The week ahead has FOMC meeting on 29th April which might be Fed Chair’s Powell last meeting both as Chair & FOMC member. But the focus might still be on news flow on Iran conflict. Our own assessment is that Iranian oil wells might suffer permanent damage if they are shut down due to lack of storage or export facilities as US naval blockade remains in place. Iran was exporting 1.5 MBPD of crude before the blockade. Now with almost 13 days of blockade in place, almost 20 million barrels of crude has been stored. Total storage earlier was 60 million barrels out of which 30 million barrels was already utilised. So, effectively it is a matter of 5-6 days that Iran might not have any more storage for crude. Then it has to shut down it’s oil well. But Iranian oil wells different from other middle east nations because these are low pressure oil wells. Once stopped, there is a high risk, their production capacity might be severely impaired. Hence, our base case now is that IRGC might be compelled to look at such a drastic scenario and look for a compromise agreement with US. In the worst-case scenario, IRGC can escalate by attacking Saudi’s East West pipeline or asking the Houthis to attack the Red Sea shipping routes. On the FOMC meeting itself, we expect it to be status quo with hawkish tone in the policy statement and a neutral rpess conference by Fed Chair Powell. We now expect Kevin Warsh to take over as Fed Chair on 15th May and hence this meeting might be the last meeting for Powell as either Chair or FOMC member. In US macro data, we have consumer confidence, ISM manufacturing, Employment Cost Index & Q1CY26 GDP's first estimate. In UST dated supply, we have $69 BN of 2 yr UST auction on Monday, $70 BN of 5 yr UST auction again on Monday followed by $44 BN of 7 yr UST on Tuesday. In RoW events, we have BOJ meeting on 28th April followed by Bank of Canada meeting on 29th April & both ECB & BOE meeting on 30th April. All three are expected to be on hold with varying degrees of forward guidance.
