Fixed InSight
Today’s highlights:
The US–Iran conflict escalated in complexity during Eid al-Fitr, with Trump shifting his tone within hours. The US administration signaled that peace talks were underway, but Iran swiftly rejected most of Trump’s claims, leaving the actual situation still unfolding. On the monetary front, Powell, in his speech, praised Volcker’s resolve in upholding policy integrity, as reflected in his aggressive rate hikes during the 1970s.
From the bond market, FR 56, 37, 90, and 59 are currently the cheapest based on our yield curve model. Throughout Eid-al Fitr, the dollar index was closed at 99.43 (-0.1%). The 1mo IDR NDF was appreciated by 0.4% to 16,904. The 10yr UST yield rose by +16.1bps to 4.36%.
Economy: US saw diplomatic opening with Iran as oil prices fell despite troop buildup and Hormuz disruption
US President Donald Trump signaled a possible diplomatic breakthrough with Iran to end the 25-day war, saying Tehran had offered a gesture linked to energy flows through the Strait of Hormuz as negotiations continued involving senior US officials. The optimism came even as the US deployed around 2,000 troops from the 82nd Airborne Division to the Middle East, underscoring a dual-track approach of diplomacy and military pressure. Iran maintained control over the Strait of Hormuz, where tanker traffic remained severely disrupted and transit fees were reportedly imposed, reinforcing supply constraints across global energy markets. Despite the escalation, oil prices declined sharply, with West Texas Intermediate falling as much as -4.9% as markets reacted to signs of potential negotiations. The US was also reported to have proposed a 15-point framework to end the conflict, though uncertainty remained over participants and terms. The situation highlighted continued volatility, as diplomatic signals contrasted with ongoing military operations and persistent disruption to one of the world’s most critical energy chokepoints. Source: Bloomberg
Economy: Powell praised Volcker’s policy legacy and stressed central bank independence amid political pressure
Federal Reserve Chair Jerome Powell praised former Fed Chair Paul Volcker’s policy legacy, highlighting his decisive rate hikes during the 1970s inflation period that ultimately triggered a recession but restored price stability. In remarks delivered at a public administration conference, Powell emphasized Volcker’s commitment to central bank independence and integrity, noting that resisting short-term political pressure was essential to achieving long-term economic stability. The comments came amid renewed criticism from US President Donald Trump, who has pressured the Fed to cut interest rates more aggressively, as well as a Department of Justice investigation related to renovation costs at the Fed’s headquarters. Powell said he planned to remain at the central bank after his term as chair ends in May until the investigation is resolved. The remarks underscored Powell’s effort to reinforce the importance of independent monetary policy in maintaining credibility and controlling inflation despite political and institutional challenges. Source: Bloomberg
