April reminded us that war rarely moves markets the way textbooks predict.

The closure of the Strait of Hormuz should, by any traditional reading, have spelled trouble for risk assets. It did, briefly. What happened next is more surprising, and more instructive, than the initial shock.

Equity markets have since staged a recovery that has surprised many, driven by forces that have little to do with geopolitics. Corporate earnings are running well ahead of expectations. The AI investment cycle has reasserted itself with a force that is hard to ignore. And markets, having lived through Ukraine and last year’s tariff episode, have developed a thicker skin for uncertainty.

None of this means the risks have gone away. Inflation is climbing again, and the Fed finds itself in a position it would rather not be in. Jerome Powell’s final meeting as Chair produced a result that says a great deal about where monetary policy stands and where it can and cannot go from here.

The yield curve is telling a story worth reading carefully. This update tries to make sense of all of it. We wish you a pleasant and insightful read.