• Meanwhile in markets, what a difference a day makes. Equities and bonds have essentially reversed yesterday’s rally – with crude oil’s moves more muted – after President Trump clarified that the two- to three-week Iran timeline doesn’t signal a US wind-down;

• Don’t get me wrong, Brent crude is up $8 to $108 a barrel, but that’s still well below Tuesday’s near-$120 peak – a level that looks to be Trump’s kryptonite. European natural gas prices are also only up €1 to €48/MWh, though staying within touching distance of the lowest level since the second week of the war;

• Shifting to bonds, US Treasury yields are up 5bps across the curve – hitting their highest level since Monday. In our neck of the woods, Bund yields are up 3bps across the curve – fully erasing yesterday’s declines. Periphery-Bund spreads are up today, but still below last week’s highs. Lo spread (Italy vs Germany) stands at 88bps – with a high of 95bps – while the Bono-Bund sits a hair below 50bps – with a high of 54bps;

• Moving to FX, the US dollar is sending mixed signals. It’s up over half a percent against major currencies, though still half a percent below Tuesday’s ‘special military excursion’ highs – when Brent neared $120 amid reports of a potential US ground offensive in Iran. Against emerging markets, the greenback is down slightly today and still a percent off its SME highs;

• If you chased yesterday’s rally and panic-bought equities, you may want to skip ahead to the next paragraph. The Stoxx 50 is down more than a percent and a half today, but it’s not all negative – we’re still trading above this week’s lows. Ditto for its US counterpart, with S&P 500 futures down one percent today;

• In our neck of the woods, Swiss CPI data for March came in below expectations with headline inflation coming in at 0.3 percent. That may not seem like a lot, but that is the hottest print in the past year fueled by … fuel prices. We expect further energy inflation to build up with a lag in the coming months. Core inflation remained steady at 0.4 percent, as energy-driven inflation is yet to push up other prices;

• But it may not be long before core inflation feels the impact of energy-driven pressures. Yesterday’s Swiss PMI survey shows firms already feel the pinch. Manufacturing firms reported their highest purchase price reading since 2023, while service firms saw the same highs on selling prices. Notably, the manufacturing headline reading was positive for the first time since 2022, but it doesn’t signal a sustainable revival. Momentum largely came from price pressures and a backlog of orders – a result of supply chain disruptions caused by the war in the Middle East;

• Shifting to what the relatively soft inflation and underlying PMI data mean for the Swiss National Bank, we still expect it to remain on hold through 2026. However, that relies on the expectation that the Iran war will ease by the summer. The market is less convinced: SARON forwards fully price in a hike by year-end, with 20bps already expected at the September meeting;

• Looking ahead, the calendar is light today, with all eyes on tomorrow’s US labor market report. It is the one-year anniversary of Liberation Day today – the day President Trump unveiled the country-specific tariffs to the world. The White House appears ready to mark the occasion in style: overnight reports suggest plans to hit certain medicines with 100 percent tariffs.

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