Investors Decide that Breakdown in Talks and Indefinite Extension of Ceasefire and Strait’s Continuing Shutdown Are Not the Worst Outcome – Currency Thoughts
Investors Decide that Breakdown in Talks and Indefinite Extension of Ceasefire and Strait’s Continuing Shutdown Are Not the Worst Outcome
April 22, 2026
No progress has been made in breaking the U.S./Iranian impasse. Talks did not resume in Pakistan, and no timetable for when formal talks might be held has been disclosed. Each side is successfully maintaining a blockade, and the resulting shortfall in global oil supply continues to mount. A 1% overnight rise in the price of West Texas Intermediate oil lifted such back above the $90 threshold. A separate ceasefire in Lebanon is said to be mostly holding, and there’s a rumor that talks in that conflict may be held later this week in Lebanon.
In a case of no news being good news, stock markets are handling the fresh status quo better than one might expect. An hour prior to the U.S. open finds the futures prices of the four key market barometers with advances ranging from 0.75% to 1.1%. Equities closed close to 0.5% higher today in Japan, China, Taiwan, and South Korea but down 1.2% in Hong Kong and Australia. European stock exchanges are narrowly mixed.
Net changes in the dollar since markets closed yesterday have been minimal, too. By comparison, prices of silver (+2.0%), gold (+1.0%) are doing better, and that of Bitcoin has advanced some 4% and earlier touched an 11-week high of $78,500.
Politically and militarily, having mutual shipping blockades is less risky than the path of escalating open conflict, but this game of chicken doesn’t provide an off-ramp for inflationary pressure and downward pressure on global growth. Ten-year sovereign debt yields fell overnight by two basis points in the United States, Britain, France, Italy and Spain and by a single basis point in Germany and Switzerland. Japan’s JGB yield held steady, while Australia’s 10-year yield climbed five basis points.
Monetary policy reviews in Indonesia and Turkey ended with announced decisions today to leave key interest rates unchanged, which aligned with the consensus of forecasters.
- Bank Indonesia‘s BI-rate was kept at 4.75%, matching the six previous decisions. Six 25-basis point cuts between September 2024 and September 2025 had followed a span of seven months at the cyclical high of 6.25%. According to a released statement, “going forward, Bank Indonesia is ready to take further strengthening of monetary policy as needed to maintain the stability of the Rupiah exchange rate and keep inflation in 2026 and 2027 within the target of 2.5±1%.”
- Turkey is a prime example illustrating why central bank independent control over interest rates is so important, not only for preserving the credibility of inflation targeting but also to avoid very wide swings in policy. Between mid-2019 and March 2024, the Central Bank of Turkey‘s policy interest rate fell from 24% to 8.25%, then rose to 17%, then fell back to 8.5%, only to be later jacked up as high as 50% where it stayed for much of 2024. Even last year amid a new effort to lessen restraint was not without a doesey do (up 350 basis points in April followed by a cut of 300 bps three months later). There has been only one interest rate change in 2026, a 100 basis point cut to 37% at the year’s first scheduled review in January. Officials claim now to be committed to a tight stance “until price stability is achieved. “CPI inflation in March had slipped marginally to 30.9%, but today’s statement predicts it will be higher in April. “In case of a significant and persistent deterioration in the inflation outlook, which can also be driven by the recent developments, monetary policy stance will be tightened.” The eventual inflation target of 5% remains very distant.
Price data reported today around the world featured
- South Korean producer price inflation, which jumped to a 37-month high in March of 4.1% from 2.5% in March and 0.3% last May.
- During March in the U.K., consumer price inflation rose 0.3 percentage points to a 3-month high of 3.3%. Producer-output price inflation jumped to 2.6% from 1.8%, and producer input price inflation soared to a 3-year high of 5.4% from 0.7% in February.
- Icelandic PPI inflation of 8.6% last month was at a 13-month high versus 5.5% in the prior month and -1.5% last June.
- South African consumer price inflation ticked only 0.1 percentage point higher in March to 3.1%, remaining near the March 2025 low of 2.7%.
- From a six-year low in January of 10.9%, CPI inflation in war-torn Lebanon had by March climbed to a 15-month high of 17.3%.
Many economies also reported on the state of consumer confidence, which understandably has been shaken by the Middle East war. Belgian consumer sentiment in April was its weakest in a year. For the Netherlands, the April reading dropped 14 index points to a 38-month low of -44. Consumer sentiment in Denmark dropped to a 5-month low, but Turkish consumer confidence edged slightly higher to a 2-month high.
At 3.0% percent of GDP, Euroland’s budget deficit in the final quarter of last year was similar to the 2.9% ratio for 2025 as a whole. The debt/GDP ratio of 87.8% was down from 88.4% in the third quarter but above 87.0% in the final quarter of 2024.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank Indonesia, British CPI and PPI, Central Bank of Turkey
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