It could be investors are growing numb to Trump's verbal reassurances. Many reckoned by extending the deadline twice, he is merely kicking the can down the road, which in itself suggests the four-week-old war is not ending anytime soon.
Adding to the jitters were reports that another 10,000 U.S. troops might be heading to the Middle East, fanning fears of an imminent ground conflict. There is a real risk of mission creep dragging the U.S. into a full-fledged war, yet with no certainty the Strait of Hormuz could be reopened anytime soon.
All of that made for cautious trading into the weekend. MSCI's broadest index of Asia-Pacific shares outside Japan is down 2.4% for the week and over 11% from its peak in late February. Japan's Nikkei was similarly down 10% from its February top. South Korea's KOSPI shed 1.5%, bringing its weekly loss to a steep 7%.
Meanwhile, central banks are warning of raising rates for the worst possible reason, fighting a 1970s-style stagflation threat. Norway's Norges Bank raised eyebrows with a spectacular U-turn on Thursday, flagging rate hikes this year after previously forecasting three cuts by 2028.
At the Fed, Governor Michael Barr and Vice Chair Philip Jefferson both sounded concerned about sticky inflation. A trio of their colleagues will get to speak later today, and markets will be listening for any more hawkish views.
Stakes will be high given the seismic shift in market pricing lately, with a rate hike in September about 50% priced in. Fed officials were projecting a rate cut this year.
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