Economic Pulse: April 2026
Monthly · Economics — By Shuhari — 30 Apr 2026
Executive Summary
The energy shock stopped being an event and became an ongoing condition. The multiple fragile ceasefire announcements brought flashes of optimism with oil dropping double digit percentages and equity indexes rallying repeatedly before reality set in with ongoing strikes in Iran, and more and more visibly in Lebanon. By month end, Brent Oil had peaked at $118 and the Strait of Hormuz remains effectively restricted. What changed in April is consensus: the economic damage will be real and longer lasting.
US inflation hit 3.8%, which is the highest reading we have seen for about 3 years. The eurozone composite PMI fell into contraction territory. The Fed voted 8-4 to hold rates and explicitly flagged rate hikes as a possibility in their transcript. (Kevin Warsh has been sitting through Senate hearings and will be coming in as the next Fed chair at probably the most awkward possible moment...)
The Geopolitical Context
The two-week US-Iran ceasefire announced in early April was the most dominant and misleading (back-and-forth) market narrative of the month. Iranian media was reporting tanker transit through the Strait still halted within hours of the "deal" announcement coming out of the White House, as fresh Israeli strikes on Lebanon triggered new Iranian action. Oil never recovered to pre-ceasefire levels, settling above $107 as of month end (Brent peaked at $118) before slight moderation.
The working assumption is now that the Hormuz disruption persists into the second half of the year due to ongoing core issues: reopening terms, sanctions relief and Iran's nuclear programme.
FED Dread: US Inflation at 3.8%
While US CPI for April (3.8% YoY) marked a 3-year high, energy alone contributed over 40% of the headline gain through gasoline (+28.4%). The more consequential number however is core CPI at 2.8% YoY, up 0.2 points from March as "Core" excludes energy and food. Real average hourly earnings fell 0.5% for the month and 0.3% annually. Workers are falling behind.
In the eurozone, flash CPI for April jumped to 3.0%, heavily driven by energy costs surging 10.9%. Core held at 2.2%, meaning the ECB's inflation pressure remains relatively contained at this point. (Though, "relatively contained" core does nothing to help consumers paying 10.9% more for energy...) The ECB held its deposit rate at 2% on April 30th for the third consecutive meeting. The ECB said "upside risks to inflation and downside risks to growth have intensified". A June hike is now the base case.
Labour Market: Stable Surface, Troubled Internals
April US NFP hit +115,000, above the ~55,000 consensus, but still the smallest organic gain in months. Unemployment held at 4.3% with average hourly earnings growing 0.2% MoM and 3.6% YoY, which was both below consensus, and below inflation.
The more human and real-world way to phrase numbers like these: 358,000 Americans newly unemployed plus 445,000 newly working part-time for economic reasons means roughly 803,000 workers moving into labour distress in a single month.
PMI: Bifurcation Deepens
US ISM Manufacturing remained unchanged at 52.7, posting the fourth consecutive month of expansion with new orders edging up and demand sentiment improved. Similarly, ISM Services PMI recovered to 53.6 in its 22nd consecutive expansion month.
The S&P Global Eurozone Composite PMI flash for April fell to 48.6, signalling a 0.1% quarterly rate of GDP decline. S&P Global noted business activity in services was falling at a pace not seen since the pandemic lockdowns of 2021. (!) Conference Board cut its 2026 eurozone GDP forecast to 1.0% and is openly warning about Q2 contraction risks.
What Does It Mean for Us?
The US military strikes on Iran have come at a time I wanted to re-launch my allocation engine after the major rework I have put it through and delayed the deployment of my portfolio funds further. While I trust the program, I did not want to launch right into an energy crisis. (We will see in hindsight if that was smart of a classic case of missing the rebound.)
The allocation engine now runs a whole different set of sub-portfolios that I will introduce and describe in more detail in The 2026 Refactor and the subsequent posts about the new "sleeves". The main change I introduced to get closer to real factor isolation is to short equity indexes themselves and then (re)add weighted factor contribution to beta exposure. I'll add a snapshot in the next update.
Data Sources:
BLS. Employment Situation (April 2026, released May 8, 2026)
BLS. Consumer Price Index (April 2026, released May 12, 2026)
BEA / Fed Staff. PCE Inflation Estimate (March 2026, per FOMC Minutes)
ISM. Manufacturing PMI® (April 2026, released May 1, 2026)
ISM. Services PMI® (April 2026, released May 5, 2026)
S&P Global / HCOB. Eurozone Flash Composite PMI® (April 2026, released April 23, 2026)
Federal Reserve. FOMC Statement (April 29, 2026)
Federal Reserve. FOMC Minutes (March 18, 2026, released April 2026)
ECB. Monetary Policy Decision (April 30, 2026)
Eurostat. Flash CPI Estimate, Eurozone (April 2026)
Conference Board. Euro Area Economic Forecast (May 2026)
Senate Banking Committee / US Senate. Kevin Warsh Confirmation Record Trading Economics. EUR/USD and Brent Crude price data (April 2026)