Executive Summary
As mentioned in the last quarterly report, Q2 was expected to be shaped by the durability
of the energy shock, the speed of inflation pass-through, and the risk that slower activity
begins to resemble stagflation rather than a clean slowdown. April largely confirmed that
view. The month was defined by firmer inflation, delayed rate-cut expectations, and a
market that became increasingly selective rather than broadly risk-on.
U.S. growth did not collapse. The advance estimate showed the economy expanding at a
2.0% annualized pace in Q1 2026, a meaningful rebound from the 0.5% pace recorded in
Q4 2025. At the same time, the inflation picture worsened during April: March CPI rose
0.9% month-on-month and 3.3% year-on-year, while March PCE inflation accelerated to
3.5% year-on-year. That combination kept the Federal Reserve on hold at 3.50%–3.75% at
its late-April meeting.
The Iran war remained relevant primarily through its effect on energy, shipping, and
inflation expectations. Oil stayed elevated through much of the month and repeatedly
moved higher when diplomacy stalled or Hormuz security deteriorated. That, in turn,
reinforced stagflation fears, supported the dollar at key moments, and reduced market
confidence in near-term Fed easing.
In summary, April 2026 was defined by three intersecting forces: inflation re-acceleration,
persistent geopolitical risk through the energy channel, and a growing realization that
policy may stay restrictive for longer than markets previously expected.
Macroeconomic Overview
Global Signals
Following the last quarterly report, the global concern for Q2 was not simply slower growth,
but slower growth combined with higher prices. April data reinforced that concern. Surveys
showed that factories across major regions faced rising input costs and delivery delays tied
to the Iran-war-related energy and shipping shock. In several economies, manufacturing
held up or even improved because firms accelerated orders and stockpiled inputs ahead of
potential shortages, but that strength came with a clear inflation cost.
The market interpretation remains broadly the same: global growth is still intact, but it is
becoming more distorted. Headline activity in some manufacturing segments looks better
on the surface, yet much of that improvement is being driven by precautionary buying,
supply-chain fears, and cost pass-through rather than clean end-demand strength.
Regional Focus
United States
Labor market & confidence:
March U.S. payrolls increased by 178,000, and the unemployment rate held at 4.3%, which
suggests the labor market is cooling but not breaking. That is a healthier picture than the
deep recessionary tone markets briefly feared earlier in the year, but it is not strong enough
to fully offset the drag from higher energy and financing costs.
Inflation & Fed policy:
Inflation clearly re-accelerated in the data released during April. March CPI rose 0.9%
month-on-month and 3.3% year-on-year, with gasoline up 21.2% in the month and energy
up 10.9%. March PCE inflation then rose 3.5% year-on-year, the biggest annual increase
since May 2023, while core PCE increased 0.3% month-on-month. Against that backdrop,
the Fed left rates unchanged at 3.50%–3.75% on April 29 and reiterated that future
decisions would depend on incoming data and the balance of risks.
U.S. macro summary: Growth is still positive, labor is softening but not collapsing, and
inflation has become more problematic again. The April macro message was not
“recession now,” but rather “higher-for-longer policy risk” in an economy still trying to
absorb an external energy shock.
Europe & UK
April was more difficult for Europe. The euro zone composite PMI fell to 48.6 from 50.7,
slipping back into contraction territory as service demand weakened and input costs
jumped. At the same time, euro area manufacturing held firmer than expected, helped by
raw-material stockpiling and fears of supply disruption. In other words, Europe saw the
same pattern we highlighted in the last quarterly report: fragile demand but inflationary
pressure rising again through the energy and supply chain channels.
Asia & Emerging Markets
Asia and emerging markets remained mixed but generally more resilient on the
manufacturing side. China’s official manufacturing PMI stayed in expansion at 50.3 in April,
with export orders rising to their strongest level since April 2024 as overseas buyers brought
orders forward. Japan’s flash manufacturing PMI climbed to 54.9, its strongest reading in
four years, though services slowed and price pressures intensified. India’s manufacturing
sector also remained in expansion, but input costs surged as fuel and logistics costs rose.
Fundamental Movers
• Inflation Re-Acceleration vs. Earlier Cooling Hopes: March CPI and PCE both
surprised to the upside on the annual trend, largely because the energy shock fed
into headline inflation much faster than markets had hoped. Core inflation stayed
more contained than headline measures, but it was not soft enough to restore
confidence in near-term Fed cuts.
• Resilient Growth, No Recession Yet: Q1 U.S. GDP grew at a 2.0% annualized pace.
That matters because it means the economy entered April with more momentum
than the market narrative implied, even as risks to Q2 remained tilted lower.
• Energy Shock: Oil remained the key transmission channel from geopolitics to
macro. Prices repeatedly moved higher in April as talks stalled and concerns about
Strait of Hormuz disruption persisted. Elevated oil kept inflation expectations firm
and pressured import-dependent currencies and economies.
• Geopolitical Risk Drivers: As mentioned in the last quarterly report, the Iran war
matters most when it affects energy, shipping, inflation expectations, and central-
bank thinking. April fit that pattern exactly: the conflict did not dominate every asset
every day, but it remained the main background risk behind higher costs, tighter
policy expectations, and more defensive market positioning.
Top Upcoming Catalysts
• April Nonfarm Payrolls (NFP) & Unemployment Rate
The next jobs report (May 8th ) will show whether labor softening continued into April.
• April CPI (YoY & MoM)
This will be the most important inflation release of the month (May 12th ) because it
will test how much of the March energy shock carried into April consumer prices.
• April PPI
Important for tracking pipeline inflation and margin pressure at the producer level
(May 13th ).
Technical Corner
USDCAD
USDCAD has been in an uptrend for the past 18 years, mainly affected by the mechanical
inverse relationship with DXY, which has also been trending up for the same period.
At the beginning of 2026, we witnessed the most recent trendline retest (Major Trend) from
which we saw a 3% rejection to the upside (around 450 pips).
Outlook: We expect to see continued strength in USDCAD in the medium to long-term.
Key levels are as follows: [1.3960], [1.4100], [1.4660], [1.5130]
U.S. Oil (WTI)
After President Trump announced the ceasefire in April, we witnessed a sharp drop in Oil
prices (the fastest pace in 6 years), which exceeded 19% on American oil and 15% on Brent
Crude.
Technically speaking, if oil manages to close below the $92 mark (the blue line), we expect
to see a deeper correction in Oil prices to retest the $76 Swing level; otherwise, oil is still
safely trending upwards.
Outlook: The war caused oil to reverse upwards, making higher highs and higher lows,
creating an uptrend movement; therefore, we expect to continue moving upwards from a
technical standpoint if the recently created uptrend remains intact.
Support levels are as follows: [$92.40], [$83.50], [$76.00], [$71.40]
GBP/JPY
GBPJPY has been in an uptrend for the past 6 years, showcasing the weakness of the
Japanese Yen, reflected by the ultra-loose monetary policy in Japan.
Technically speaking, GBPJPY is currently above all major moving averages (50-day, 100-
day, and 200-day), meaning that a continuation of this bullishness is more likely than not.
Outlook: Our analysis shows that any drop toward the 212.00 area should be looked at as a
long opportunity, while the key levels are as follows:
Support levels:
[212.20], [208.00], [204.60], [197.10]
Resistance levels:
[215.70], [222.00], [240.00], [249.00]
Trading & Investment Themes
• Quality is Key: April reinforced the need to favor high-quality balance sheets,
resilient cash flow, and more defensive positioning when inflation and geopolitical
uncertainty rise together.
• Carry Over Conviction: The month again showed that strategies built around carry,
cash flow, and flexibility tend to outperform pure directional conviction when macro
outcomes are becoming less predictable.
• Geopolitical Hedging: Energy and FX exposure should still be managed with
geopolitical risk premia in mind. In April, that proved especially true for oil-sensitive
currencies, precious metals, and rate expectations.
Behavioral Insight
“Volatility Taxes Impatience.”
April showed that markets can stay directionally confused even when the macro story is
clear. Inflation rose, oil stayed elevated, and the Fed stayed cautious, but price action
across assets was still uneven. That is a reminder that discipline matters more than
reacting to every headline. Staying patient through noise remains essential.
Conclusion & Strategic Guidance
Q2 was expected to test whether the market was facing a temporary energy shock or a
more persistent stagflationary phase. April did not fully settle that debate, but it clearly
pushed the market closer to the stagflation side of the spectrum. Growth stayed positive,
Yet inflation re-accelerated, and central-bank easing expectations were pushed further out.
Strategic priorities:
• Elevate defensive exposures when energy-driven inflation risks rise.
• Maintain flexible duration positioning ahead of every major inflation and labor
release.
• When investing or swing trading, use precious metals and FX hedges selectively, not
mechanically.
• Keep a close eye on oil and dollar dynamics, because that remains the clearest
macro transmission path from the Iran war into broader markets.
Contact & Disclaimer
Contact:
Website: www.tradin.com
Email: support@tradin.com
Instagram: @Tradin
Disclaimer: This publication is informational and should not be taken as financial advice.
Markets involve risk; past performance is not predictive of future results.