Fra Danske Bank:
The war in Iran has dominated the macroeconomic outlook and financial markets in March. The two-weeks cease fire and deal to reopen of the Strait of Hurmuz has come as a relief, as it is at least a temporary de-escalation that buys time. Iran and the US remain far apart on key issues, so a new escalation is likely. It also remains to be seen if shipments through the Strait of Hormuz start to pick up the coming days, which will be key for the oil market. Before the war, around 20 million barrels per day (20% of global supply) flowed through the strait. Rerouting and continued Iranian flows have limited losses to around 13 million barrels per day, with emergency IEA releases and sanction relief reducing the shortfall to around 6 million barrels per day. If the ceasefire is permanent and traffic normalises, we expect only a temporary economic impact that central banks will most likely “look through”. However, oil prices will probably maintain a premium due to Iran’s potential control over the strait and global refilling to higher emergency inventory levels. Given ongoing uncertainty and likely escalation risks, we still see potential for longer economic disruptions and potential tighter monetary policy.
The central banks are balancing higher energy costs against slower growth expectations , with Europe facing greater impact due to its energy import dependency. The Fed remains cautious whilst the ECB has turned more hawkish in its communication. We stress that the current macro backdrop is more balanced than 2022, requiring less aggressive tightening if any. The likelihood of ECB hiking in April and June has clearly fallen following the cease fire, but a hold at 2.00% is not a done deal yet. For the US, we expect Fed cuts by year-end. Fiscal responses have been limited (EUR 5-10 billion in the eurozone), but larger untargeted measures could increase monetary tightening needs.
US March macro data was mixed but resilient as non-farm payrolls beat expectations rising by 178k (consensus: 65k) with unemployment falling to 4.3%. However, February NFP growth was revised down to 133k, meaning average NFP growth of just 22.5k over February-March. Since the job market report generally captures the second week of March, any war impact was likely limited. On the other hand, daily job postings have declined notably since the war in Iran began, reflecting broader labour market softening in the US. In the euro area, inflation rose to 2.5% y/y in March from 1.9%, driven entirely by energy, with core inflation falling to 2.3%. Survey based forward-looking indicators were mixed with industry selling price expectations rising sharply while services remained unchanged. The war’s impact on current inflation data has thus been as expected or slightly weaker. It is early days and the outlook depends on Middle East developments. We believe the euro area economy is set to evolve somewhere between the ECB’s ‘baseline’ scenario and ‘adverse’ scenario, with HICP inflation at around 3.0% y/y (from 2.1% pre-war) in 2026 and GDP growth at around 0.75% y/y (from 1.3% pre-war).
Hurtige nyheder er stadig i beta-fasen, og fejl kan derfor forekomme.
