The brief Hormuz optimism is over. Iran's weekend counter-offer, to separate Strait talks from the nuclear question, was dismissed by President Trump on Truth Social as "a piece of garbage" and reportedly prompted a national-security huddle in Washington at which "more military action was likely". Brent rebounded from US$101 to US$108, WTI is back above US$102, US 10-year Treasuries sold off seven basis points to 4.40%, and US equity leadership has narrowed even further: AI and energy did the work on Monday while consumer staples fell 1%. AI now accounts for more than 40% of S&P 500 market cap. As NAB's Rodrigo Catril put it, "no news is good news"; Bloomberg satellite imagery shows oil exports from Iran's Kharg Island terminal have stopped entirely, with storage tankers reportedly full. The Trump–Xi summit on 14–15 May remains the meaningful set-piece, even though the President says Iran "isn't likely" to be on the agenda, a claim almost no one believes.

For Australian advisers the local story is the Federal Budget. Treasurer Chalmers delivered the long-flagged property tax reform: negative gearing now restricted to investment in new builds, and the 50% capital-gains discount replaced with indexation plus a minimum 30% tax rate (also waived for new builds). The 2026-27 underlying cash deficit prints  at $31.5 billion (roughly 1% of GDP), a $45 billion cumulative improvement on the forward estimates, though the 2026-27 cash balance remains at 2.1% of GDP. Markets took it in their stride; they are also waking up to the fact that the government is spending more despite the headline tax tightening, exactly the demand impulse Michele Bullock told us she does not want. The NAB Business Survey echoed the point: purchase costs surged to 4.5% in quarterly equivalent terms, three times February's level, while final product prices rose only 1.8%. Westpac consumer confidence fell from 90.6 to 80.1, the largest monthly drop since COVID.

Across the Pacific, the US April CPI print was the hottest in months, headline +3.8%  year-on-year (from 3.3%), core +2.8% (from 2.6%), gasoline +5% on the month, food at home +0.7%, and shelter +0.6% (a part-distortion from the October shutdown reversing). The NABE's Constance Hunter expects US headline to average 4.2% in the second quarter and warns the market is "not properly pricing" a Strait that stays closed through northern-hemisphere summer. Pricing has duly shifted: from rate cuts to 5 bps of hikes by October, 10 bps by December and 20 bps by next March, meaningful pressure on Kevin Walsh as he steps into the Fed chair later this month.

For clients: stay diversified, keep duration sensible and treat each peace headline with the scepticism it has earned.