The Blockade Extends

MONETARY

• Pursuant to the Federal Reserve’s April FOMC meeting, the Fed opted to leave its Target Federal Funds rate unchanged at a level of 350-375bps¹
  • Chairman Powell noted the ongoing strength of economic growth, highlighting strength in consumer spending, business investment, as well as continued weakness in the housing sector¹
    • (Powell) “Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient, and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.”¹
  • Powell also noted the large effect oil price volatility has had on inflation data since the start of the Iran War. Similarly, Powell referenced that Core Inflation (Ex-Energy) still remains elevated on a trailing 12-month basis¹
    • (Powell) “Excluding the volatile food and energy categories, core PCE prices rose 3.2 percent over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector. Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longer-term expectations remain consistent with our 2 percent inflation goal.”¹
    • (Powell) “With energy it’s so hard to say. I mentioned, you know, in, you know, sort of the text book you would look through it and oil shock because they tend to be short live and tend to revert. And monetary policy works with long variable lags. So you wouldn’t necessarily react right away. I think that is all the more true given we’re several years above two percent inflation and that we’re already looking through the tariff shock. So I think we’re going to be very cautious about that. But the question about looking through energy really is not in front of us right now. It hasn’t even peaked yet”¹
  • When asked about whether the current level of interest rates is generally consistent with the neutral rate, Powell largely agreed that policy was close enough.¹
    • (Powell) “You know, the neutral rate is — we cannot know it with certainly. I think pretty close to the neutral rate, yeah. I always had it between three and four percent. We’re little north of three-and-a-half. So that’s well in the range of what I consider reasonable. But at the higher end of the range what I would consider reasonable neutral rate.”¹

GEOPOLITICS

• United States military preparing for an extended blockage of the Straight of Hormuz in response to failed peace negotiations²
  • Analysts cite that the longer the blockade carries on, the longer Iran will have to endure economic hardships associated with virtually no seaborn transit to or from its ports²
  • General consensus among the geopolitical community is that the Iranian Government is very willing to impose blockade-driven economic hardships on its people for as long as necessary, raising concerns over how long the naval stalemate in one of the world’s most important energy transitways can last²
    • (S.Maloney – Brookings Institute) “Iran is calculating that its ability to withstand and circumvent the blockade outstrips the U.S. interest in preventing a wider energy crisis and potentially a global recession,”²
    • (S.Maloney – Brookings Institute) “A regime that slaughtered its own citizens to silence protests in January is fully prepared to impose economic hardships on them now”²
  • Separately, Secretary of State Marco Rubio highlighted further complications with negotiations, citing that the internal conflicts over control of the Iranian Government are making the negotiating process even more unclear²
    • (Rubio) “The hard-liners, with an apocalyptic vision of the future, have the ultimate power in that country,” “…One of the impediments here is that our negotiators aren’t just negotiating with Iranians. Those Iranians then have to negotiate with other Iranians in order to figure out what they can agree to, what they can offer, what they’re willing to do, even who they’re willing to meet with.”²
  • Here is a brief outline of what each side is more or less demanding in peace negotiations²
    • Iran Demanding:
      • A Permanent End to the War: The US and Israel must commit to a guaranteed, permanent end to all military strikes in the region.²
      • Lift the US Blockade: The US must immediately lift its naval blockade on Iranian ports. (Furthermore, leaks suggest Iran eventually wants the US to recognize its right to exert sovereignty over the Strait by charging “tolls” to passing commercial vessels²
      • Defer the Nuclear Issue: This is the most controversial demand. Iran wants to completely separate its nuclear program from the immediate ceasefire, asking to push all negotiations regarding nuclear enrichment to a later date²
    • United States Demanding:
      • Zero Enrichment: This is the non-negotiable anchor for the US. President Trump and Vice President JD Vance are demanding that Iran completely cease all nuclear enrichment and hand over its existing 400kg stockpile of highly enriched uranium (which Trump recently referred to as “nuclear dust”)²
      • Unconditional Freedom of Navigation: The US refuses to allow Iran to dictate routes, ban specific nations, or charge tolls in the Strait of Hormuz. The US is demanding permanent, unhindered global access to the waterway.²
      • Missiles and Proxies: The US wants verifiable curbs on Iran’s ballistic missile production capabilities and a permanent end to its funding and arming of regional proxy groups

[See Below for Disclosures & Annotations]

DISCLOSURES

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ANNOTATIONS

1. The Federal Reserve. “Transcript of Chair Powell’s Press Conference Opening Statement”. April 29, 2026
2. The Wall Street Journal. “Trump Tells Aides to Prepare for Extended Blockade of Iran”. April 28, 2026