• Meanwhile in markets, we have the familiar mantra of bonds and equities down and oil up after President Trump’s delivered the archetypical nothingburger primetime address to the nation. That speech was just Trump’s Truth Social on repeat. With yesterday’s relief rally gains fully erased, markets are clearly quite skeptical about Trump’s claim that the war could end soon – two to three weeks he mentioned;

• Trump also said that the core strategic objectives are nearing completion, which is an odd thing to say when at the same time you threaten to ramp up strikes on Iran in the near future. Furthermore, if you had expected a genius plan for reopening the Strait of Hormuz (I hope you didn’t) you will be mightily disappointed. The President suggested traffic would somehow magically return to normal once the war is over (whenever that may be). He also acknowledged ongoing diplomatic efforts to end the war. But again, without adding anything new;

• The glass is not entirely empty though. With thousands of additional US troops deployed to the region, Trump could have prepared the American public for a ground war. He didn’t. Furthermore, before the speech there were rumors/worries that Trump would announce the US exiting NATO, or at least some kind of ‘empty chair’ policy if the legal hurdles for a pullout proved to be insurmountable. However, beyond the usual complaints of allies not stepping up, there was nothing suggesting the US will exit NATO. So, us Europeans can breathe that collective sigh of relief;

• If you take a few steps back from the rhetoric and the headlines, it becomes perfectly clear that Trump realizes that he’s in deep trouble – five weeks in and already in a quagmire. I think he will follow his self-preservation instincts and call it a day, not escalate further. That’s cutting your losses. Doubling down would be gambler’s ruin;

• Turning to some market commentary, US Treasury yields, which fell to a two-week low on pace optimism, are up roughly 10bps across the curve. However, much of the increases in yields happened before the speech as punters started to hedge their bets. S&P 500 futures have roundtripped and are back at around Tuesday’s close;

• Crude oil prices are higher, but it could have been much worse. Brent crude futures are just shy of $108 a barrel, up $10 from yesterday’s low but still comfortable below Tuesday’s peak of nearly $120 a barrel (which we believe is the White House’s line in the sand). Dutch natural gas futures have started to trend lower. Yesterday we even closed at a two-week low. However, urea futures (key ingredient for fertilizers) continue to rise, with no let up in the rally that now has more than doubled prices;

• Asian equities are lower this morning, though we’ve seen worse. The Nikkei is down 2.4% while Chinese markets are around half a percent in the red. In FX, the dollar has recouped yesterday’s losses. In the greater scheme of things, the war-induced rally in the greenback has been quite modest, with the rally now basically having stalled;

• ESTR rate hike pricing for the April ECB is exactly where President Lagarde & Co want it to be: at around 50/50 odds of a hike. Thus giving our central bank overlords the full optionality that they so desperately crave;

• And speaking of the ECB, doves will feel vindicated by inflation swap pricing when they make their case for a hold this month. The 1y1y forward inflation-linked swap rate has plateaued at a not so elevated 2.2 percent, a far cry from the readings of more than three percent during the 2021-2022 inflation scare;

• Looking ahead, today’s calendar is empty, and the focus will be thus on the usual Iran headline watching and US labor market data tomorrow. On Good Friday, when much of Europe is off of course.

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