WS #6271

The dominant theme in this window is the confirmation of a major oil supply shock and its macroeconomic consequences. Oil surged above $126/barrel after Trump warned the US blockade of Iranian ports could last months, with the Strait of Hormuz crisis now a global price shock. This is corroborated by multiple sources including a Bloomberg report on oil spiking to highest since 2022 and a GDELT article on US gasoline prices jumping to highest since 2022. The UAE's exit from OPEC is now being analyzed by JP Morgan as potentially attracting more US investment post-crisis, but the immediate impact is a supply-side shock. Central banks are responding: the ECB held rates at 2% but signaled a possible June hike due to energy-driven inflation; the Bank of England held at 3.75% with an 8-1 vote, warning of prolonged inflation from the Iran war; the Fed's preferred PCE inflation gauge surged to 3.5% year-over-year, the highest since May 2023, driven by gasoline prices. US Q1 GDP came in at 2.0% annualized, below the 2.2% estimate, with consumer spending slowing. US natural gas storage missed expectations at +79 Bcf vs +83 Bcf estimate. On the geopolitical front, Iran threatened long-range strikes if US resumes bombing, and Iran's parliament speaker vowed a Strait of Hormuz 'without any American presence'. The Israel-Gaza flotilla interception near Crete adds another layer of Middle East tension. In tech earnings, Alphabet surged 7%+ on 63% Google Cloud revenue growth, while Meta dropped 9%+ after raising capex guidance to $125-145B, raising AI spending ROI concerns. Microsoft shares fell 2.7% despite beating estimates, as Azure growth was in line but capex concerns persist. NVDA dropped 4% amid broader tech weakness. The US jobless claims sank to a 57-year low, indicating a tight labor market. The Louisiana House primaries postponement after the Supreme Court Voting Rights Act ruling is a political development but not directly market-moving. Overall, the oil shock and central bank responses are the highest-significance signals, with the UAE OPEC exit and Iran blockade escalation being the key drivers.