In 30 seconds: A wave of US economic data showed a widening trade deficit driven by AI-related import surges, stable but softening labor market conditions, and ISM readings consistent with below-trend GDP growth, while real personal income per capita remains stagnant. US gold exports have become the country's single largest export for the fifth time in six months, largely flowing to China, as analysts debate the structural erosion of dollar dominance and the implications of rising US debt for gold and global trade settlement. The closure of the Strait of Hormuz following the Iran war has sent oil prices surging, disrupted global supply chains, and prompted a scramble for alternative supply routes, while physical oil markets show early signs of stabilization as Americas liftings recover. UK 30-year gilt yields have climbed to their highest level since 1998 at 5.76%, decoupling from other advanced economies and raising concerns about a significant headwind to UK economic growth.
The labor market is doing that thing where it looks fine until you squint. The vacancies-per-unemployed-worker ratio slipped to 0.94, which is in line with the recent trend. The private sector job opening rate came in at 4.3%, near the low for the last year, though the private sector hiring rate hit 3.9%, the highest in the last two years. The quits rate ticked up to 2.0% from 1.9%. Stable, softening, pick your adjective. Meanwhile, real personal income per capita has not grown in 15 months and is meaningfully below the pre-pandemic trend. That is not an adjective anyone wants. Within the ISM Services report, the activity index jumped 2 points to 55.9, but new orders fell 7.1 points to 53.5, and employment remained contractionary at 48. The services inflation index was flat; high since Oct '22. On the manufacturing side, 46 commodities were rising in price, the most since October 2021, though the number of commodities in short supply ticked up modestly, indicating no widespread shortages. Factory orders rose 1.5% versus a prior 0.3%, with ex-transportation orders up 1.6%. And in a quiet editorial choice, Treasury slimmed down its inflation table, dropping core inflation measures along with a range of subcategories. What's remaining: headline CPI, food, and energy. Sometimes the data you stop publishing says more than the data you keep.
For the fifth month in the last six, nonmonetary gold has been the single largest US export category. The numbers in March are striking: gold shipments ran 1.7x US oil exports, 2x pharmaceutical preparations, and 2.5x aircraft engine exports. The primary destination is China or Switzerland — and then on to China. Gold itself closed at $4,566.70, up 1.0444% on the day. The question is whether this flow is structural or transient. US imports of computers have tripled since this time last year, with essentially no imports coming from China (the fentanyl tariff, now removed, had a big impact here). A competing read of the gold flow points in a different direction. One argument holds that China has stopped taking USDs for certain goods, whether by agreement or de facto.
The Strait of Hormuz remains closed, and the global energy system is doing what it does when a critical chokepoint goes offline: absorbing the shock, then rerouting. Brent crude sits at ~$115 per barrel, and US gas prices have hit $4.48 per gallon, their highest since July 2022. That pump price represents a 50% surge over the last 10 weeks, the largest such move in the past 30 years. The Bloomberg Commodity Index is up 30% on the year. The physical market, though, tells a more nuanced story. The physical oil market appears to be calming. Physical oil grade differentials have collapsed to ~$3 per barrel above benchmark, down from ~$30 per barrel in mid-April. On a 7-day moving average, global oil liftings (into tankers) have recovered to their pre-war level due to a surge in liftings in the Americas. The world is, as one analyst put it, bypassing the Hormuz at an impressive speed. Not everyone can bypass it so easily. Iraq is offering huge price discounts — around $30 per barrel — to entice buyers to send tankers inside the Persian Gulf. That is the price of asking a tanker captain to sail into a war zone. Indonesia's extra fuel subsidy cost due to the Iran conflict has reached $6 billion, a reminder of the burden falling on import-dependent economies. The Iran war has been a windfall for the world's largest petrostate, with US fossil fuel exports running at record highs. The product of the US 10-year yield and oil prices has reached levels seen only in 1980-82 and summer 2008 — and it has never been this high alongside current debt-to-GDP ratios and deficits. Europe has found some shelter: electricity markets are calmer in 2026, thanks to nuclear, hydropower, solar, and better grids. The strait remains closed. The map is being redrawn.
The UK 30-year gilt yield has hit 5.76%, its highest since 1998. To put that in context: on September 27, 2022, the same yield stood at 4.99%. UK 30-year gilt yield: 5.76%. The UK 10-year gilt yield rose 12 basis points on the day, decoupling from oil prices and yields in other advanced economies. The yield gap between UK and German 10-year government bonds now stands at two full percentage points. UK 10-year gilt yield up 12 basis points today. UK 30-year gilt yield up 77 bps since September 27, 2022. UK 30-year gilt yield: 4.99%.
Here is where the labor market stands for your paycheck.
Initial jobless claims: 189,000, down 12.09% on the week
Continuing claims: 1,785,000, down 1.27% on the week
Quits rate: 2.00, up 5.26% on the month
Unemployment rate: 4.30, down 2.27% on the month