Markets React to Trump Blockade Threat

• Weekend talks failed to deliver an agreement, with negotiations around Iran’s nuclear program breaking down, leaving tensions elevated heading into the new week.

• In response, President Trump has threatened a full blockade of the Strait of Hormuz, targeting all shipping entering or leaving the region, a move that would significantly raise risks around global energy flows.

• In US inflation data, CPI rose 0.9% in March, in line with expectations and marking the largest monthly increase since mid-2022. Annual inflation lifted to 3.3% from 2.4%, showing a clear step higher.

• Bond markets reacted to the inflation backdrop, as well as ongoing geopolitical uncertainty, with US 10-year Treasury yields rising 4bps to 4.32%.

• Looking ahead, domestic data picks up this week with the NAB Business Survey and Westpac consumer sentiment out Tuesday, followed by the March labour force report on Thursday.