Key Central Bank Decisions, Many Data Releases, Suspected Japanese Intervention, and A Possible Resumption of U.S. Military Attacks on Iran Vie for Investor Attention
April 30, 2026
Frustrated with the continuing effective shutdown of the Strait of Hormuz, President Trump is reportedly soliciting advice on the options for resuming military strikes against Iran, which he had hoped to avoid. The price of WTI oil briefly poked above $110.0 per barrel overnight but is quoted currently at $104.44, down 2.3% on balance.
With Japan shut yesterday for Showa Day, the yen had been as weak as 160.7 overnight but abruptly strengthened to 155.6. This very sharp move of 3.3% in a very brief span of time resembles periods of intervention (i.e., direct dollar sales by officials) especially since the 160 per dollar level has been a level previously identified as a red line that could provoke a response. The dollar is also down 0.8% against the Swiss franc, marginally firmer against the euro and sterling, steady versus the loonie, and showing 0.6-0.7% advances against the kiwi and Australian currencies.
Whereas the Japanese 10-year JGB yield climbed five basis points today, the ten-year U.S. Treasury yield is four basis points lower, and major European 10-year sovereign debt yields fell overnight by 6-9 basis points. Precious metal prices have strengthened. So did the price of crypto. In stock market action, Japan’s Nikkei closed down 1.1%, and share prices also fell at least 1% in Hong Kong, Taiwan, South Korea, India, and Indonesia.
U.S. real GDP growth gained momentum last quarter, led by investment in AI and defense spending but mitigated by a 1.3 percentage point drag from net foreign demand. There were also negative growth contributions from residential construction, and the smallest growth in personal consumption since a year earlier. The overall 2.0% GDP growth rate in the first quarter was only slightly below analyst expectations and four times fast than experienced in the final quarter of 2025. The PCE price deflator leaped sharply.
In a huge surprise, last week’s number of new jobless insurance claims shrank to 187K, its smallest figure since the first year of the Nixon presidency over 55 years ago. The labor market impetus for the Fed to cut its interest rate is shrinking with each fresh data release. The first quarter employment cost index accelerated to a 3-quarter high of 0.9% and was 3.4% above its year-earlier level.
A 3.5% year-on-year rise U.S. PCE price deflator was the highest reading since May 2023 and associated with a 3.2% advance when excluding food and energy. That represents the highest reading since November 2023 and more than a percentage point above the Fed’s inflation goal of 2.0%.
On the central banking front, both the ECB and Bank of England interest rates were left unchanged as had been expected. The ECB deposit rates has been at 2.0% since a 25-basis point cut last June, while the Bank of England’s last rate change (also of 25 basis points) was done in December to 3.75%. The Bank of England’s decision had just one dissenter, although the preference for a 25-bp reduction came from the bank’s chief economist, Huw Pill. Language in the ECB and BOE statements were similar:
ECB: The war in the Middle East has led to a sharp increase in energy prices, pushing up inflation and weighing on economic sentiment. The implications of the war for medium-term inflation and economic activity will depend on the intensity and duration of the energy price shock and the scale of its indirect and second-round effects. The longer the war continues and the longer energy prices remain high, the stronger is the likely impact on broader inflation and the economy. The Governing Council will closely monitor the situation and follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. The Governing Council is not pre-committing to a particular rate path.
BOE: The conflict in the Middle East means that prospects for global energy prices are highly uncertain. Monetary policy cannot influence energy prices but will be set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably. The policy stance required to achieve this will depend on the scale and duration of the shock, and how it propagates through the economy. There is a risk of material second-round effects in price and wage-setting, which policy would need to lean against.
One economy where there has been an interest rate change involves the Brazilian Selic rate, which was sliced yesterday by 25 basis points to 14.5%. An initial easing of 25 bps had also been done in March, prior to which the Central Bank of Brazil‘s rate had stayed at 15.0% since last June. Considering that CPI inflation is at 4.14%, Brazil’s monetary stance remains very caution in light of uncertainty related to the war in Iran and U.S. tariff policy.
The preliminary first-quarter GDP and April consumer price releases from Euroland arrived today. GDP growth underperformed expectations with a rise of only 0.1% that represents a 3-quarter low, and the year-on-year 0.8% advance of GDP was the slowest since the second quarter of 2024 and down from 1.6% in the first half of 2025. Consumer prices in the euro area jumped 1.0% overall in April and by 0.9% excluding food and energy. A 12-month 3.0% increase in Euroland’s CPI was the most in 31 months and 0.4 percentage points above March’s pace. But core CPI slid 0.1 percentage point to a 3-month low of 2.2%. Energy price inflation punched in at 10.9%, a 38-month high, but food price inflation of 2.5% was at only a 2-month high. Service sector price inflation slid to 3.0% from 3.2% in March and 4.0% in April of 2025.
A 29.3% year-on-year plunge in housing starts in March was the largest such drop in ten months, and a slide of 14.4% in construction orders was the biggest decline in 8 months. Japanese retail sales and industrial production during March were 1.7% and 2.3% greater than in the year-earlier month. Finally, consumer sentiment in Japan deteriorated to a 12-month low in April from a 23-month high recorded just two months earlier.
The Chinese government-compiled April purchasing manager surveys registered 2-month lows in the composite and manufacturing indices of 50.1 and 50.3 and a 3-month low of 49.4 in non-manufacturing. The S&P Global manufacturing PMI for China printed at 52.2, best since the pandemic.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank of England, Central Bank of Brazil, Euroland CPI and GDP, European Central Bank, Japanese retail sales and industrial producftion
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