April 10, 2026
Iran
The U.S. and Iran tentatively agreed to a two-week ceasefire this week. The terms of the ceasefire are disputed, however, as Iran believes it should include fighting between Israel and Hezbollah in Lebanon. Israel disagrees. Additionally, while the Strait of Hormuz is technically open, the flow of tanker traffic through the waterway still appears to be restricted.
Our Take: Markets rejoiced over news of the ceasefire as oil prices and interest rates fell while equities rallied. However, tensions in the region remain high and markets are likely to remain volatile as the situation continues to evolve.
Employment
The economy added 178,000 jobs in March, exceeding expectations of a 65,000 increase. The unemployment rate fell from 4.4% to 4.3%. Average hourly earnings decreased from 0.3% to 0.2% for the month and are up 3.5% year-over-year. The labor force participation fell from 62% to 61.9%.
Our Take: The falling unemployment rate seems to indicate that everyone who wants a job has one though some of the decline could be attributable to slightly lower labor force participation. On the flipside, lower average hourly earnings suggests that employers are not having to pay up to keep or attract employees. While job growth exceeded expectations in March and first-quarter gains are running ahead of the 2025 pace, the labor market overall still appears subdued.
Inflation
The Consumer Price Index (CPI) rose 0.9% in March and 3.3% from a year ago. Core CPI, excluding food and energy, rose 0.2% in March and 2.6% from a year ago. The core Personal Consumption Expenditures (PCE) deflator rose 0.4% in February and 3% year-on-year.
Our Take: Data shows inflation remained stubbornly above the Fed’s 2% target in February. Headline inflation surged in March driven by higher energy prices tied to the war in Iran. Core CPI was a little softer than expected and has been running cooler than PCE, the Fed’s preferred metric. The Fed is likely to remain on hold while continuing to evaluate the impact of the war.