•Meanwhile in markets, we have the archetypical Iran war ‘weekend angst’ triggering profit taking in the Iran war peace talks relief rally. Still, bonds and equities are up for the week even though Brent crude futures have crawled back to just shy of $100 a barrel;

•President Trump managed to get Israel and Lebanon agree to a ten-day ceasefire. That’s the good news. However, regarding the US-Iran peace talks, there has been no progress in the past several days. That doesn’t mean the truce will be extended when it expires early next week – it most definitely will – but markets clearly prefer to be teased by more than just ‘peace talks are going well’ headlines. That, or unblocking Hormuz. Yes, President Trump said that a deal with Iran is “close”. Probably as close as we were to thermonuclear war and megadeaths a week before. Fundamentally, punters crave some proof that the Americans and Iranians can agree on something besides stopping the shooting and killing;

•Furthermore, if you’re no longer worried about the war coming back (I am not worried), there’s something else to lose sleep over. That’s the energy shock. Which the experts warn us will hit us with some delay. Yesterday we had headlines that Air France-KLM has cancelled about 80 flights because they’re uneconomical. The Franco-Dutch airline blamed high prices, not a shortage of kerosine. But ask yourself: why have kerosine prices basically doubled? Yes, because of shortages;

•Then there were headlines that us poor Europeans have about six weeks of kerosine left. Ominous for sure. It could become a problem for markets, but only if there’s no light at the end of the tunnel. Punters will all too merrily discount near-term disruption if they can reasonably believe things will return to normal in the not too distant future. That’s markets for you;

•Turning to some overnight market commentary, US Treasury yields are up by about a basis point or five from yesterday’s lows. S&P 500 futures are flattish while the cash market index is up three percent for the week and having set an ATH to boot. The outperformance of equities versus bonds in the peace rally is becoming glaringly obvious for even the most laziest observers of markets;

•Asian equities are down this morning, denting weekly gains a bit. Dutch natural gas futures prices are down notable for the week, shedding nearly 4% and hoovering around the lowest level since the outbreak of the war nearly two months ago. Natgas prices trending lower is one of the reasons why ECB-speakers have turned dovish, basically foreclosing on a hike later this month. As a matter of fact, overnight we had Slovenian central bank head Dolenc punting for no hikes at all because of lower energy prices;

•And speaking of the ECB, an April hike is basically fully priced out. Yes, my campaign against a hike this month has been quite successful;

•In FX space, the broad dollar is down about half a percent for the week. The greenback has erased all the war/energy spike induced gains. Currencies that benefitted the most from the declining dollar are EM currencies (surprising) and the euro;

•Looking ahead, today’s calendar is rather empty and focus will turn to the usual Iran headline watching. Next week’s calendar isn’t terribly exciting, containing mostly second-tier data. Of note are the April PMIs, which will hopefully tell us and our central bank overlords more about budding price pressures because of the war.

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