Macro is trying to turn constructive this week, but the underlying tensions haven’t gone away yet. Markets are starting the week near highs with the S&P 500 up almost 10% this month and equities broadly holding firm as optimism builds around a potential US–Iran deal to reopen the Strait. At the same time, Brent remains elevated around ~$108, reflecting a reality where energy flows are still heavily disrupted. The result is a market leaning back into the AI-driven growth narrative, even as the macro backdrop remains unresolved.
Beneath the surface the oil shock is already feeding through into the real economy. With supply down by roughly 10% and a billion-barrel shortfall effectively locked in, the adjustment is increasingly shifting toward demand destruction. Global oil demand is on track for its biggest monthly drop in five years, with early signs showing up in industrial activity across Asia and now spreading into consumer-facing sectors. US gasoline demand is already running ~5% lower YoY as prices sit above $4, while airlines across Europe and the US are cutting capacity as fuel costs surge.
The key shift is that this is no longer just an inflation story, it’s becoming a growth story and that’s putting central banks in a difficult position. This week brings a rare alignment of all G7 central bank decisions, with the Fed, ECB, BoE and others all meeting against the backdrop of the energy-driven shock. While rates are expected to remain on hold, the focus is firmly on inflation risk. Markets are increasingly bracing for a more hawkish tone, with bond yields holding elevated and rate cut expectations being pushed further out. Here in the UK pricing has already shifted toward roughly two hikes this year, while US rate cut odds continue to fluctuate as policymakers balance resilient data against rising cost pressures.
The result is a macro environment drifting back toward higher for longer, even as growth risks build, a combination that tends to tighten financial conditions across assets.
Crypto is reflecting that same push and pull. Bitcoin climbed back toward the $80k level, hitting a 12-week high around $79k and posting a ~16% gain in April. The move has been supported by renewed institutional demand, with roughly $2.5bn flowing into US spot ETFs this month and continued accumulation from large buyers. Fresh on-chain data from last week revealed what many Archax OTC clients have suspected - Bitcoin’s largest holders have been accumulating at their fastest pace in over a year. Given the data-led context this looks much more like conviction-driven positioning rather than opportunistic dip-buying. But the rally has also been driven by short covering, with positioning still cautious. The $80k level now acts as a key inflection point, not just technically but psychologically, as many recent entrants approach breakeven. In other words, price is improving faster than conviction.
That dynamic leaves crypto, like equities, highly sensitive to the same macro catalyst: the trajectory of the Iran situation and specifically whether energy flows normalise.
For now, markets are choosing to focus on the potential for resolution. But with oil still elevated, demand already adjusting and central banks unable to ease policy meaningfully, the underlying picture is more fragile than headline price action suggests.
Keep an eye on this week’s calendar as where we’re heading will largely depend on four major central banks expecting to hold rates where they are. However, the market will be watching the Fed the closest with inflation running hot and the job market strong, we could see a hike rather than a cut…