Global Credit Bullets | Monday, 27th April 2026

Iran – Truce delayed, oil elevated

Another week, another round of headline-driven volatility, with negotiations once again delayed. Earlier last week, planned US–Iran talks failed to materialise, further highlighting the fragility of the diplomatic process. Reports last Thursday also suggested that Mohammad Ghalibaf has stepped back from negotiations, implying that the Islamic Revolutionary Guard Corps is now fully in control of the Iranian side. Missile and drone activity from Iran toward Gulf countries has effectively ceased, but traffic through the Strait of Hormuz remains significantly depressed and still well below pre-war levels. With markets back near the highs reached when Hormuz was initially declared open, Trump appears reluctant to risk disappointing markets or triggering another spike in oil prices. As a result, negotiation deadlines continue to be pushed back, even as oil prices moved back above $100 per barrel last week. Markets are therefore caught in an increasingly fragile equilibrium: elevated valuations are colliding with weakening fundamentals, particularly across risk assets, leaving markets understandably nervous.

Federal Reserve – Warsh rewrites the playbook

At his Senate confirmation hearing, the upcoming FED Chair Kevin Warsh struck a broadly dovish tone, emphasising the potential productivity gains from AI while firmly defending central bank independence. He was notably critical of forward guidance and the dot plot, arguing that both can constrain policy flexibility. At the same time, he reiterated and defended his hawkish stance during the 2008 crisis. Warsh avoided providing new specifics on balance sheet reduction, despite previously advocating a more proactive approach. However, his framework implies a softer view on current inflation dynamics. Using a trimmed-mean methodology, a 12-month inflation gauge would stand at much lower levels than the actual Core PCE. He also described the inflation trend as “quite favourable” going forward. On the political side, Senator Thom Tillis is currently blocking the confirmation process pending the resolution of investigations involving Jerome Powell. In the meantime, markets are increasingly pricing in a prolonged hold from the Fed as official communication has appeared broadly balanced.

ECB – Caught in between

The European Central Bank is widely expected to leave rates unchanged at next Thursday’s meeting. With euro area inflation remaining contained, recent communication suggests that it is still too early to consider the start of a new tightening cycle. The growth backdrop, however, remains weak. Soft data across Europe continues to disappoint, in contrast to the more resilient momentum seen in the US and UK. This divergence reinforces a different policy trade-off, as European policymakers could be placing relatively more weight on growth risks than inflation concerns. Despite this, markets continue to price in further tightening, with more than two hikes expected before year-end. At the same time, growth expectations are being revised lower, though only modestly relative to the scale of potential downside risks. This appears complacent, particularly given the much more constrained fiscal space compared to past shocks such as 2022. At the same time, markets are unlikely to tolerate additional fiscal slippage without demanding higher compensation at the long end of the curve.

Algebris Investments’ Global Credit Team