Markets endured a week of whiplash. Brent crude pushed toward US$98 a barrel as Israel and Iran exchanged fire and a US Apache helicopter was reportedly shot down near the Strait of Hormuz. Then on Friday a single Truth Social post, President Trump cancelling planned strikes and claiming a deal had been "approved by all parties”, sent Brent back well below US$90, the Nasdaq up 3.5% and ten-year Treasury yields nine basis points lower in hours. President Trump said on Monday that a preliminary agreement to end the conflict had been signed by the U.S. and Iran. Markets remain cautious: neither side has released the deal text, and shipping companies are delaying vessels through Hormuz until there is greater clarity. The message is familiar: position for diversification, not a binary outcome.

As expected the RBA kept rates on hold but issued a hawkish statement, intimating that inflation remained too high for comfort. The issue now is whether enough damage has been done to ensure higher inflation, and perhaps even lower growth, is already ‘in the pipes’ for much of the world.  The US story is more conflicted. Headline CPI rose to a three-year high of 4.2%, but core surprised lower at 0.2% on the month, limited second-round effects from energy so far. PPI looked hotter underneath, and core PCE is tracking 3.4%. Markets price 23 basis points of Fed tightening by year-end; Kevin Warsh chairs his first FOMC meeting this week. The ECB delivered its first hike since 2023 to 2.25% and was explicit this is not one-and-done. The Bank of Canada held at 2.25%, citing the dilemma of weak growth and rising inflation. Tighter for longer remains the global default outside Australia.

Japan is doing its own thing. The BoJ is widely expected to lift the policy rate to 1% this week, its first hike to that level since 1995, to support a yen back at ¥160/USD and to tackle inflation that, on the Bank's "core-core ex-institutional factors" measure, sits near 3%. The hike comes alongside PM Takaichi's growth agenda: targeted spending across 17 strategic sectors (AI, semiconductors, shipbuilding, quantum, defence), gas subsidies capping pump prices at ¥170/litre, and a meticulous METI response to the energy shock that has seen alternative crude suppliers cover more than 70% of imports (US crude up eight-fold). The market is buying it: the Nikkei sits near all-time highs and Japan-equity exposures have led global indices in recent sessions.

Risk appetite snapped back hard into Monday's open: since the Friday Trump reversal, Japan and the Nasdaq 100 have led developed equities up roughly 6%, emerging markets are up 4–5%, while the S&P 500, Russell 2000, Europe, global small-caps and Australia are clustered at around +3-4%. Gold round-tripped a mid-week sell-off (briefly down ~4%) and is now broadly back to its starting point. The US ten-year has eased from 4.55% to 4.45%; the Aussie ten-year sits at 4.85% (4.89% Friday close). The week's headline event, the SpaceX float, was the largest IPO in history. The company raised US$75 billion at US$135, opened at US$150 and closed Friday up 19% at US$161, briefly valuing it above US$2 trillion. Retail demand exceeded US$100 billion against an allocation cap near 20%. On Bloomberg Surveillance, veteran Jim Chanos flagged that the stock trades on roughly 110x revenue and has just pivoted to a lower-margin cloud leasing model, a trend we are seeing with some of the other hyper scalers. This begs the question why are they selling compute to other companies if it is so scarce?

We have moved from a synchronised tightening world to a fragmented one - RBA likely done, ECB still hiking, Fed in limbo, BoJ moving. Oil's round trip and the fact that financial betting markets are still not convinced that this deal will stick is a reminder that prediction is a poor substitute for diversification.