Weekly focus – Higher hopes of Hormuz harmony

This week has been light on the data front so developments in the US-Iran war have shaped markets. The spot oil price declined from USD 115/bbl to around USD 100/bbl following reports of a US one-page memo to the Islamic Republic with suggestions on how to formally end the war while setting up a 30-day period for detailed talks. The deal would involve Iran committing to a moratorium on nuclear enrichment, US lifting sanctions and releasing frozen assets, and both sides lifting the blockage of the Strait of Hormuz (SOH). We are awaiting the Iranian response to the proposal that should come later today. The two-sides remain divided on the issue on Iran's enriched uranium stockpile and on who controls SOH, so the risk of reescalation is high. Even if there was an initial deal, the limbo would continue until there is a more permanent agreement, as talks could collapse and warfare resume anytime. It would be very positive if the SOH would at least gradually reopen but full normalisation would take months.

In terms of data releases, we have received a string of labour market data from the US pointing to broadly steady conditions, which was slightly better than expected. ADP hiring showed steady employment growth, the JOLTs job openings-to-unemployed ratio remaining at 0.95, while continuing jobless claims reached their lowest level since early 2024. Hence, job market data has been slightly better than expected ahead of the US Jobs Report which will be released later this afternoon. In other news, ISM Services delivered mixed signals, with unchanged prices, weaker new orders, and improved business activity and employment indices.

Data releases from the eurozone were light this week. The final PMIs confirmed the flash release for manufacturing while the services index was marginally higher. The Sentix sentiment index rose slightly but remains at the lowest level since April last year. And finally, retail sales for March were broadly similar to February with no clear impact of the war outside of fuel spending, where consumers spend more on fuels but bought a smaller quantity compared to February. Finally, the ECB's wage tracker continues pointing to lower wage growth in 2026 compared to 2025.

From Asia we received PMI data for April where the manufacturing PMI rose in both China, Taiwan, and South Korea, thereby signalling continued growth in the sector as they remain above 50. The global manufacturing sector thus seems to have continued growing in April despite the rise in energy prices as we also saw decent manufacturing PMIs in the eurozone and US last week.

We will not publish the Weekly Focus next week, so focus the coming two weeks is on US April CPI on 12 May, flash PMIs for US, Eurozone, and UK on Thursday 21 May, and finally Euro area negotiated wages and Japanese inflation on 22 May.

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