This report reviews developments in March and April 2026. In the US, job growth rebounded strongly to 178,000, while unemployment fell to 4.3%, though driven by a shrinking labor force. Inflation surged to 3.3%, mainly due to a sharp spike in energy prices linked to the Iran conflict, while core inflation remained contained. The Fed remains cautious, with low expectations for near-term rate cuts.
In Europe, inflation rose to 2.6%, with energy contributing significantly. The ECB signaled rising upside risks to inflation due to the ongoing conflict but is holding off on immediate policy action while assessing the situation.
Oil prices remained highly volatile, peaking near $118 before stabilizing around $90–$100 amid ceasefire developments and ongoing tensions around the Strait of Hormuz. Supply risks remain elevated, with disruptions affecting global energy markets and even leading to jet fuel shortages in Europe.
Global equities rebounded sharply, with the S&P 500 up 8.1% and reaching new highs, driven by optimism around a ceasefire. European markets also posted strong gains. However, risks remain that prolonged high oil prices could reverse this rally.
Bond yields were mixed, with US yields slightly lower and European yields stable to slightly higher. Gold recovered modestly after prior declines, while Bitcoin rose around 5%. The US dollar weakened, while the euro and sterling strengthened.
In Cyprus, inflation increased to 1.5%, while 10-year yields declined. US banks reported strong Q1 earnings driven by trading income, though concerns emerged around private credit exposure at some institutions.
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