (up 32bps y-t-d). France’s CAC40 recovered 3.4% (down 2.3%). The German DAX equities index rallied 3.9% (down 5.4%). Spain’s IBEX 35 equities index jumped 4.5% (up 1.4%). Italy’s FTSE MIB index rallied 5.2% (up 1.5%). EM equities were mixed. Brazil’s Bovespa index recovered 3.6% (up 16.7%), and Mexico’s Bolsa index jumped 4.5% (up 8.3%). South Korea’s Kospi declined 1.1% (up 27.6%). India’s Sensex equities index slipped 0.4% (down 14.0%). China’s Shanghai Exchange Index dipped 0.9% (down 2.2%). Turkey’s Borsa Istanbul National 100 index gained 1.9% (up 14.9%).
Federal Reserve Credit increased $7.0 billion last week to $6.621 TN, with a 16-week expansion of $130 billion. Fed Credit was down $2.269 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.894 TN, or 78%. Fed Credit inflated $3.810 TN, or 136%, since November 7, 2012 (699 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt recovered $3.3 billion last week to $3.012 TN - near the low back to January 2012. “Custody holdings” were down $281 billion y-o-y, or 8.5%.
Total money market fund assets (MMFA) increased $7.6 billion to $7.811 TN - with a 39-week surge of $788 billion, or 14.8% annualized. MMFA were up $779 billion, or 11.1%, y-o-y - having ballooned a historic $3.227 TN, or 70.4%, since October 26, 2022.
Total Commercial Paper dropped another $28.7 billion (3-wk decline $76bn) to $1.334 TN. CP contracted $61 billion, or 4.4%, y-o-y.
Freddie Mac 30-year fixed mortgage rates rose eight bps to 6.46% (down 18bps y-o-y). Fifteen-year rates added two bps to 5.77% (down 5bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate up 11 bps to 6.61% (down 17bps).
Currency Watch:
For the week, the U.S. Dollar Index was little changed at 100.185 (up 1.9% y-t-d). On the upside, the Brazilian real increased 1.6%, the Mexican peso 1.2%, the South African rand 0.9%, the Japanese yen 0.4%, the Australian dollar 0.3%, the Singapore dollar 0.1%, and the euro 0.1%. On the downside, the New Zealand dollar declined 1.0%, the British pound 0.4%, the Canadian dollar 0.4%, the Norwegian krone 0.2%, the Swiss franc 0.2%, and the Swedish krona 0.1%. China's (offshore) renminbi gained 0.43% versus the dollar (up 1.54% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index gained 2.3% (up 25.1% y-t-d). Spot Gold rallied 4.1% to $4,677 (up 8.3%). Silver recovered 4.7% to $73.017 (up 1.9%). WTI Crude surged $11.90, or 11.9%, to $111.54 (up 94%). Gasoline added 1.2% (up 92%), while Natural Gas sank 7.4% to $2.80 (down 24%). Copper gained 1.6% (down 2%). Wheat declined 1.1% (up 18%), and Corn fell 2.1% (up 3%). Bitcoin increased $960, or 1.5%, to $66,900 (down 23.7%).
Market Instability Watch:
March 29 – Reuters (Yoruk Bahceli, Gertrude Chavez-Dreyfuss, Rae Wee and Alun John): “The war in Iran has sparked chaos across financial markets, leaving some investors and market makers reluctant to take on risk, making trading harder and costlier… None of the world’s biggest markets, from U.S. Treasuries, to gold, to currencies have been spared, investors and traders said. In Europe, hedge funds, which now dominate bond trading, added to those dynamics as they rapidly unwound a number of bets this month. Investors say they have at times struggled to get prices, or execute trades over the past four weeks, as market makers fear being stuck with large positions that could quickly become unprofitable. ‘When we try to trade, it takes longer to trade. (The market makers) want us to be more patient, cut the trades into smaller sizes,’ Rajeev De Mello, chief investment officer at GAMA Asset Management, said…”
April 2 – Bloomberg (John McCrank): “US investment-grade bond funds suffered the largest weekly outflows in about a year as rising macro-economic risk led to significant losses for the asset class. Investors yanked $5.35 billion of debt from high-grade corporate funds for the week ended April 1, the largest since mid-April 2025 when Trump announced tariffs, and the first net withdrawals since November, LSEG Lipper data show. That follows the steepest monthly loss for the debt in March since October 2024, and the first quarterly decline since the last quarter of 2024…”
April 1 – Bloomberg (John Cheng): “A weak sale of benchmark bonds in Japan added fuel to the selloff across global markets after US President Donald Trump said he would hit Iran ‘extremely hard’ over the next two to three weeks. Japanese sovereign debt slumped after an auction of 10-year notes drew the weakest investor demand since May, underscoring concerns about rising inflation driven by higher oil prices. Treasuries also fell, along with most equity markets in Asia.”
March 31 – Bloomberg (Miles J. Herszenhorn): “The Treasury market has been rendered structurally unstable by its explosive growth and is likely to require occasional ‘official interventions’ to support its functioning, according to strategists at Barclays. The $31 trillion US government debt market ‘has grown far faster than the quantum of bank capital,’ creating a gap between the supply and demand for liquidity that reverses a decades-long trend and is ‘the underlying force driving market fragility,’ according to a March 30 report by New York University finance professor Jeffrey Meli and several of his former colleagues at Barclays… ‘This imbalance increases the need for official interventions to stabilize markets during periods of volatility,’ the team wrote. The result is ‘a vicious cycle: expectations of intervention can become self-reinforcing if they result in greater use of leverage and, thus, more risk of disorderly unwinds’.”
April 2 – Wall Street Journal (AnnaMaria Andriotis and Peter Rudegeair): “The rush of investors trying to pull their money from private-credit funds intensified this week, hitting unprecedented levels and raising the specter of prolonged pressure on the firms that had become the new kings of Wall Street… In total, investors asked to pull nearly $14 billion in the first quarter from the type of private-credit funds known as business-development companies that make loans to mostly junk-rated companies, according to… Robert A. Stanger & Co. Investors were able to redeem roughly half that. The redemption requests are up from $5.7 billion in the prior quarter and $3.7 billion in all of 2024.”
April 2 – Financial Times (Michelle Chan and Eric Platt): “Credit investors have piled into defensive positions by shifting out of riskier areas of the debt markets over the past month… Investors pulled an average of $2.7bn a week from US junk bond funds over the past month, a more than 24-fold increase from the four weeks prior, according to… JPMorgan. The asset class lost nearly $14bn this year. Leveraged loans… saw $602mn of weekly average outflows during the same period, compared to $263mn in the prior month…”
Leveraged Speculation Watch:
April 2 – Bloomberg (Hema Parmar and Nishant Kumar): “Citadel’s Global Fixed Income Fund last month fell 8.2%, the worst performance among the hedge fund firm’s major strategies… The losses left the fund down 5.5% for the year… The Global Fixed Income Fund, which is smaller than the firm’s flagship Wellington pool, sank 4.75% in the first week of March alone. Losses widened as the month progressed, falling to about 8% through March 20…”
April 2 – Bloomberg (Natalia Kniazhevich): “Fast-money investors are rushing to unwind their global equity exposure amid diminishing hopes for a swift resolution of the war in the Middle East. Hedge funds sold global stocks at the fastest pace in 13 years in March, according to… Goldman Sachs… The pace of selling was the second-largest since the bank started collecting the data in 2011. The move was largely driven by a pickup in short sales…”
March 31 – Bloomberg (Reshmi Basu and Carmen Arroyo): “Goldman Sachs... has told clients eager to short leveraged loans that a product it’s developing to bet against the $1.4 trillion market isn’t yet ready. The bank had been pitching hedge funds on a total return swap — a type of derivative that would allow clients to profit from a loan’s price decline without ever owning the underlying debt. Investors are increasingly looking to make money from the sell off in software debt sparked by fears of AI disruption. But Goldman Sachs has told clients that it’s not ready to launch the effort as it works through additional considerations, according to people familiar with the matter.”
U.S. Credit Trouble Watch:
April 1 – Wall Street Journal (Telis Demos): “Banks are being hit with fears of contagion from private-credit losses. Even if they prove fairly insulated from a wipeout, they do stand to lose significant business from the whole mess… There has been a surge in recent years of bank lending to nonbanks, or so-called non-depository financial institutions, or NDFIs. Besides private lenders, this also includes loans to mortgage lenders, consumer lenders and private-equity funds. Bank lending to nonbank financial institutions has grown to about $1.9 trillion from about $1.1 trillion three years ago, according to… Truist Securities. This now represents about 14% of all bank loans…”
March 31 – Bloomberg (Olivia Fishlow): “Wall Street has been pouring into private credit, fueling rapid growth in firms’ portfolios of loans to non-banks. Lending to so-called non-depository financial institutions has almost quadrupled over the past 10 years, surging to about $1.4 trillion as of the end of 2025, Moody’s… said… Such lending makes up roughly 11% of banks’ total loans, and is the fastest growing portion of their balance sheets. The growth of the business is now raising some potential red flags for analysts at the rating company. ‘If an area expands much more rapidly than the broader market, that raises broader credit questions about seasoning, since a seasoned book is a more predictable book,’ Jeffrey Berg, an associate managing director at Moody’s, said... ‘Without that, there’s a greater probability of risk and of weaker underwriting’.”
April 2 – Bloomberg (Olivia Fishlow): “The top-line numbers from Blue Owl Capital Inc.’s funds were unambiguous and, by just about any measure, ugly. Investors sought to cash in more than 20% of shares from its flagship $36 billion private credit fund. Its smaller, tech-focused vehicle saw redemption requests top 40%. The firm, like others across the $1.8 trillion market, enforced a 5% withdrawal limit, leaving billions trapped. In short, no major private credit manager has faced the onslaught that Blue Owl’s funds were asked to pay back.”
April 1 – CNBC (Leslie Picker): “Blue Owl is experiencing elevated redemption requests for two of its private credit funds, according to letters to shareholders… The firm’s flagship OCIC fund, with about $36 billion in assets under management, received redemption requests of about 21.9% of shares outstanding during the first quarter, the firm said. Blue Owl’s smaller, tech-oriented fund, OTIC, received redemption requests of 40.7% during the same period, it said. In both of the funds, Blue Owl opted to cap requests at 5%. Blue Owl attributed the higher-than-usual requests to ‘heightened market concerns around AI-related disruption to software companies’.”
April 1 – Bloomberg (Allison McNeely): “KKR & Co.’s non-traded business development company KKR FS Income Trust, a type of private credit fund for retail investors, curbed redemptions after receiving an increase in such requests, according to a shareholder letter. The fund, known as K-FIT, received tendered repurchase requests totaling 6.3% of the outstanding shares during the repurchase period that ended on March 30… KKR capped share repurchases at 5%, and the fund will satisfy all repurchase requests on a pro-rata basis of about 80%...”
April 3 – Axios (Emily Peck): “A big, overlooked risk in private credit is coming from the life insurance industry, investors and economists warn. Life insurance, particularly the annuities that people buy to fund their retirements, could be the vehicle through which the pressures on private credit actually affect the lives of real people… Redemptions at business development companies, which invest in small and medium-size private firms, are rising… That distress is raising concerns about the private credit market overall — which is much bigger than BDCs alone. In fact, some of the biggest players in the market are life insurance companies. They invest in private credit to earn enough return to pay the people who buy insurance and annuities. Over the past few years, insurance has become the ‘lifeblood’ of private credit, as the Financial Times put it earlier this year.”
March 29 – Wall Street Journal (Jack Pitcher and Matt Wirz): “Many private-credit fund managers are playing down their exposure to software as fears spread about threats from artificial intelligence. A detailed analysis revealed four large funds marketed to individual investors by Apollo Global Management, Ares Management, Blackstone and Blue Owl Capital have more exposure to the software industry than their filings suggest. Investors’ concerns about the industry’s software exposure helped prompt record withdrawals… The Blue Owl Credit Income Corp. fund had nearly twice as much exposure to software as it reported, an analysis by The Wall Street Journal found… On average, the four funds classified about 19% of their investments as software, while the Journal found their average software exposure to be about 25%.”
March 31 – Bloomberg - (Olivia Fishlow): “Wall Street has been pouring into private credit, fueling rapid growth in firms’ portfolios of loans to non-banks. Lending to so-called non-depository financial institutions has almost quadrupled over the past 10 years, surging to about $1.4 trillion as of the end of 2025, Moody’s… said… Such lending makes up roughly 11% of banks’ total loans, and is the fastest growing portion of their balance sheets. The growth of the business is now raising some potential red flags for analysts at the rating company.”
March 30 – Bloomberg - (James Crombie): “Business development company turmoil is a black eye for private credit and a growing threat to middle-market enterprises powering the US economy. Small cap companies that collectively generate trillions of dollars in revenue will find loans harder to get and more expensive as the Iran war drags on. A key source of liquidity — BDCs — is on the defensive, just as fuel prices surge, supply chains get disrupted and consumers withdraw. Retail participants in the private credit boom learned the hard way how these funds work… BDCs, which manage over $400 billion in assets, can survive a few more rounds of redemptions at the going 5% rate, but they’d be unsustainable at 20% annual outflows.”
March 31 – Bloomberg - (Jeannine Amodeo, Gowri Gurumurthy and Katherine Schwartz): “Banks led by JPMorgan… changed the terms of their $7.2 billion debt offering to fund the buyout of Sealed Air Corp., in a bid to break a stalemate with investors who have balked at some of the deal’s provisions. The lender group told investors… of changes that would offer them greater protections…”
April 1 – Bloomberg (Reshmi Basu): “Sleep Number Corp., which has seen its share price collapse more than 80% over the past two months, is seeking rescue financing to stave off other options including a potential bankruptcy… The mattress seller’s banker, Guggenheim Partners, has been reaching out to investors to gauge interest in providing fresh capital, including a priming loan of about $50 million… Such loans — often used to help a troubled borrower restructure its debt or plug a liquidity shortfall — rank new financing higher than existing obligations.”
Global Credit Watch:
March 30 – Financial Times (Kate Duguid, Michelle Chan and Ian Smith): “Foreign central banks have slashed their holdings of Treasuries at the New York Federal Reserve to the lowest level since 2012, as countries sell the US government bonds to prop up their economies and currencies in the wake of the Iran war. The value of Treasuries held in custody at the New York Fed by official institutions… has dropped by $82bn since February 25 to $2.7tn… The decline in these holdings since the war began a month ago highlights how the surge in energy prices triggered by Iran’s closure of the Strait of Hormuz… has upended the finances of countries that rely on oil imports, as well as boosting the dollar across the board.”
March 31 – Bloomberg (Amedeo Goria): “As the war in the Middle East drives up the cost of CLO funding, some European managers are shelving their refinancing plans — a move that may complicate efforts by the region’s riskiest borrowers to roll over their debt. Issuers including Alcentra, Five Arrows, Onex Credit Partners, and Napier Park Global Capital have all withdrawn refinancing plans in recent weeks as a plunge in leveraged loan prices makes cleaning up portfolios more expensive, while wider market spreads drive up the price of CLO liabilities.”
March 31 – Bloomberg (Dorothy Ma): “Private equity-owned companies borrowed $94 billion in leveraged loans and high-yield bonds in the US to fund their own payouts last year, increasing risk to the businesses, according to an analysis by Moody’s… The transactions, called dividend recapitalizations, have gained popularity among private equity firms who are looking for ways to cash in on their investments. Exits have become more difficult because economic uncertainty has slowed acquisition activity and the market for initial public offerings… Meanwhile, the credit market has stayed open to borrowers, including companies that are already leveraged. That’s allowed private equity firms to load more debt onto their portfolio companies, but such deals don’t boost earnings and are generally seen by credit ratings agencies as negative because they raise interest expenses.”
April 2 – Bloomberg (Rachel Graf and Ellen DiMauro): “Faced with a wave of redemptions and market turmoil, the private credit industry is leaning into a classic Wall Street maneuver: securitization. Private credit firms are issuing collateralized loan obligations at a near record pace, despite unease over a potential rise in defaults and exposure to AI-threatened software firms. Issuance of the deals — which package private credit loans into bonds — has reached $9.5 billion so far this year, just shy of 2024’s record first quarter… The private credit market has turned to CLOs for funding for years but a wave of redemptions — most recently at two Blue Owl Capital Inc. funds — and banks restricting some lending has focused attention on the practice.”
April 1 – Bloomberg (Hannah Benjamin-Cook): “Amazon.com Inc. has almost single-handedly spurred the best-ever opening quarter for corporate debt sales in Europe, even as markets face huge disruption from the war in Iran. Corporate borrowers have raised about €145.6 billion ($168.7bn) in 2026, by far the highest volume for a first quarter on record… Nearly 10% of that came just from Amazon’s €14.5 billion eight-part debt sale on March 11.”
March 31 – Bloomberg (Stephan Kahl): “Germany’s second-largest lender warned that private credit is now so big, it poses a major risk to the US economy. The market’s ‘considerable size’ and its ‘inherent lack of transparency’ have turned private credit into ‘a risk for the financial markets,’ DZ Bank said… ‘In the event of another financial crisis in the United States, this risk could trigger a chain reaction with severe negative effects for the US economy.”
April 2 – Reuters (Laura Matthews and Timothy Aeppel): “Some tariff-whiplashed companies are exploring using refund claims as collateral for loans, in the latest example of creative financing arising from the complicated process of getting refunds from Donald Trump’s now-overturned ‘Liberation Day’ tariffs.”
Iran War Watch:
April 3 – Washington Post (Alex Horton and Tara Copp): “Two U.S. military aircraft were shot down in separate incidents Friday while conducting combat operations against Iran, setting off a frantic search-and-rescue effort that remains ongoing for one missing crew member… The F-15E fighter jet and the A-10 attack plane both were hit by incoming fire… One of two crew members aboard the F-15, which crashed inside Iran, was rescued… The A-10 pilot navigated the damaged plane to Kuwaiti airspace before ejecting and was subsequently rescued... Two U.S. Black Hawk helicopters involved in the search-and-rescue effort also were hit by Iranian fire that injured U.S. personnel on board, though both aircraft have safely returned to their base…”
April 3 – Washington Post (Susannah George): “The assassinations of Iran’s senior leaders by Israel and the United States have triggered unprecedented churn within Tehran’s political and military establishment, eliminating the supreme leader and some of the most powerful men in the Islamic Revolutionary Guard Corps, but have left in place a hard-line government and little hope of a diplomatic breakthrough, according to regional and Western officials. Rather than usher in what President Donald Trump has called ‘more reasonable’ leadership, the surviving Iranian regime is newly emboldened to inflict economic pain, pushing Tehran and Washington further apart in negotiations, according to the officials…”
April 2 – CNN (Haley Britzky, Natasha Bertrand, Jim Sciutto and Tal Shalev): “Roughly half of Iran’s missile launchers are still intact and thousands of one-way attack drones remain in Iran’s arsenal despite the daily pounding by US and Israeli strikes against military targets over the past five weeks, according to recent US intelligence assessments… ‘They are still very much poised to wreak absolute havoc throughout the entire region,’ one of the sources said of Iran. The US intelligence assessment total may include launchers that are currently inaccessible, such as those buried underground by strikes but not destroyed. Thousands of Iranian drones still exist — roughly 50% of the country’s drone capabilities — two of the sources said… The intelligence, compiled in recent days, also showed a large percentage of Iran’s coastal defense cruise missiles were intact…, consistent with the US not focusing its air campaign on coastal military assets though they have been hitting ships.”
April 3 – New York Times (Julian E. Barnes and Eric Schmitt): “Iranian operatives have been digging out underground missile bunkers and silos struck by American and Israeli bombs, returning them to operation hours after an attack, according to U.S. intelligence reports. Iran has also retained a significant amount of its missiles and mobile launchers, the reports say. The Pentagon and White House this week claimed to have made substantial progress against Iran. At a briefing this week, the Pentagon said it had struck 11,000 targets in Iran in five weeks of war. But American intelligence agencies have cast doubt on how close the United States is to destroying Iran’s missile capability, a key goal in the war.”
April 1 – New York Times (Edward Wong and Julian E. Barnes): “Multiple U.S. intelligence agencies have assessed in recent days that the Iranian government is not currently willing to engage in substantial negotiations over ending the U.S.-Israeli war, according to U.S. officials. The assessments say the Iranian government believes it is in a strong position in the war and does not have to accede to America’s diplomatic demands… And while Iran is willing to keep channels open, they said, it does not trust the United States and does not think President Trump is serious about negotiations… The assessments align with recent statements from Iranian officials, who reject Mr. Trump’s assertion that the two sides are making progress in discussions mediated by other countries.”
March 28 – Reuters (Christian Martinez): “The Pentagon is preparing for weeks of ground operations in Iran, the Washington Post reported… The plans could involve raids by Special Operations and conventional infantry troops… Whether President Donald Trump would approve any of those plans remains uncertain, according to the Post. The Trump administration has deployed U.S. Marines to the Middle East as the war in Iran stretches into its fifth week, and also has been planning to send thousands of soldiers from the U.S. Army's 82nd Airborne to the region.”
March 30 – Bloomberg (Weilun Soon and Prejula Prem): “Israel and US strikes have wiped out senior Iranian leaders and hit key targets across the country. But after a month of fighting, it is arguably Iran that has secured the most significant strategic victory — a tightening grip over traffic through the Strait of Hormuz. So far in March, the first full month of war, barely six vessels per day on average have traversed the narrow waterway connecting the Persian Gulf to the world, in either direction. That compares with about 135 a day in normal times…”
March 30 – Financial Times (Simeon Kerr): “Iran has struck an electricity and water desalination plant in Kuwait in the latest escalation of tit-for-tat attacks across the Gulf, raising concerns about the likelihood of further strikes targeting critical civilian infrastructure on either side of the waterway.”
March 30 – Bloomberg (Fiona MacDonald, Sherif Tarek and Weilun Soon): “An Iranian drone hit a fully laden Kuwaiti oil tanker off Dubai early on Tuesday in one of the most significant attacks on a vessel in a month of war, pushing crude prices higher and heightening tension around the vital Strait of Hormuz.”
March 30 – Bloomberg (Gerry Doyle): “After a weekend with some of the heaviest Iranian ballistic missile attacks on Gulf targets since the war began, increasingly effective strikes have consumed at least 2,400 interceptors — a number approaching those countries’ known prewar stockpiles. Despite unrelenting US and Israeli airstrikes, Iran has launched almost 1,200 ballistic missiles and 4,000 rudimentary Shahed cruise missiles at Gulf countries since the war began on Feb. 28… ‘Without active US support, most countries would have nothing left with which to defend themselves against Iranian missiles,’ said Kelly Grieco, a senior fellow at the Stimson Center.”
March 29 – Financial Times (Edward Luce): “Donald Trump has said he wants to ‘take the oil in Iran’ and could seize the export hub of Kharg Island, as the US sends thousands of troops to the Middle East. The US president told the FT… that his ‘preference would be to take the oil’, comparing the potential move to Venezuela, where the US intends to control the oil industry ‘indefinitely’ following its capture of strongman leader Nicolás Maduro in January… Trump said: ‘To be honest with you, my favourite thing is to take the oil in Iran but some stupid people back in the US say: ‘why are you doing that?’ But they’re stupid people’.”
March 30 – Bloomberg (Ellen Milligan): “Reopening the Strait of Hormuz to commercial shipping is ‘easier said than done,’ UK Prime Minister Keir Starmer warned ahead of a meeting designed to secure that aim once the conflict in Iran has ended… ‘The most important thing we can do is to de-escalate the situation and bring an end to the conflict: that would be the most effective way to deal with the impact and, as part of that, opening the Strait of Hormuz, which is easier said than done,’ Starmer said… He reiterated the line he delivered to local broadcasters on Monday morning about a conflict that has concerned UK voters: ‘it’s not our war, but it is our duty to protect British citizens’.”
March 30 – Bloomberg (Alex Wickham and Ben Bartenstein): “Iran is pushing the Houthis to prepare for a renewed campaign against Red Sea shipping, contingent upon any further escalation by the US in its war on the Islamic Republic, according to European officials familiar with the matter. Leaders of the Yemen-based Houthis… are weighing options for more aggressive action after launching ballistic missiles at Israel, the people said…”
March 30 – Associated Press (Aamer Madhani, Samy Magdy, Matthew Lee and Sam Mednick): “Gulf allies of the United States, led by Saudi Arabia and the United Arab Emirates, are urging President Donald Trump to continue prosecuting the war against Iran, arguing that Tehran hasn’t been weakened enough by the monthlong U.S.-led bombing campaign, according to U.S., Gulf and Israeli officials. After private grumbling at the start of the war that they were not given adequate advance notice of the U.S.-Israeli attack and complaining the U.S. had ignored their warnings that the war would have devastating consequences for the entire region, some of the regional allies are making the case to the White House that the moment offers a historic opportunity to cripple Tehran’s clerical rule once and for all. Officials from Saudi Arabia, United Arab Emirates, Kuwait and Bahrain have conveyed in private conversations that they do not want the military operation to end until there are significant changes in the Iranian leadership or there’s a dramatic shift in Iranian behavior…”
March 30 – New York Times (Julian E. BarnesAdam Goldman and Ronen Bergman): “The U.S.-Israeli war against Iran has fractured the Iranian government, complicating its ability to make decisions and coordinate larger retaliatory attacks… Several dozen Iranian leaders and their deputies have been killed… Those who survive have had difficulty communicating and are unable to meet in person, for fear of having their calls intercepted by the United States or Israel and being targeted in an airstrike. While Iran’s security and military agencies continue to function, the government’s ability to plan new strategies or policies has been weakened.”
March 31 – Wall Street Journal (James T. Areddy): “The oil states of the Persian Gulf have made great strides to diversify their economies in recent years, but they have also created a new vulnerability: more strategic targets for Iran to hit. Outgunned militarily, Iran is wreaking economic havoc in the Middle East by attacking factories that produce aluminum and steel, targeting services such as banking and tourism, and disrupting the region’s trade in products like fruit. Oil and gas production remains the Persian Gulf’s economic backbone, and Iran’s stranglehold on tanker transits through the Strait of Hormuz has caused the war’s biggest economic dislocations.”
March 27 – Wall Street Journal (Anat Peled): “Israel has begun rationing its use of high-end missile interceptors, hoping to preserve stocks of its most capable defensive weapons in the face of daily Iranian barrages that haven’t let up through four weeks of war… The decision to use less-capable munitions reflects the pressure militaries across the region are under as they burn through expensive, difficult-to-manufacture weapons to fend off attacks from Iran’s mass-produced missiles and drones.”
April 1 – Associated Press (Qassim Abdul-Zahra and Scott Bauer): “An American journalist who was kidnapped in Baghdad had tried to cross from Syria into Iraq three weeks earlier and was initially turned back, an Iraqi official said… U.S. and Iraqi officials said Shelly Renee Kittleson had also been warned of threats against her in the days before her abduction. A freelance journalist who has worked for years in Iraq and Syria and was described by those who knew her as deeply knowledgeable about the region and the communities she covered, Kittleson was kidnapped from a street in the Iraqi capital Tuesday and remains missing.”
Iran War Ramifications Watch:
March 31 – Associated Press (Wyatte Grantham-Philips): “U.S. gas prices jumped past an average of $4 a gallon for the first time since 2022 on Tuesday, as the Iran war continues to push fuel prices higher worldwide.”
March 31 – Politico (Geoffrey Smith): “The war on Iran is already morphing into a war on European consumers. Eurozone inflation jumped to its highest level in over a year in March due to soaring fuel prices… The data highlights the dilemma facing President Christine Lagarde and… the European Central Bank: Higher inflation may require them to raise interest rates, but doing so will add to the economic problems created by higher energy costs. Governments, too, face a parallel dilemma, across a region where energy costs are already cripplingly high. Voters and businesses are demanding protection, but few capitals can afford the lavish subsidies that were doled out in 2022, the last time energy prices spiked.”
April 2 – Yahoo Finance (Ines Ferré and Francisco Velazquez): “Airline stocks tumbled on Thursday, extending year-to-date losses, as soaring oil prices sparked concerns about shrinking profits… Jet fuel prices have surged more than 100% over the past month as the Middle East conflict disrupted energy supplies… ‘Asian refiners have had to cut utilization rates due to a lack of crude oil, further exacerbating the supply situation,’ Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance… ‘To top it off, refined product exports have been restricted by China, Korea, Thailand, and Pakistan,’ he added.”
March 31 – Bloomberg (Lars Paulsson): “Aluminum headed for its biggest monthly gain in almost eight years, as the war in the Middle East disrupted supplies and damaged local production facilities… The lightweight metal exceeded $3,500 a ton in London, putting it on course for a monthly gain of more than 12%. That’s the most since April 2018…”
March 29 – Financial Times (Jamie John and Alice Hancock): “For Anuj, an Indian seafarer serving on an offshore support ship stuck in a Gulf port, the first few days of the US-Israeli war on Iran were full of ‘very scary’ Iranian strikes on nearby vessels. ‘We were stuck and there were missiles firing over and blasts everywhere,’ said Anuj… Like many of the 20,000 seafarers that the International Maritime Organization estimates are stranded in the Gulf, he remained trapped aboard his vessel with limited communications. Some may be forced to ration food and water. Many sailors have been aboard their ships for months and want to return home, but find their employers either unable or unwilling to repatriate them.”
March 31 – Financial Times (Owen Walker, Krishn Kaushik, A. Anantha Lakshmi and Daniel Tudor): “Asian countries facing domestic energy shocks due to the conflict in the Gulf are turning to Moscow, agreeing to buy millions of barrels of Russian oil since the US granted a temporary sanctions reprieve last month. Asian economies are among the most exposed to the global energy crisis… While India and China have been the main buyers of Russian crude since Moscow’s full-scale invasion of Ukraine four years ago, other Asian countries have restarted or increased imports of Russian oil in recent days following the US sanctions waiver on Russian supply. The Philippines and South Korea have already received shipments of Russian oil and petrochemical products, while Vietnam and Sri Lanka are in talks with Russian energy companies. Thailand and Indonesia have confirmed they are open to making purchases.”
March 30 – Financial Times (Andres Schipani, Nic Fildes and Harry Dempsey): “Asian economies are firing up coal plants and increasing production to reinforce energy supplies as fears of a protracted war in the Middle East raise the threat of long-term disruption to oil and gas flows. The region leads the world in liquefied natural gas imports — chiefly by China, Japan, South Korea and India — and many Asian countries are heavily dependent on the Strait of Hormuz, the critical Gulf waterway through which shipping has slowed to a near standstill since the US and Israel launched strikes on Iran.”
March 30 – Wall Street Journal (Georgi Kantchev): “The Iran war isn’t just affecting energy supplies. It is also cutting deeply into supplies of the invisible gas that is essential for cooling artificial-intelligence chip-making tools and keeping MRI scanners humming. The global supply of helium… is being squeezed by a halt in natural-gas exports from Qatar, the source of about a third of the world’s total. The shortage is straining a market where supplies can’t be switched on quickly, threatening to hamper production of everything from semiconductors to military-drone components and space rockets.”
April 1 – Bloomberg (Keira Wright and Paul-Alain Hunt): “Western Australia invoked emergency powers to force fuel suppliers to provide detailed information on their supply chains, as the nation seeks to manage an ongoing shortage spurred by panic-buying in the wake of the war in Iran. The state government activated the powers under the Fuel, Energy and Power Resources Act after several companies failed to provide… information on fuel shipments…”
Trump Administration Watch:
April 2 – Financial Times (James Politi, Abigail Hauslohner, Amy Mackinnon and William Sandlund): “Donald Trump vowed to hit Iran ‘extremely hard’ over the coming weeks in a primetime television speech that dashed investors’ hopes of an imminent end to the conflict. The US president insisted Washington would achieve its goals for the war ‘very shortly’, but signalled further escalation rather than a quick peace deal. ‘We’re going to hit them extremely hard over the next two to three weeks. We’re going to bring them back to the Stone Ages, where they belong,’ Trump warned in the 19-minute address… He also told American allies they would have to ‘take the lead’ in reopening the Strait of Hormuz to oil shipments.”
March 31 – Axios (Zachary Basu and Dave Lawler): “President Trump’s threat to bomb Iran’s water supply would constitute his most dramatic breach of the laws and norms designed to protect civilians in wartime. The Iran war is the biggest test of what Trump’s contempt for ‘politically correct’ war-fighting looks like in practice. His administration has already signed off on Israeli assassinations of political leaders, threatened ‘no quarter’ for enemy combatants, and initially rejected responsibility for a mass casualty strike on an elementary school. But the U.S. has been almost exclusively targeting Iran’s military and nuclear program up to now. The threat to hit civilian infrastructure shows how intent Trump is on finding ways to increase the pressure on Tehran, even if that means flouting the generally accepted principles of warfare.”
April 2 – Axios (Barak Ravid): “The U.S. military on Thursday attacked major civilian infrastructure in Iran for the first time, hours after President Trump threatened in a prime-time address to bomb the country ‘back to the Stone Ages.’ The attack on the B-1 bridge near Tehran signals a widening of the U.S. military's targets and could be a first step toward attacks on energy, water and transportation infrastructure. Trump has said the U.S. could conduct such attacks, which would have devastating effects for Iranian civilians, to punish the regime if it won't cut a deal.”
April 1 – Axios (Marc Caputo and Barak Ravid): “President Trump isn’t just befuddling foreign leaders and financial markets with his mixed signals on Iran. Advisers who speak regularly with the president tell Axios they’re just as uncertain. Trump's off-the-cuff musings and Truth Social postings can have life-or-death consequences for the war, and massive implications for the market. Then the cycle restarts without any lasting clarity. Some Trump aides and allies say he’s mostly improvising rather than following any clear plan. He likes to keep his options open, spitball with different audiences, then capitalize if he thinks he sees an opportunity, they say. Aides have been convinced at various points that Trump was leaning toward a major escalation, and at others that he was eager for a swift resolution. ‘Nobody knows in the end what he’s really thinking,’ a senior adviser said. ‘They had a plan for the first week and since then, they are making the plan up as they go along,’ a former U.S. official said.”
April 1 – Financial Times (Andrew England and Abigail Hauslohner): “Saudi Arabia has become increasingly frustrated with the US over Donald Trump’s erratic handling of the war with Iran, including his threats to attack Iranian power plants, suggestions that the Gulf states pay for the conflict and disparaging comments about the kingdom’s leader. Riyadh now has an ‘utter sense of disappointment with the White House’, according to Neil Quilliam, a Saudi expert and associate fellow at the Chatham House think-tank, after the kingdom had invested heavily in recent years to strengthen its longstanding relationship with the US... ‘They are massively frustrated at Trump’s independent actions, his unwillingness to think through the consequences — and then the crowning glory is his comments about MBS [Crown Prince Mohammed bin Salman],’ Quilliam said…Trump said ‘he [Prince Mohammed] didn’t think he’d be kissing my ass… He thought it would be just another American president that was a loser with a country that’s going downhill, but now he has to be nice to me,’ Trump said to an audience packed with some of Prince Mohammed’s top lieutenants…”
March 30 – Axios (Barak Ravid): “President Trump threatened on Monday that if a deal with Iran ‘is not shortly reached’ and if the Hormuz Strait isn't open ‘immediately,’ the U.S. will ‘completely obliterate’ Iran’s power, energy and water infrastructure. Destroying those facilities would not only have devastating implications for Iranian civilians, it could also deepen the war-driven global energy crisis… Trump wrote on Truth Social that the U.S. is ‘in serious discussions with A NEW, AND MORE REASONABLE, REGIME’ in Iran on ending the war and claimed ‘Great progress’ has been made. ‘But if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately ‘Open for Business’ we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!), which we have purposefully not yet ‘touched,’’ Trump wrote.”
March 30 – Bloomberg (Hadriana Lowenkron): “President Donald Trump said that Iran ‘gave’ the US most of the 15 demands it issued to Tehran to end the war, even as it remains unclear whether either side is negotiating. ‘They gave us most of the points. Why wouldn’t they?’ he told reporters on… on Sunday. ‘We’re going to be asking for a couple of other things’… ‘To be honest with you, my favorite thing is to take the oil in Iran but some stupid people back in the US say: ‘Why are you doing that?’ But they’re stupid people,’ he said…”
March 30 – Bloomberg (Daniel Flatley): “Treasury Secretary Scott Bessent indicated optimism about a reopening of the Strait of Hormuz for passage of cargo ships and said the administration is steadily moving to address the shortage of global oil supplies. ‘Over time, the US is going to retake control of the straits, and there will be freedom of navigation — whether it is through US escorts or a multinational escort,’ Bessent said… Monday…”
March 30 – Reuters (Bo Erickson, Ryan Patrick Jones and Trevor Hunnicutt): “U.S. President Donald Trump is interested in calling on Arab countries to pay for the cost of the Iran war, White House press secretary Karoline Leavitt said… Leavitt, asked at a news briefing whether Arab countries would step up to help pay for the war, said she would not get ahead of the Republican president but that it was an idea that Trump had.”
April 2 – Bloomberg (Chris Strohm and Jimmy Jenkins): “President Donald Trump’s decision to remove Pam Bondi as attorney general delivers a new disruption to an already embattled US Justice Department as it works to advance the administration’s policy goals and sometimes controversial prosecutions. Trump announced… that he’d ousted Bondi as the nation’s chief law enforcement officer following several high-profile stumbles in her efforts to carry out his agenda… Trump picked Bondi’s deputy, Todd Blanche, to take over as acting attorney general. He’s expected to serve until a new nominee by Trump is confirmed by the Senate.”
March 29 – Reuters (David Lawder): “The U.S. Treasury Department is expected to convene in coming weeks the first of a series of meetings with domestic and international insurance regulators about recent developments in jittery private credit markets… Concerns over liquidity, transparency and lending discipline have rattled investor sentiment in the $2 trillion non-bank lending sector in recent weeks. The sources said Treasury Secretary Scott Bessent had been planning since January, however, to start regular and sustained consultations with insurance regulators in the second quarter of this year.”
March 30 – Financial Times (Paul Murphy, Harriet Agnew, Joshua Franklin and James Politi): “A broker for Pete Hegseth, the US defence secretary, attempted to make a big investment in major defence companies in the weeks leading up to the US-Israeli attack on Iran, according to three people familiar... Hegseth’s broker at Morgan Stanley contacted BlackRock in February about making a multimillion-dollar investment in the asset manager’s Defense Industrials Active ETF…, shortly before the US launched military action against Tehran. The inquiry on behalf of the high-profile potential client was flagged internally at BlackRock, according to the people familiar…”
March 30 – New York Times (Alan Rappeport and Colby Smith): “At a meeting of the Financial Stability Oversight Council this month, Trump administration officials moved ahead with plans to scale back scrutiny of hedge funds, encouraged financial firms to experiment with artificial intelligence and lamented the burden of onerous regulation. What wasn’t discussed during the public session was the segment of the financial system that has Washington and Wall Street most on edge: private credit. The once-booming corner of lending markets has been showing signs of shakiness recently, raising alarm that a broader set of investors could soon be exposed to a new financial risk just as President Trump accelerates a push to loosen regulations across the financial sector.”
March 29 – Financial Times (Camilla Hodgson): “The Trump administration is poised to sink $1.6bn into a mining company that aims to extract rare earths and make high-tech magnets in the US. But the lossmaking group has yet to do either commercially. The deal with USA Rare Earth is one in a series the Trump administration has struck over the past year, as it strives to rapidly establish secure domestic supply chains for critical minerals… But some industry experts have questioned whether the companies chosen by the administration are capable of delivering on their promises, while one executive noted that early-stage companies such as USA Rare Earth are not poised to ‘solve problems today’. In some cases, the companies that have won government backing have financial ties to people close to the Trump administration…”
Constitution Watch:
March 31 – Axios (Avery Lotz and Rebecca Falconer): “A federal judge… temporarily blocked President Trump’s sprawling plans to build a massive ballroom where the East Wing of the White House once stood. U.S. District Judge Richard Leon said Trump is the ‘steward,’ not the ‘owner’ of the White House, and that the project ‘must stop until Congress authorizes its completion.’ Lawyers for the Trump administration filed an appeal... Leon granted the National Trust for Historic Preservation’s request for a preliminary injunction, halting the administration's fast-tracked plans. The trust has argued that the White House needs congressional approval for the extensive renovations and said in a filing earlier this month that ‘the President is a temporary tenant of the White House—its steward, not its landlord,’ a notion that Leon echoed in his 35-page opinion.”
March 31 – New York Times (Benjamin Mullin): “A federal judge ruled… President Trump’s executive order barring the federal funding of NPR and PBS violated the First Amendment. Randolph Moss, a judge in the U.S. District Court for the District of Columbia, said in his ruling that Mr. Trump’s order, signed last May, was unlawful because it instructed federal agencies to refrain from funding NPR and PBS because the president believed their news coverage had a liberal viewpoint. ‘The message is clear: NPR and PBS need not apply for any federal benefit because the president disapproves of their ‘left-wing’ coverage of the news,’ Judge Moss wrote. But the First Amendment, he said, ‘does not tolerate viewpoint discrimination and retaliation of this type’.”
April 2 – New York Times (Erik Wemple): “President Trump in April 2025 posted some thoughts on Truth Social about public media, in all caps: ‘Republicans must defund and totally disassociate themselves from NPR & PBS, the radical left ‘monsters’ that so badly hurt our country!’ This was not a watershed moment. In both his social media posts and his off-the-cuff comments to reporters, Mr. Trump’s broadsides against traditional news outlets have become the tap water of his political rhetoric. But they’re now haunting him in court. Judges have cited attacks on the press by Mr. Trump and his appointees when ruling against the government in at least three court cases involving news organizations.”
Budget Watch:
April 3 – Reuters (Bo Erickson and Ryan Patrick Jones): “U.S. President Donald Trump… requested a 10% cut in non-defense spending for the 2027 fiscal year and a massive $500 billion increase in the military budget, as the United States continues its war against Iran. The 2027 budget request comes as the president faces risky choices abroad, with the administration sending U.S. servicemembers to the Middle East, and a weary public at home feeling the economic crunch of skyrocketing gas prices due to the conflict.”
Trade War Watch:
April 2 – Reuters (David Lawder and Ahmed Aboulenein): “U.S. President Donald Trump ordered 100% tariffs on certain branded pharmaceutical imports and overhauled steel, aluminum and copper duties… as his administration sought to move on from the collapse of the broad global tariffs he announced exactly one year ago. The new tranche of tariffs is aimed partly at rebuilding duties lost when the Supreme Court struck them down in February. But they drew criticism from some business groups for adding potential new cost pressures at a time when the war on Iran has spiked energy prices for consumers.”
April 2 – Bloomberg (Mackenzie Hawkins and Maggie Eastland): “US lawmakers unveiled legislation that seeks to crack down on exports of chipmaking tools to China, especially from allies including the Netherlands and Japan, in a bipartisan effort to help Washington further constrain Beijing’s technology ambitions.”
New World Order Watch:
April 1 - Associated Press (Jill Lawless and Jamey Keaten): “U.S. President Donald Trump says he’s strongly considering pulling the United States out of NATO, ratcheting up his criticism of European leaders and exposing a wider rift in the trans-Atlantic alliance — this time over the Iran war. While Trump’s talk of a possible NATO pullout dates back years, the comments to The Telegraph newspaper… were among the clearest and most disparaging yet — suggesting that the fracture has deepened perhaps to a point of no return. Asked whether he would reconsider U.S. membership in the alliance after the conflict in the Middle East ends, Trump replied, ‘I would say (it’s) beyond reconsideration.’ Congress passed legislation in 2023 that would prevent any president from pulling out of NATO without its approval. The Trump administration, during his first term, had insisted the president had such authority on his own.”
March 28 – Bloomberg (Peter Martin, Jonathan Tirone, and Gerry Doyle): “Donald Trump’s willingness to attack adversaries while rattling allies is threatening to push the world into a new nuclear age. From the North Atlantic to the West Pacific, governments are debating more publicly than before whether they, too, must get the bomb. Germany and Poland, who have long been satisfied to sit under the US nuclear umbrella, have in the wake of Trump’s musings about taking Greenland welcomed French overtures about extending the country’s own strategic deterrent across the continent.”
April 2 – Axios (Jim VandeHei): “JPMorgan… chairman and CEO Jamie Dimon tells me the U.S. is facing the most concurrent risks in 80 years — and that’s before AI starts displacing a large number of American workers. Dimon… says American business leaders need to step up, and speak up, to help guide the country through these high-risk, tumultuous times. ‘We in business made a mistake in not getting more involved earlier,’ Dimon told me… ‘I do not think the problems of society will be fixed by politicians alone.’ Dimon's annual shareholder letter, out next week, will dive deep into geopolitical threats. ‘There’s more geopolitical risk than we’ve seen since World War II,’ he said.”
March 31 – Wall Street Journal (Editorial Board): “Meanwhile in the Asia-Pacific, Beijing keeps stepping up its campaign against Japanese Prime Minister Sanae Takaichi. Its latest move… was to impose sanctions on one of Ms. Takaichi’s close aides. The sanctions came after the aide, Keiji Furuya, visited Taiwan this month—something he’s done often over the years. Beijing views the democratic island as a breakaway province and interprets any official interaction with Taipei as a slight. This is the latest Chinese move to pressure Ms. Takaichi over her stance on Taiwan.”
Ukraine Watch:
April 1 – Financial Times (Laura Dubois, Henry Foy, Amy Mackinnon and George Parker): “Donald Trump threatened to stop supplying weapons for Ukraine in order to pressure European allies to join a ‘coalition of the willing’ to reopen the Strait of Hormuz, according to people briefed... The US president demanded Nato navies help him reopen the narrow waterway last month, but was rebuffed by European capitals which said it would be impossible while the conflict was ongoing, with several also pointing out that this was ‘not our war’. Three officials familiar with the discussions said that Trump responded by threatening to stop supplies to Purl, Nato’s weapons procurement initiative for Ukraine funded by European countries.”
U.S./Russia/China/Europe/Iran Watch:
April 2 – Financial Times (Lucy Fisher): “Emmanuel Macron… dismissed Donald Trump’s suggestion that western countries should use force to reopen the Strait of Hormuz as ‘unrealistic’, as the UK hosted talks with 41 nations about how to increase diplomatic pressure on Iran to reopen the strategic waterway. The French president said restoring shipping in the strait was only possible ‘in co-ordination with Iran’ following a ceasefire in hostilities with the US and Israel. A military operation to re-establish freedom of navigation ‘would take forever, and would expose all those who go through the strait to risks from the Revolutionary Guards but also ballistic missiles’, Macron told reporters…”
March 31 – CNBC (Holly Ellyatt and Kevin Breuninger): “President Donald Trump on Tuesday warned the U.K. and France that the U.S. ‘won’t be there to help you anymore,’ as he vented his frustration over the close allies’ refusal to join military action against Iran. Posting on Truth Social…, ‘the Country of France wouldn’t let planes headed to Israel, loaded up with military supplies, fly over French territory.’ ‘France has been VERY UNHELPFUL with respect to the ‘Butcher of Iran,’ who has been successfully eliminated! The U.S.A. will REMEMBER!!!,’ he said… In another post, the president singled out the U.K. for criticism… ‘All of those countries that can’t get jet fuel because of the Strait of Hormuz, like the United Kingdom, which refused to get involved in the decapitation of Iran, I have a suggestion for you… Number 1, buy from the U.S., we have plenty, and Number 2, build up some delayed courage, go to the Strait, and just TAKE IT… You’ll have to start learning how to fight for yourself, the U.S.A. won’t be there to help you anymore, just like you weren’t there for us. Iran has been, essentially, decimated. The hard part is done. Go get your own oil!,’ he wrote.”
March 31 – Associated Press (Jon Gambrell, Mike Corder and Darlene Superville): “President Donald Trump lashed out… at allies who have been unwilling to do more to support the U.S. war effort against Iran, telling them to ‘go get your own oil’ and saying it was not America’s job to secure the Strait of Hormuz. The president said the military could end its offensive in two to three weeks and that the U.S. ‘will not have anything to do with’ what happens next in the strait that has been closed by the Islamic Republic. Instead, he told reporters, the responsibility for keeping the vital waterway open will rest with countries that rely on it. There’s ‘no reason for us to do this,’ Trump said... ‘That’s not for us. That’ll be for France. That’ll be for whoever’s using the strait’.”
March 30 – Reuters (Vladimir Soldatkin and Dmitry Antonov): “Russia said… an oil tanker carrying 100,000 metric tons of crude oil had arrived in Cuba and that Moscow would stand by its friends by working on further supplies despite a U.S. blockade of the Communist-run island.”
April 1 – Wall Street Journal (Mike Cherney): “After a hiatus of nearly a decade, China is jump-starting its island-building campaign in the South China Sea—and turning a once-obscure reef into what could be its largest military base in the disputed waters. The construction at Antelope Reef could give Beijing another runway, more missile facilities and additional surveillance installations… And because it is relatively close to the Chinese mainland, it also offers Beijing a chance to increase civilian infrastructure, bolstering its argument that the area is part of China.”
Taiwan Watch:
April 1 – Financial Times (Eyck Freymann): “Iran did not need to sink a single tanker to shut down a fifth of the world’s oil supply. It took only a handful of missile and drone strikes to persuade insurers to pull coverage from vessels transiting the Strait of Hormuz. Within days, the vital energy chokepoint was functionally closed. So far, the market is still refusing to bear the risk — despite Washington’s efforts to backstop reinsurance coverage, which would depend on US Navy escorts. This is a replicable playbook. China is a vastly more capable actor than Iran that could use a more sophisticated version of the same economic blackmail in the Taiwan Strait. The US and its allies should start preparing accordingly.”
AI Bubble/Arms Race Watch:
March 30 – Reuters (Jamie McGeever): “No borrower will escape the surge in market-based interest rates unleashed by the Middle East war and resulting energy supply shock. But for U.S. tech firms planning to spend over $600 billion this year in the artificial intelligence arms race, spiking borrowing costs could not have come at a worse time… The expected $630 billion in capital expenditure from Big Tech this year, mostly on AI data centers, chips, and cloud computing, is worth more than 2% of GDP. The projected spend of more than $800 billion next year is closer to 3% of GDP… Big Tech historically used cash to fund expansion. And they still have lots of it: some estimates put the big five hyperscalers’ combined… holdings at over $350 billion… But they’re burning through it. At the end of last year, about 60% of hyperscalers’ operating cash flow was used to fund capex, according to Apollo Global Management. That’s now almost 70%. At this pace, almost every dollar earned may soon be earmarked for capex. Analysts at Morgan Stanley say Big Tech’s cumulative capex this year and next will be about $1.4 trillion, consuming nearly 90% of expected operating cash flow of $1.6 trillion.”
March 30 – Reuters (Rocky Swift): “Massive investments in artificial intelligence that underpinned record runs in equities face a major hurdle as the Middle East crisis clouds prospects for growth and energy costs, said Melissa Otto, head of research at S&P Global Visible Alpha. Before the Iran war broke out, tech giants Microsoft, Amazon, Alphabet and Meta planned to spend about $635 billion on data centres, chips, and other AI infrastructure in 2026… That figure was up from $383 billion the prior year and just $80 billion in 2019… ‘I think if the capex numbers get pulled back, if in fact energy prices are not reflected in earnings, that could be a catalyst,’ she added…”
April 1 – Bloomberg (Hema Parmar): “OpenAI shares have fallen out of favor on the secondary market — in some cases becoming almost impossible to unload — as investors pivot quickly to Anthropic, its biggest competitor. Even as OpenAI raced in recent months to raise tens of billions of dollars, Next Round Capital founder Ken Smythe said his secondary marketplace was seeing a drop in demand for shares of the artificial-intelligence giant. About a half-dozen institutional investors… approached his company in recent weeks looking to sell about $600 million of OpenAI shares. Last year, they would have been snatched up within days. But now, no one’s biting.”
April 1 – Bloomberg (Emily Forgash and Akshat Rathi): “In the red dirt of Abilene, Texas, more than 6,000 workers travel around on electric buggies, spending day and night constructing a massive data center that will feed the world’s growing artificial intelligence needs. When completed this year, the eight sprawling buildings — which OpenAI will use — will consume 1.2 gigawatts of power, or enough electricity for nearly 1 million American households. As the global AI race heats up, there is a huge rush to build data centers fast. There’s no lack of money chasing these projects… Yet neither ambition nor capital is enough to materialize all the necessary components for these power-hungry computers. Almost half of the US data centers planned for this year are expected to be delayed or canceled. One big reason is the shortage of electrical equipment, such as transformers, switchgear and batteries. They are needed not just for powering AI, but also for building out the grid that is seeing increased consumption from electric cars and heat pumps.”
April 1 – Axios (Amy Harder): “Spending on data centers is surging to levels that rival investments in energy, according to a new report by Norway-based Rystad Energy. The research firm’s findings underscore how the AI boom is reshaping global capital flows. The race to build AI infrastructure is turning data centers into one of the world’s largest energy investment categories — with major implications for power demand and emissions. The U.S. accounted for 42% of the installed capacity of data centers in 2025 — double that of mainland China, the second-place market, Rystad found.”
April 2 – Wall Street Journal (Will Parker): “Maine is poised to freeze large data-center construction, which would make it the first state to enact such a measure as communities across the U.S. grapple with fallout from the boom in artificial intelligence. The Maine bill calls for a ban on major new data-center construction until November 2027, so the state can assess the impact of such development on the environment and electricity grid.”
Bubble Watch:
March 31 – Financial Times (Oliver Barnes and Ivan Levingston): “A record number of megadeals were agreed in the first quarter of the year as companies shrugged off war in the Middle East and a shakeout in the software sector to propel mergers and acquisitions to $1.2tn globally. A total of 22 deals valued above $10bn were agreed in the past three months, the highest-ever quarterly figure, according to LSEG data… It cemented the third consecutive $1tn quarter for dealmaking. ‘It’s extremely busy,’ said Viktor Sapezhnikov, public company M&A chair at DLA Piper. ‘There’s no trace of the risk-off mentality that companies took following liberation day,’ he added…”
April 1 – Reuters (Charlie Conchie, Yantoultra Ngui and Echo Wang): “Companies raised the most through share sales in the first quarter since 2021, and mega-IPOs from Space X and OpenAI may raise tens of billions more in the coming months despite volatility amid the Iran war and a software stock selloff… Equity capital markets issuance jumped 40% on the year to $211 billion in the three months to March 31, according to LSEG data. Of that, IPO proceeds made up $44 billion, up 47% on the year… SpaceX is expected to raise more than $75 billion at a valuation as high as $1.75 trillion… AI companies OpenAI and Anthropic are also considering listings later this year, potentially raising tens of billions.”
April 1 – Financial Times (George Steer, George Hammond and Stephen Morris): “Elon Musk’s rocket company SpaceX has confidentially filed to go public… Confidential filings allow companies to advance their listing plans without publicly revealing their financials. SpaceX last month acquired Musk’s lossmaking AI start-up xAI for $250bn. SpaceX was seeking to raise about $75bn and was targeting a valuation of roughly $1.75tn, said people familiar with the matter. In the US, only Nvidia, Apple, Alphabet, Microsoft and Amazon have higher market capitalisations. The rocket company was valued at roughly $90bn as recently as 2022.”
April 2 – Axios (Emily Peck): “Companies simply don’t need as much office space these days. The pandemic triggered a permanent, fundamental shift in how people work. Vacancy rates hit a record high in the first three months of the year, per… Moody’s… 21% of the office space across 79 markets in the U.S., mostly cities, was vacant in the first quarter — up from 17% in 2020. Although the return-to-office trend was certainly real, plenty of people still work remotely or on hybrid schedules.”
Crypto Bubble Watch:
March 30 – New York Times (David Yaffe-Bellany): “At a crypto industry conference in Washington this month, no speaker received a warmer reception than Paul Atkins, the chairman of the Securities and Exchange Commission. Mr. Atkins was ‘so kind and generous,’ the founder of a crypto trade group declared to the packed auditorium. He had done an ‘amazing job’ working under President Trump, she added, before welcoming him to the stage to fervent applause. When he addressed the room, Mr. Atkins, 68, delivered some good news for his industry hosts. At that very moment, he told them, the S.E.C. was issuing a set of business-friendly guidance for crypto companies. ‘You should find that in your inbox,’ Mr. Atkins said.”
Inflation Watch:
March 28 – Axios (Neil Irwin): “Americans desperately want day-to-day life to be more affordable. Right now, they aren’t getting it. The pinch of high prices for food, energy, housing and more has driven seismic shifts in public opinion over the last four years. Since the onset of the Iran war, the cost of living looks likely to get worse, not better, at least in the near term. Energy prices are surging, interest rates are on the rise, and the stock market is looking wobbly — a triple whammy for U.S. households… Even before the latest energy shock, electricity prices were up 4.8% over the last year, and piped natural gas up 10.9%. Higher energy prices will also likely show up in more expensive airfares and in shipping costs that could ripple through all sorts of goods. Grocery prices are up 3.9% over the last year, and Iran's blockade is throttling the global supply of fertilizer, which could create new pressures on food prices come harvest season.”
April 1 – Bloomberg (Charles Gorrivan): “US manufacturers of soda bottles, peanut butter jars, sandwich bags and just about anything else made of plastic are getting squeezed as the Iran war chokes off supplies of key components. Several makers of monoethylene glycol and purified terephthalic acid have declared forces majeures as the Persian Gulf conflict damages oil fields, disrupts processing plants and halts most shipping through the Strait of Hormuz. In much of the world, those compounds, which fortunately go by the acronyms MEG and PTA, are made from derivatives of the oil byproduct naphtha. Without MEG and PTA, production of polyethylene terephthalate, or PET, grinds to a halt. PET is the ubiquitous, transparent, waterproof plastic used in food packaging, as well as fabrics and auto parts.”
March 30 – CNBC (Eunice Yoon): “Pickleball paddle producer Devi Wei has a message for U.S. shoppers. ‘Americans will have to pay more,’ the Chinese businessman told CNBC at a Beijing trade show… Because of the recent swings in oil prices resulting from the Iran war…, Wei… has had to hike prices on his paddles and pickleballs by as much as 20%... Wei’s goods are made with polypropylene, a plastic material derived from oil and made in the Middle East, a dominant producer in the global industry. The war in Iran has stalled shipments of oil and its products…, raising concerns among Chinese manufacturers at the trade fair about further disruption across the global supply chain. ‘I might have to go even higher,’ Wei said. ‘Maybe double if the Iran war doesn’t stop soon’.”
Federal Reserve Watch:
March 30 – CNBC (Jeff Cox): “Federal Reserve Chair Jerome Powell… at Harvard University, said… he sees inflation expectations as grounded despite rising energy prices so the central bank doesn’t need to respond with higher interest rates. As his term leading the central bank nears an end, Powell avoided questions about the longer-term direction of interest rates or inclinations his designated successor has espoused. In the near term, he said the proper move is to look beyond the short-term gyrations of the energy market and focus on the Fed’s goals of stable prices and low unemployment. ‘Inflation expectations do appear to be well anchored beyond the short term, but nonetheless, it’s something we will eventually maybe face the question of what to do here,’ he said… ‘We’re not really facing it yet, because we don’t know what the economic effects will be, but we’ll certainly be mindful of that broader context when we make that decision’.”
March 31 – Bloomberg (Catarina Saraiva): “Federal Reserve Bank of Kansas City Jeff Schmid cautioned that the US central bank should not look through the impact on inflation of a surge in energy prices stemming from the conflict in Iran. ‘This oil shock comes at a time when inflation already has been too high for too long,’ Schmid said… ‘With inflation already running hot, now is not the time to assume that the inflation from higher oil prices will be transitory.’ Schmid said the increase in oil and gas prices will likely feed through to core inflation through items like airfares and other transportation costs. He said that prices have been rising faster than the Fed’s 2% goal for five years, and said he’s concerned inflation will get stuck closer to 3%.”
April 1 – Bloomberg (Maria Eloisa Capurro): “The next bout of US inflation looks set to kick in before the Federal Reserve is quite done cleaning up after the last one. As the war in Iran sends fuel costs soaring, there’s growing anticipation of fallout at home. Consumers, bond traders and economists all now expect a price jump in the coming year. And even before energy spikes — and before President Donald Trump gets his new chair into place, with a mandate for easier money — the Fed was already seeing its inflation-fighting credentials called into question… Late last year, Cleveland Fed President Beth Hammack cited ‘market participant chatter’ questioning whether the central bank might tolerate inflation just below 3%. ‘Getting it back to 2% is critical for our credibility,’ she said.”
U.S. Economic Bubble Watch:
April 3 – CNBC (Jeff Cox): “The U.S. labor market bounced back in March, with job creation much stronger than expected… Nonfarm payrolls rose a seasonally adjusted 178,000 during the month, a reversal from the 133,000 decline in February and better than the… estimate for 59,000… February’s number was revised down by 41,000 while January was revised up by 34,000 to 160,000, putting the three-month average around 68,000. The unemployment rate edged lower to 4.3%... As has been the case, health care was responsible for much of the growth, with the sector adding 76,000 jobs… Wages also rose less than expected, with average hourly earnings up just 0.2% for the month and 3.5% from a year ago.”
April 1 – CNBC (Jeff Cox): “Private sector employment growth was a bit better than expected in March, but health care and construction continued to provide nearly all the momentum…, ADP reported… Job growth totaled 62,000 for the month… Like February’s report, two sectors essentially provided all the gains. Education and health services contributed 58,000 — identical to the February total — while construction added 30,000… ‘We’ve seen two consecutive months of pretty steady job growth, but most of it has been in health care,’ Nela Richardson, ADP’s chief economist, told CNBC. ‘That’s really the story. Health care is transforming the labor market’.”
April 2 – Reuters (Lucia Mutikani): “New applications for U.S. unemployment benefits fell last week amid low layoffs, suggesting labor market conditions remained calm in March… Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 202,000 for the week ended March 28… The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 25,000 to a seasonally adjusted 1.841 million…”
March 31 – Associated Press (Paul Wiseman): “U.S. job openings fell last month to 6.9 million and hiring was weak, more signs of sluggishness in the American labor market… Job vacancies slid from 7.2 million in January. The Job Openings and Labor Turnover Summary (JOLTS), showed that layoffs rose. Just 2.97 million people quit their jobs in February… The number of people leaving jobs last month was the fewest since August 2020. A measure of hiring also deteriorated: The JOLTS report showed 4.85 million gross hires in February, fewest since April 2020. The hiring rate — the number of hires as a percentage of employment — dropped to 3.1%, also the lowest since April 2020, at the height of the COVID-19 pandemic that shut down economic activity.”
April 2 – Wall Street Journal (Matt Grossman and Anthony DeBarros): “The U.S. trade deficit increased in February, continuing a bumpy stretch for international flows of goods amid fast-changing U.S. policy. February imports were $372.1 billion, up 4.3% from January. U.S. exports in February increased slightly less, by 4.2%, to $314.8 billion. That yielded a February trade deficit of $57.3 billion, up 4.9% from the January deficit. Analysts… were expecting a bigger deficit of $62 billion.”
April 1 – Associated Press (Anne D’Innocenzio): “Shoppers increased their spending in February… Retail sales rose a better-than-expected 0.6% in February, from a revised 0.1% decline in January… Retail analysts say it was a strong showing given that inflation has rattled American households… Yet before the Iran war began, sales at motor vehicle and auto parts dealerships rose a solid 1.2% in February. Excluding that sector, retail sales rose 0.4%. Business at clothing and accessories stores rose 2%, while sales at electronics and appliance stores were up 0.5%. Sales at online retailers rose 0.7%. And business at health and personal care stores were up 2.3%.”
April 1 – Bloomberg (Jarrell Dillard): “US manufacturing activity expanded in March by the most since 2022, while input prices continued to surge amid the war with Iran. The Institute for Supply Management’s gauge of prices paid for manufacturing inputs climbed another 7.8 points to 78.3, remaining at the highest since mid-2022. Over the past two months, the index has advanced 19.3 points, the most in nearly a decade. The Strait of Hormuz has effectively been closed… That’s fueled a surge in oil prices. Still, ISM’s measure of factory activity edged up to 52.7, boosted by firmer production growth…”
March 31 – Associated Press (Matt Ott): “U.S. consumer confidence inched higher in March… The Conference Board said… its consumer confidence index rose modestly to 91.8 in March from 91 in February. The board said that while rising costs due to tariffs and spiking oil prices… did not affect the topline confidence reading, there was increasing pessimism in other measures of the survey, including expectations of higher inflation.”
April 2 – Associated Press (Alex Veiga): “The average long-term U.S. mortgage rate climbed for the fifth straight week, reaching its highest level in nearly seven months… The benchmark 30-year fixed rate mortgage rate rose to 6.46% from 6.38% last week… One year ago, the rate averaged 6.64%.”
March 31 – Wall Street Journal (Jessica Coacci): “U.S. home-price growth slowed in January as affordability constraints continued to weigh on home buyer decisions. The S&P Cotality Case-Shiller National Home Price Index… rose 0.9% in the 12 months through January, compared with a 1.1% increase in December. ‘The National Index rose 2.2% over the first six months of the period, then fell 1.3% over the most recent six—a swing that explains why annual gains have compressed to under 1% despite prices remaining historically elevated,’ said Nicholas Godec at S&P…”
China Watch:
March 31 – Financial Times (Joe Leahy, Cheng Leng and Wenjie Ding and Thomas Hale): “The US and Israel’s war on Iran is expected to help China’s exporters gain global market share from rivals in countries hit harder by high energy prices and supply chain shocks, according to economists. Chinese factories should be able to maintain steady production thanks to the country’s large oil reserves and domestic energy supplies, they said, while the war’s disruption to oil and gas markets could spur a longer term shift to green energy that would benefit Chinese industry. ‘One could certainly see China take more market share globally as a result of the energy shock, said Fred Neumann, chief Asia economist at HSBC.”
March 30 – Associated Press (Chan Ho-Him): “China’s factory activity expanded in March, ending two months of contraction, the government said Tuesday, but analysts say prolonged impacts of the Iran war could weigh on growth. The official manufacturing purchasing managers index rose to 50.4 from 49 in February…”
March 31 – Bloomberg: “China Vanke Co. posted a record 88.6 billion yuan ($12.8bn) loss last year, a sign of the deepening problems facing the developer ahead of a wall of upcoming debt maturities. The result, which was even worse than the firm’s forecast, marks Vanke’s second full-year loss since its 1991 initial public offering. It brought the company’s combined loss in the past two fiscal years to more than 130 billion yuan.”
Central Banker Watch:
April 1 – Wall Street Journal (Martin Arnold, George Parker and Jim Pickard): “The Bank of England has warned that the economic shock from the Middle East conflict is intensifying risks to the financial system by threatening to ‘crystallise’ numerous existing vulnerabilities at the same time… The supply shock from the war in Iran… is likely to intensify faultlines in the financial system, including tensions in private credit markets, high government debt and stretched valuations, the BoE said… ‘The shock will weigh on growth, increase inflation and tighten financial conditions,’ the central bank said in the record of last week’s meeting of the Financial Policy Committee. ‘Adverse impacts on the global macroeconomy increase the likelihood that multiple vulnerabilities could crystallise at the same time, amplifying their effect on financial stability and, ultimately, the provision of vital financial services to UK households and businesses,’ it added.”
Europe Watch:
March 30 – Bloomberg (Gerry Doyle): “Exposure to energy imports is separating winners from losers in the global credit market, with Europe turning to a major pain point as the Iran war shows few signs of ending soon. Risk premiums on high-grade euro-denominated corporate bonds have climbed 13 bps, almost triple the widening seen on their US counterparts since the start of the conflict… European economies — and companies — are looking increasingly vulnerable to disruptions in the flow of oil and other energy products as the war drags on, given the region’s higher dependency on imports than the US.”
March 31 – Bloomberg (Mark Schroers): “The euro area saw its steepest jump in inflation since 2022 as the Iran war pushed energy costs sharply higher, backing expectations that the European Central Bank will have to raise interest rates. Consumer prices rose 2.5% from a year ago in March – up from 1.9% the previous month and the highest since January 2025.”
March 30 – Wall Street Journal (Ed Frankl): “German inflation jumped in March to its highest level in more than a year… Consumer prices rose 2.8% on year this month, up from a 2.0% increase in February… Energy prices were up 7.2% compared with the same month of last year, marking the first increase since December 2023…”
Japan Watch:
April 3 – Reuters (Kantaro Komiya): “Japan’s services sector grew at its weakest pace in three months in March…, as rising uncertainty over the Middle East war crushed business confidence to its lowest level since the pandemic. The S&P Global final Japan Services Purchasing Managers' Index (PMI) fell to 53.4 in March from a 21-month high of 53.8 in February…”
Emerging Market Watch:
March 30 – Bloomberg (Srinivasan Sivabalan): “The Middle East war risks ending a run of net credit-rating upgrades across emerging markets and could trigger a new downgrade cycle as it fuels inflation and tightens financial conditions, S&P Global Ratings Director Ravi Bhatia said. The warning comes as an energy shock ripples through developing economies…, raising costs for energy importers such as India, Turkey and Kenya… The shift would mark a reversal from the past three years, when many emerging markets repaired balance sheets, implemented fiscal reforms and regained market access after the pandemic triggered widespread defaults and rating cuts.”
April 2 – Bloomberg (Pratigya Vajpayee): “The Reserve Bank of India’s crackdown on speculation against the rupee has come at the cost of a broader market disruption. After the central bank imposed a $100 million cap on banks’ onshore currency bets on Friday, lenders rushed to unwind arbitrage trades — buying dollars abroad and selling them locally. That pushed speculative activity into overseas markets, which the RBI quickly shut off late Wednesday by barring banks from offering non-deliverable forwards…”
Social, Political, Environmental, Cybersecurity Instability Watch:
April 1 – Bloomberg (Brian K Sullivan): “California is heading into its dry season with just a fraction of the snow it typically has across its highest peaks at the end of its winter months, raising the prospects of drought across the most populous US state. Statewide, California has just 18% of the snow a normal winter would bring to its mountains… The hardest-hit areas are in the northern Sierra Nevada range where just 6% of the normal snow was recorded, followed by the central region with 21% and southern region with 32%. Unlike the eastern US, California and many Western states receive most of their water between October and April before the dry season begins.”
