The ongoing blockade in the Strait of Hormuz and the increasingly fragile truce between the main Gulf protagonists are expected to remain the key drivers of US inflation in April, according to analysts.

Annual headline CPI is forecast to have accelerated to 3.7% in April from 3.4% previously. On a monthly basis, however, price growth is expected to have slowed by three tenths to 0.6%.

Core CPI, which excludes food and energy, is projected to have risen 2.7% y/y, a tenth above the prior month’s reading.

Economists expect the April CPI to continue to reflect the effects of the Iran conflict. Inflationary pressures stemming from higher energy prices are anticipated to at least temporarily lift PCE price inflation, with analysts warning that spillover effects into core inflation are likely over time. Higher food prices are also expected to contribute to upside pressure on the headline reading. (LiveSquawk – Continue Reading)

A further deterioration in German investor sentiment is forecast for May, although other timely gauges point to a more nuanced outlook.

An analysts’ poll predicted that the forward-looking economic sentiment reading from a survey conducted by Germany’s ZEW economic institute will soften to -19.5 from -17.4 in April.

The institute’s current conditions indicator is expected to decline to -78.0 from -73.7.

The reading for the Eurozone is set to fall to -20.0, although this would still represent a marginal improvement on last month’s print.

Nomura said investor sentiment, according to the ZEW survey, was likely to be mixed. “The Sentix survey, published on Monday, 4 May, reported a deterioration in both the current conditions and expectations components. However, since then, the US has been in de-escalation mode, and equities have rallied.” (LiveSquawk – Continue Reading)

A devastating set of local elections has left Sir Keir Starmer’s premiership on the brink. Calls for the Prime Minister to exit stage left are growing and have now surpassed the usual hard-left Corbynite suspects.

Furious backbenchers have vented that Sir Keir is simply too toxic on the doorstep to make a comeback and that the game is up. Downing Street this evening scrambled to rally the Cabinet to the Prime Minister’s defence. While, through gritted teeth no doubt, some have taken to backing him, there remains either a very noticeable silence or non-committal statement from a handful. They include: Wes Streeting, Lisa Nandy, Yvette Cooper and Shabana Mahmood. (The Spectator – Continue Reading)

Two court rulings in the past two weeks have hit the chances that Democrats flip control of the House in November, according to traders on prediction markets platform Kalshi.

Odds that the party wins control of the lower chamber have fallen to 75% from 85.3% on April 28.

On April 29, the Supreme Court ruled in Louisiana v. Callais that a majority-Black congressional district in Louisiana was invalid, limiting how much race can be considered when drawing congressional maps and weakening part of the Voting Rights Act. (CNBC – Continue Reading)

To investors,

The last two years have been filled with prediction after prediction of the next financial recession. Whether it was tariffs, potential inflation, or geopolitical conflicts, everyone kept promising financial pain was right around the corner.

Recession odds just hit a new all-time low on prediction markets though. Kalshi is now showing only a 17% chance of an economic contraction, which is down substantially from the nearly 40% odds back in March of this year. (The Pomp Letter – Continue Reading)