The University of Michigan’s Consumer Sentiment Index plummeted 11% to a historic low of 47.6 in early April 2026, far below both market expectations of 52 and last year’s level by 9%. Nearly all surveys (98%) were conducted before the temporary cease-fire announcement, underscoring the Iran conflict’s immediate impact on confidence. Sentiment declined across all demographics, as well as every index component, signaling a broad-based drop. One-year business condition expectations crashed 20%, while assessments of personal finances fell 11%, with consumers citing rising prices and shrinking asset values as key concerns. Buying conditions for durables and vehicles deteriorated further, again due to high costs linked to the war. Year-ahead inflation expectations spiked to 4.8% from 3.8% in March, the largest one-month jump since April 2025, while long-term inflation expectations rose to 3.4%, the highest since November 2025.

The Mexican peso strengthened 0.3% on Friday, trading around 17.31 as markets focused on geopolitical developments, including US–Iran negotiations. Uncertainty in the Middle East, particularly risks around the Strait of Hormuz, continues to support a geopolitical risk premium. The US dollar remains under pressure as US inflation stays broadly in line with expectations and the Federal Reserve maintains a cautious, data-dependent stance, limiting Treasury yield upside. At the same time, resilient but uneven US growth keeps markets balanced between inflation and slowdown risks. Risk appetite supports emerging market currencies, with the peso benefiting from strong carry appeal and a wide interest rate differential versus the US. USD/MXN is down 14.79% this year, reflecting dollar weakness and sustained inflows into Mexican assets.

Oil prices fell 2.35% on Friday, with WTI crude trading around $95.5 per barrel as markets focused on shifting geopolitical developments and ongoing negotiations in the Middle East. The move came amid continued uncertainty around US–Iran talks, with traders weighing the potential for de-escalation against lingering risks to regional stability. Concerns over possible disruptions to shipping flows through the Strait of Hormuz continued to support a geopolitical risk premium in oil markets, even as immediate supply disruption fears remained contained. Despite the daily decline, crude oil remains up 10.28% over the period, reflecting sustained sensitivity to geopolitical headlines and supply-side risk conditions.

US stocks were trading near 5-week high, loosely holding the surge this week amid seemingly lower geopolitical tensions. The S&P 500 and the Nasdaq 100 held near the flat line and Dow was slightly lower. While the two-week ceasefire was largely being maintained across the Middle East, and the ongoing closure of the Strait of Hormuz and clashes between Israel and Hezbollah in Lebanon risked complicating this weekends negotiations in Pakistan. Speculative tech stocks gained on the higher risk sentiment, with Amazon and Meta up 2%, while Nvidia added almost 1% on strong results from TSMC. In turn, financial companies were slightly lower ahead of their earnings next week. For the week, the S&P 500 has surged over 3%, putting it on track for its strongest performance since November. The Nasdaq is set to climb more than 4%, also heading for its best week since November, while the Dow has advanced roughly 3% so far.

The development of ceasefire talks regarding the war in the Middle East will remain the driver of market movements, with current agreements proving fragile and energy exports from the region not yet normalized. Producer prices in the US will take the data spotlight in the US, quantifying the initial impact of the surge in energy prices for goods producers. In Europe, trade figures and industrial production are also awaited. A busy week in China will feature its GDP, trade figures, industrial production, retail sales, unemployment, housing prices, and credit aggregates. Meanwhile, major financial companies in the US will release earnings, including JPMorgan, Goldman Sachs, Bank of America, and BlackRock. Elsewhere, TSMC and ASML will set the latest guidance for AI. On the politics front, elections in Hungary are due to shape the policy direction of the EU. Lastly, the World Bank and International Monetary Fund will hold spring meetings.

The dollar index remained below 99 on Friday, as investors continued to monitor developments in the Middle East and assess the latest US CPI report. US and Iranian delegations are set to meet in Pakistan on Saturday, while Israel has agreed to hold talks with Lebanon’s government, raising hopes of de-escalation in the region. However, the Strait of Hormuz remains largely closed, keeping oil prices elevated. The impact of the war with Iran is already being reflected in US inflation data. Consumer prices rose 0.9% in March, the largest monthly increase since June 2022, pushing the annual rate to 3.3%, the highest since May 2024 and in line with expectations. Core CPI, however, rose more modestly to 2.6% from 2.5%, suggesting that the full impact of the oil shock has yet to pass through to underlying inflation. Investors currently see little chance of another interest-rate cut by the Fed in 2026 and many economists are maintaining forecasts for one or more reductions later in the year.