Predictably Adverse Market Reaction to Speedy End and Failure of Mediated U.S./Iranian Peace Talks – Currency Thoughts
Predictably Adverse Market Reaction to Speedy End and Failure of Mediated U.S./Iranian Peace Talks
April 13, 2026
(144) It took only a 21-hour single session of Peace talks for the American side, headed by VP Vance, to conclude there was no hope of success. Diplomatic talks after major wars tend to be quite extended and complicated. For example, the Treaty of Paris that formally ended the American Revolution took 17 months to be completed, and six years ensued before the formal treaty between Japan and the United States after World War 2.
Financial markets were not entirely surprised by the quick break-up of Saturday’s negotiations between Iran and the United States but nonetheless disappointed and all the more so after U.S. President Trump wasted little time before signaling his intention to impose a full blockade of the Strait of Hormuz and to slap a 50% tariff on any country helping Iran militarily including and especially China. The first threat mimics the approaches taken already against Venezuela and Cuba and would squeeze Iran both economically and militarily. The second threat comes against the backdrop of an increasingly isolated United States in this war, especially if China, Europe, and perhaps Russian, North Korea, and others were to formally unite forces against America.
The $103.7 per barrel price of West Texas Intermediate oil is 7.4% higher than at the pre-weekend close. The dollar paradoxically has been a winner, returning to its traditional safe haven appeal, but net gains have been limited to 0.3% against the yen, 0.2% relative to the euro, sterling, Australian dollar, Korean won and Australian dollar, and 0.1% vis-a-vis the Swiss franc and New Zealand dollar. Worries about rising inflation have squelched hopes of further central bank easing and pushed up long-term interest rates. Compared to Friday, 10-year sovereign debt yields are up by six basis points in New Zealand, five basis points in Australia, four basis points in the U.K., three basis points in Switzerland, and two basis points in the U.S., Germany, Japan, France, Spain and Italy. Equity markets in Pacific Rim closed down 1.2% in New Zealand, 0.9% in Hong Kong, South Korea and India and 0.7% in Japan. A 1.4% drop so far in Spain’s Ibex leads the share price declines of European markets that include 1.0% in Germany and 0.8% in France. One notable exception to this trend involves a 3.3% rally in Hungary’s stock market following the unexpectedly large electoral vote suffered by President Orban there. With 75 minutes to go before the U.S. opening bell, losses of the four main U.S. stock market issues in futures trading range from 0.7% to 1.0%. Silver and gold prices are in the red as well, showing drops of 0.9% and 2.8% now. Bitcoin is 0.2% firmer.
The IMF and World Bank spring meetings in Washington all week are bound to generate a slew of news headlines. Australian Deputy Governor Hauser said inflation is too high and serious discussion will ensue on whether and under what circumstances an interest rate hike will be implemented. Chances for further cuts have faded greatly. In a speech earlier today, Bank of Japan Governor Ueda favors a stronger yen, which could help rein in imported inflation, but his remarks on the bank’s interest rate tool were more guarded due to continuing geopolitical strains that could dampen Japanese growth.
In Hungary’s election, Prime Minister Orban, the populist and increasingly autocratic leader of that country since 2010, conceded defeat surprisingly early last evening. Peter Magyar led the opposition that captured 138 parliamentary seats to Orban’s far-right Christian Nationalist Party Fidesz, which took only 55 seats. Magyar is also conservative but less extremely so, and Hungary under him is expected to become more supportive of the EU, NATO and Ukraine in its fight against Russia.
There was also a general election in Peru yesterday that was plagued by irregularities and produced highly splintered results. Some voters were not able to get ballots and have been granted an extra day to vote. Keiko Fujimori got the most votes for president but well short of the 50% required to avoid a run-off election on June 7. Her opponent then remains to be determined.
Like many Mondays, today’s data release menu has been thin.
Turkish retail sales posted a 15.6% year-on-year advance in February, down from January’s 22-month high of 19.7%. Turkey’s current account deficit in the first two months of this year totaled $14.543 billion, 57% larger than a year earlier.
Indonesian retail sales in February rose 4.1% on month (a 7-month high) and 6.5% on year, the most in 23 months.
In China, new yuan lending of CNY 2.99 trillion in March was smaller than forecast, and on-year growth in the M2 stock of money slowed to a 3-month low of 8.5% after printing at 9.0% in the first two months of 2026.
Accelerating food costs have lifted consumer price inflation in India to an 11-month high of 3.47% as of February from a record low of 0.25% last October.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Chinese money growth, election results in Hungary and Peru, Indian CPI inflation, market reaction to failed peace talks between the U.S. and Iran
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