Ceasefire hopes lift markets as eyes turn to US inflation

Summary

Podcast Summary: Moving Markets

Episode: Ceasefire hopes lift markets as eyes turn to US inflation
Date: April 10, 2026
Host: Helen Frear
Guests: Roman Canciani, Thomas Kraflich

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Overview

This episode of Julius Baer's "Moving Markets" podcast delivers a concise wrap-up of the week's financial market developments, with a special focus on how ceasefire hopes in the Middle East have lifted market sentiment. Discussions center on equity performance, stagflation risks in the EU, shifting expectations for US interest rates, key company news (notably SAP), currency and commodity trends, and the critical US inflation data set for release later in the day.

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Key Discussion Points & Insights

1. Market Performance Recap

Speaker: Roman Canciani
[00:35–02:14]

• Markets experienced significant midweek rebounds, driven by optimism around a potential US–Iran ceasefire.
• US indices finished higher after Israel agreed to direct ceasefire talks with Lebanon; this positivity has spilled into Asian trading, with notable gains in the Nikkei (up ~2%) and Chinese equities.
• European markets lagged slightly, giving back some gains from earlier in the week.
  • Notable economic data: Germany’s industrial production dipped by 0.3% in February, showing ongoing weakness even prior to the war. Though new orders technically rose, this was due to isolated large contracts, indicating underlying softness.

Notable Quote

"There had already been economic headwinds before the war kicked in."
— Roman Canciani [01:54]

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2. Stagflationary Risks in the EU

Speaker: Roman Canciani
[02:14–03:18]

• EU Commissioner Valdis Dombrovskis has warned of stagflation risk: slow growth paired with rising inflation.
• The EU’s dependency on energy imports makes it especially vulnerable to disruptions in oil flows from the Strait of Hormuz.
• Forecasts suggest EU growth could be slashed by 0.6% and inflation could rise by up to 1.5% if energy prices remain elevated.
• Some countries are cutting fuel taxes, but there’s caution against provoking a broader fiscal crisis.

Notable Quote

"It's a double whammy. Several EU countries are cutting fuel taxes to mitigate the impact, but the Commissioner rightly cautions against turning this into a full blown fiscal crisis."
— Roman Canciani [03:11]

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3. Company Spotlight: SAP & US Software Struggles

Speaker: Roman Canciani
[03:18–04:37]

• SAP shares dropped almost 7% after its CEO warned of “short-term pain” due to the company’s AI transition, similar to challenges faced during the cloud migration.
• The uncertainty and resource demands of AI make future outcomes unpredictable and are currently pressuring margins.
• The broader US software and services sector is similarly under pressure, with the S&P 500 software/services index down over 25% YTD; high-profile companies like Salesforce and Adobe have seen sharp declines.
• Anthropic’s new “Claude Mythos” AI model is intensifying concerns about disruption and vulnerability in existing software architectures.

Notable Quote

"The challenge with AI is that it's largely uncharted territory, making the outcome much harder to predict."
— Roman Canciani [03:48]

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4. Focus on US Inflation and the Federal Reserve

Speaker: Roman Canciani
[04:37–05:45]

• Anticipation centers on the US CPI print: expectations are for a 0.9% monthly and 3.3% annual rise in headline CPI; core CPI is forecast at 0.3% monthly and 2.7% annually.
• Consumer spending is only marginally up, with real disposable income falling and inflationary pressures building.
• Iran conflict has intensified cost pressures, particularly on energy and materials.
• The CPI data will be pivotal for the Fed’s policy path; traders currently anticipate two rate hikes in 2026, but this outlook could flip depending on the inflation report.

Notable Quote

"All eyes will be on the CPI report today as it will heavily influence the debate around whether the Federal Reserve will proceed with its anticipated rate hikes."
— Roman Canciani [05:17]

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5. Commodities & Currencies Update

Speaker: Roman Canciani
[05:45–06:36]

• Oil markets were volatile: prices first spiked on conflict escalation, then fell back as de-escalation hopes rose. Brent sits above $96/bbl, up ~2% day-on-day.
• Japan’s plan to release strategic reserves has also supported sentiment in Asia.
• US dollar had its first negative weekly performance since the start of the conflict, mirroring receding war premiums.

Notable Quote

"Overall, the market is walking a tightrope, balancing hopes for peace with the ever present threat of renewed escalation."
— Roman Canciani [06:28]

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6. FX Trends & Outlook

Speaker: Thomas Kraflich
[06:45–08:38]

• The US dollar lost ~1% after a surprise truce in the Middle East, now consolidating.
• Scenario Analysis:
  • Ceasefire holds: Dollar would likely weaken, with inflation fading as a concern and renewed prospects of Fed rate cuts (especially with incoming Chair Kevin Walsh, rumored to be dovish).
  • Conflict continues: Dollar remains supported; high oil prices challenge justification for US rate cuts.
• Market now prices only 6 basis points in US rate cuts for 2026, compared to expectations of 50bp cuts (sharply reversed to 25bp hikes during the recent panic).
• Eurozone: Two ECB rate hikes priced in due to greater inflation impact from energy. Switzerland: Minor rate hike expected.

Notable Quote

"In such a scenario (ceasefire), we would see a lower dollar... renewed expectations of rate cuts in the U.S."
— Thomas Kraflich [07:36]

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7. Precious Metals Recovery

Speaker: Thomas Kraflich
[09:26–09:52]

• Precious metals have rebounded from their earlier drop after the Iran conflict began.
• Barring aggressive sell-offs in other asset classes, especially gold is expected to find strong demand and trend higher.

Notable Quote

"I think the worst is over for precious metals after some consolidation, especially gold should meet good demand and trade higher again."
— Thomas Kraflich [09:44]

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Notable Quotes – Quick Reference

• “There had already been economic headwinds before the war kicked in.” — Roman Canciani [01:54]
• “It's a double whammy...the Commissioner rightly cautions against turning this into a full blown fiscal crisis.” — Roman Canciani [03:11]
• “The challenge with AI is that it's largely uncharted territory, making the outcome much harder to predict.” — Roman Canciani [03:48]
• “All eyes will be on the CPI report today as it will heavily influence the debate...” — Roman Canciani [05:17]
• “Overall, the market is walking a tightrope, balancing hopes for peace with the ever present threat of renewed escalation.” — Roman Canciani [06:28]
• “In such a scenario (ceasefire), we would see a lower dollar... renewed expectations of rate cuts in the U.S.” — Thomas Kraflich [07:36]
• “I think the worst is over for precious metals after some consolidation, especially gold should meet good demand and trade higher again.” — Thomas Kraflich [09:44]

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Key Timestamps – Segment Guide

• [00:35] Market performance recap (global equities, Germany, Asia)
• [02:14] EU stagflation risk analysis
• [03:18] SAP/US software sector news
• [04:37] US inflation expectations & Fed outlook
• [05:45] Commodities and currency developments
• [06:45] FX market trends and scenarios (USD, EUR, CHF)
• [09:26] Precious metals recovery

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Tone & Language

The episode maintains a professional, informative, and measured tone, with expert commentary that’s accessible to clients and market watchers. Commentary is factual but laced with caution regarding ongoing geopolitical uncertainties and shifting inflationary pressures.

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For more episodes and updates, find Moving Markets from Julius Baer on your preferred podcast platform.

Transcript

[A]

Good morning, everyone, and welcome to Julius Baer's Moving Markets podcast. It's Friday 10th April, and my name is Helen Frear. My first guest this morning will be Roman Canciani and he'll be giving us a roundup of the latest news in financial markets. And I'm also joined by Thomas Kraflich this morning who will be filling us in on the latest moves in FX and metals markets. But first up with the market news is Roman. Good morning, Roman. Thanks for joining me.

[B]

Good morning, Helen.

[A]

We've had a dynamic week, haven't we? A lot of moves in both geopolitical landscapes and financial markets. We saw a substantial bounce across markets midweek, fueled by hopes of a ceasefire in the us. Iran situation yesterday brought a more mixed picture, but ultimately ended positively in the us. Can you give us a few of the details, please, Roman, on what's been happening across equities?

[B]

Absolutely. While European markets gave back some of those substantial gains from Wednesday, yesterday finishing slightly lower, US markets managed to claw their way higher after news emerged of Israel agreeing to direct negotiations with Lebanon regarding a ceasefire. With all major indices in the US ending the day in the plus, that overnight positivity has carried through to Asia this morning with markets broadly higher, with the Nikkei up almost 2%. And also Chinese shares are rallying after factory gate prices there rose for the first time in more than three years. With regard to yesterday's market action in Europe, there was actually one really noticeable economic news, and that was that Germany's industrial sector was already struggling before the war. February numbers saw a 0.3% dip in industrial production, continuing a trend of weak activity, while new orders saw a slight increase in February. This was driven by a few large contracts and doesn't indicate a widespread recovery. Excluding those large orders, orders actually decreased. So there had already been economic headwinds before the war kicked in.

[A]

And speaking of headwinds, the EU Commissioner Valdis Dombrovskis recently flagged the risk of a stagflationary shock. That sounds unpleasant. Could you unpack this a little bit for us, please?

[B]

Unfortunately, it is. Stagflation is a really difficult scenario. A combination of slow economic growth and rising inflation. The EU is particularly vulnerable because of its reliance on energy imports. Even with the improving diplomatic outlook, the potential for disruptions to oil flows via their Strait of Hormuz reduce remains a serious concern. According to the commissioner, EU growth forecasts could be lowered by up to 0.6% if high energy prices persist. Simultaneously, inflation could climb by one to 1.5 percentage points. It's a double whammy. Several EU countries are cutting fuel taxes to mitigate the impact, but the Commissioner rightly cautions against turning this into a full blown fiscal crisis.

[A]

And looking at individual companies now, SAP took a pretty hefty tumble this week. What's going there?

[B]

Yes, SAP shares fell almost 7% yesterday after their CEO warned of short term pain during their transition to artificial intelligence. It's a classic story of investing for the future, but with immediate consequences. The CEO likened it to the previous cloud transition, acknowledging that it will initially hurt margins. However, the the challenge with AI is that it's largely uncharted territory, making the outcome much harder to predict.

[A]

And this ties neatly into the broader struggles within the US software sector. We're seeing significant declines there, aren't we?

[B]

Exactly. The S&P 500 software and services index is down over 25% this year. Yesterday it fell more than 2%. Anthropic's new Claude Mythos model, though limited in access due to security concerns, has amplified fe years of AI driven disruption. It's exposing vulnerabilities in existing software and adding to anxieties surrounding private credit markets. Cybersecurity firms, alongside larger players like Salesforce and Adobe have all felt the pressure and in the trading day, sharply down

[A]

in the U.S. all right, and turning to the U.S. economy now, we're getting crucial CPI data today. What are the expectations and how might these numbers influence the Fed's thinking?

[B]

Expectations are for a 0.9% monthly increase in headline CPI and a 3.3% year over year rise. Core CPI is projected to increase 0.3% monthly and 2.7% annually. These numbers are certainly elevated. Recent consumer spending data shows only marginal growth in February, partly due to persistent inflation and rising energy costs. Real disposable income actually fell, while the labor market appears somewhat stabilized. The overall picture suggests inflationary pressures are building. The Iran conflict exacerbates this, driving up fuel and material costs. All eyes will be on the CPI report today as it will heavily influence the debate around whether the Federal Reserve will proceed with its anticipated rate hikes. Currently, traders still expect two rate increases this year, but that could change depending on the data.

[A]

Okay, and finally then let's quickly touch on commodities and currencies. Anything noteworthy to mention there, Roman?

[B]

Well, stating the obvious, oil prices experienced volatility this week, initially spiking on escalating tensions before retracing ground as de escalation hopes grew. Brent is currently trading up around 2% since yesterday, above US$96 a barrel. Still, as I said before, Asian markets are reacting positively to the prospect of continu dialogue with Japan planning to release oil reserves too. On the currency side, the US Dollar is bound to deliver its first negative weekly performance since the war kicked in. Overall, the market is walking a tightrope, balancing hopes for peace with the ever present threat of renewed escalation. That's it from me.

[A]

All right, thank you very much, Roman, for the great roundup this morning.

[B]

Thank you very much, Helen. It's always a pleasure.

[A]

And now over to you, Thomas. Good morning. Firstly.

[C]

Good morning, Helen.

[A]

So it's been a few weeks, Thomas, since we had you on the podcast to talk about currencies. What can you tell us about what's been happening since your last update?

[C]

Yeah, that's right. Not too much happened at first glance. The dollar in general trades marginally lower since we talked last time three weeks ago. Back then, I assumed the dollar would remain bit as long as the conflict in the Middle east goes on and oil prices remain elevated. And the dollar was indeed trading higher, at least until Tuesday, when a surprising truce was negotiated. The dollar immediately lost about 1% and is consolidating since.

[A]

Okay, and your thoughts on what to expect going forward?

[C]

Well, I think we have two scenarios. One is that the ceasefire holds, a peace deal is agreed, and cheap traffic resumes through the Strait of Hormuz. Difficult to believe, but hopefully not impossible. In such a scenario, we would see a lower dollar. Basically back to the world before the conflict, where US Policy uncertainty has been a key driver in the dollar's depreciation. Inflation fears would rather be in the background again and growth concerns would get more weight. A consequence would be renewed expectations of rate cuts in the U.S. in this context, we must not forget that a new Fed chair, Kevin Walsh, will take over mid May. And markets speculate that Walsh only got the job because he promised Donald Trump to cut interest rates. The second, but probably more likely scenario is that the conflict continues and oil prices remain high. That would again support the dollar and put the new Fed Chair in a difficult situation. It would have problems to justify rate cuts in such a scenario.

[A]

Okay, so on rate cuts, what are the expectations in terms of interest rates now after they've changed dramatically when we spoke last time?

[C]

Currently, the market is pricing only 6 basis points in rate cuts for the US until the end of the year. This comes after the panic reaction three weeks ago when the market shifted from an expectation of 50 basis points cut to 20 basis, 25 basis points hike within days. In the Eurozone, the market is pricing in two rate hikes by the ECB until year end. The higher oil and gas prices have a stronger impact on inflation in Europe than in the US and even in Switzerland, futures imply a 20 basis point hike by the SMB until year end.

[A]

Now just finally on metals, they recovered from the dive they took at the beginning of the Iran conflict. And now are they continuing to go up?

[C]

Yeah, I think so. Unless we see another aggressive sell off in equities and bonds, I think the worst is over for precious metals after some consolidation, especially gold should meet good demand and trade higher again.

[A]

All right, Very good. Thank you, Thomas, for joining us this morning.

[C]

Thank you, Helena.

[A]

So that is all for today. Thank you again to my guests and thank you all for tuning in. Please subscribe to our show if you enjoy it and you can, of course also leave us a review on whichever platform you like to listen on. So we'll be back again on Monday morning. Do join us then when Bernadette will be back as your host, joined as always by more of our colleagues to talk about what is moving markets. But until then, I wish you all a great day and then a great weekend. Bye for now. The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.