KEY EVENTS
Glimpses of light, perhaps only apparent, and shadows, decidedly concrete, over the Strait of Hormuz: this is the summary of the geopolitical situation in the most sensitive location on the planet.
Military operations today appear to be moving along an atypical ceasefire — not formalised in the negotiations between the United States and Iran, yet effectively observed on the ground. Its durability remains uncertain. In the absence of new developments, this fragile equilibrium could persist, were it not for the fact that roughly 20% of the world’s oil supply transits through that passage.
In other words, the market has already reacted: crude oil prices rose sharply in the early stages of the conflict, while supply-side pressures are beginning to emerge as a concrete risk to economic activity.
This is a stalemate that is, by its very nature, bound to break — though the consequences that will precede its resolution have yet to be determined.
The war in the Middle East is also producing effects at the political level. Relations between the United States and Europe remain marked by a certain coolness, while China is gradually re-inserting itself into the scenario, particularly following Washington’s decision to impose a naval blockade in the Strait.
Eastern Europe, too, has emerged as a key player in the geopolitical landscape: the outcome of the elections in Hungary and Bulgaria remains difficult to interpret, while it appears increasingly clear that the conflict in Ukraine is set to continue, persisting as a source of structural instability for the continent.
“After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined.”J. J. Powell clarifies his future at the Fed at the press conference following the April 29, 2026 meeting
Most of the macroeconomic data published so far does not yet reflect the effects of the Middle East war on commodities and, consequently, on inflation and consumer behaviour.
However, economists’ and analysts’ forecasts tend to rapidly incorporate adverse scenarios, reducing the risk of negative surprises in the short term. In this context, it will be above all the trajectory of oil prices that shapes sentiment in financial markets.
On the central bank front, significant developments are emerging. Within the Federal Reserve, doubts over the succession of Jerome Powell have been resolved: Congress has confirmed the appointment of Kevin Warsh to lead the institution.
During his hearings, he signalled his intention to revisit the main reference frameworks used to guide monetary policy, in particular forward guidance. The final meeting chaired by Powell, at the end of the month, also highlighted a complex environment: diverging views persist within the Board, signalling a decision-making phase that is anything but straightforward. The European Central Bank also met on the last day of the month: as expected, it made no changes to the cost of borrowing.
Of greater interest are the forward guidance signals: risks to both growth and inflation remain asymmetric, with greater attention directed towards the latter.
An interpretation that implies a higher probability of a rate move as early as the June meeting.
PROSPECTS
At this stage, rather than a clearly defined picture, what is taking shape is a trajectory conditioned by exogenous variables, with central banks anchored to an explicitly data-dependent approach.
On the geopolitical front, the situation in the Strait of Hormuz remains the principal source of uncertainty: the de facto ceasefire observed on the ground appears fragile, and the risk of a renewed escalation of tensions continues to represent a critical factor for energy markets. In this context, the price of oil confirms itself as the key variable, with direct implications for both inflation and growth.
On the monetary front, the handover at the helm of the Federal Reserve introduces a further layer of complexity, at a time already characterized by diverging views within the Board and by a growing difficulty in charting a clear path for monetary policy. In parallel, the earnings season for the first quarter is not giving rise to particular concerns: on the contrary, positive surprises have not been lacking, reflecting a resilience in corporate earnings that contributes, at least in the short term, to supporting sentiment in financial markets.
In the background, the intention of Presidents Xi Jinping and Donald Trump to meet also remains on the table: an appointment initially scheduled for April and subsequently postponed to May.
The meeting outcome could represent a further point of reference for the global geopolitical balance.