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Briefing.com Summary:
*Key talks between U.S. and Iranian officials will take place in Pakistan this weekend.
*Oil prices are little changed this morning, but traffic through the Strait of Hormuz is reportedly still largely at a standstill.
*March CPI was elevated due to energy prices, but core CPI was better than feared.
U.S. and Iranian officials are meeting in Pakistan tomorrow to discuss their positions and hopefully work toward an agreement that turns the temporary ceasefire agreement into a permanent one. The market has its reservations about such an outcome, but the trading action so far this week has been grounded in hope that the worst of the conflict has passed.
The main source of anxiety is what lingering effects this war will have on the global economy. That determination will revolve around when safe passage through the Strait of Hormuz is restored. Reports indicate that traffic is still largely at a standstill, notwithstanding President Trump predicating his concession to delay bombing Iran's infrastructure on Iran facilitating safe and free passage through the strait.
Today, he warned in a Truth Social post that Iran "better stop" charging tolls and added that it is doing a very poor job of allowing oil to go through the Strait of Hormuz.
So, yeah, there is that, but oil prices have settled down after some overnight jitters. WTI crude futures are down 0.5% to $97.43/bbl, and Brent crude futures are down 0.6% to $95.39/bbl.
That disposition has quieted things for a market that was also anxious ahead of the 8:30 a.m. ET release of the March CPI report, which is open for spin by the bulls and the bears.
Total CPI was up 0.9% month-over-month in March (Briefing.com consensus: 0.7%) following a 0.3% increase in February. Core CPI, which excludes food and energy, was up 0.2% month-over-month (Briefing.com consensus: 0.3%) following a 0.2% increase in February.
With these changes, total CPI was up 3.3% year-over-year, versus 2.4% in February, and core CPI was up 2.6% year-over-year, versus 2.5% in February.
The key takeaway from the report is that headline inflation was driven by the index for energy, which rose 10.9% in March, and although core inflation was seemingly subdued in March, the concern is that the energy price shock will bleed through more to core inflation in April.
Treasury yields saw some knee-jerk action in the wake of the report, falling initially before bouncing back to pre-report levels. The 2-yr note yield is down one basis point to 3.78%, and the 10-yr note yield is up one basis point to 4.30%.
The equity futures market, subdued ahead of the report, took a liking to the better-than-feared core inflation headline, but overall, there wasn't a lot of movement. Traders recognize that the story of the Iran war has not been fully written, so they, in turn, are not fully committed.
Currently, the S&P 500 futures are up nine points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 60 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are down eight points and are trading in line with fair value.
It will be a slow start, then, for the market, but like the talks in Pakistan this weekend, it's not how things start but how they finish that matters most.
