The U.S., Israel and Iran agree that a ceasefire is now in effect, but they're contradicting each other and themselves in terms of what's actually been agreed to and what happens now.

Why it matters: Those differences will have to be reconciled at the negotiating table, beginning on Friday in Islamabad. One thing everyone agrees on is that there is no guarantee this war is actually over.

Breaking it down: President Trump's key condition for a ceasefire was the reopening of the Strait of Hormuz, but we still don't know just how "open" it will be or whether Iran will charge ships to pass through. (Axios – Continue Reading)

This week’s US data should help policymakers better assess the emerging global energy shock and its implications for inflation expectations.

On Thursday, the Bureau of Labor Statistics will release March consumer price data. Analysts expect headline CPI to rise 3.3% y/y, accelerating from 2.4% previously. On a monthly basis, CPI is seen increasing 0.9%, up from 0.3% in February.

Core CPI, which excludes food and energy, is forecast to edge up to 2.6% y/y from 2.5%, while the m/m pace is expected to hold at 0.2%.

Citi economist Veronica Clark said headline inflation likely picked up further in April on the back of stronger energy prices, but emphasised that markets will remain focused on underlying core dynamics.

“Core goods prices could be firmer in March compared with recent months, with a 0.27% increase in our forecast. However, this largely reflects a 1.8% rise in used car prices, which have lagged wholesale trends and should begin to catch up. Other goods categories should remain relatively subdued.” (LiveSquawk – Continue Reading)

Traders are entertaining the possibility of an interest rate cut by the end of the year now that the U.S. and Iran have agreed to a ceasefire.

Odds for a reduction jumped Wednesday morning, hitting about 43%, according to the CME Group’s FedWatch tool, which uses 30-day fed funds futures contracts to compute market expectations for moves by the Federal Reserve.

Market pricing is implying a 3.5% rate in December for the overnight borrowing benchmark, compared with the current effective level of 3.64%.

Before the announcement, market-implied odds for a cut were just 14%. (CNBC – Continue Reading)

Federal Reserve officials at their March meeting still expected to lower interest rates this year, even with a high level of uncertainty from the Iran war and tariffs, according to minutes released Wednesday.

Most of the participants said the war could result in the need for easier monetary policy if rising gas prices hit the labour market and consumer wallets.

Policymakers said they would need to remain “nimble” as they weighed the impact the war had on inflation, which continued to hold above the Fed’s target, and hiring, which has been mostly flat over the past year.

“Many participants judged that, in time, it would likely become appropriate to lower the target range for the federal funds rate if inflation were to decline in line with their expectations,” the minutes said. (CNBC – Continue Reading)