ALTERNATIVE MARKETS UPDATE – MID APRIL 2026 & macroeagle by bobby vedral

​Over the past two weeks, the US–Iran conflict has shifted from a tentative stabilisation phase back into renewed escalation, reinforcing the fragility of any diplomatic progress. Following initial attempts to de-escalate through a temporary ceasefire and negotiations, the situation deteriorated quickly as violations emerged and trust between both sides eroded. Diplomatic talks ultimately failed, leading to a resumption of military activity centred around the Strait of Hormuz, including targeted strikes and increased naval presence. Most notably, the conflict has moved beyond isolated engagements towards a broader strategic confrontation, with measures aimed at disrupting Iran’s economic and energy infrastructure, significantly raising the risk of prolonged instability and further escalation across the region. 

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RESEARCH PERSPECTIVE VOL. 273 April 2026 Alternative Markets Update Over the past two weeks, the US–Iran conflict has shifted from a tentative stabilisation phase back into renewed escalation, reinforcing the fragility of any diplomatic progress. Following initial attempts to de-escalate through a temporary ceasefire and negotiations, the situation deteriorated quickly as violations emerged and trust between both sides eroded. Diplomatic talks ultimately failed, leading to a resumption of military activity centred around the Strait of Hormuz, including targeted strikes and increased naval presence. Most notably, the conflict has moved beyond isolated engagements towards a broader strategic confrontation, with measures aimed at disrupting Iran’s economic and energy infrastructure, significantly raising the risk of prolonged instability and further escalation across the region. Over the same period, oil has been the key transmission channel into markets, but with an increasingly nuanced outlook. Prices initially surged on renewed escalation and supply disruption risks around the Strait of Hormuz, regularly moving and staying above the $100 per barrel threshold and reinforcing the inflation narrative. As shown in Figure 1, WTI crude oil gained nearly 100% at its peak compared to the beginning of the year with massive daily moves. While the forward-looking view even at the outset of the conflict was that this would represent a temporary spike, expectations have since shifted higher, reflecting the already longer-than-anticipated duration of the conflict and the likelihood of structurally elevated geopolitical risk. Consensus now points to oil declining again as flows normalise, albeit to a level above pre-conflict ranges. The critical variable for inflation is therefore not the spike itself, but its duration. If oil remains around or above $100 for a sustained period, second-round effects become more likely, whereas a relatively swift move back towards the $80 range would contain the broader inflationary impact and limit the need for a more aggressive policy response. Figure 1: WTI Crude Oil YTD and Daily Gains and Losses since the Beginning of 2026, Source: Investing.com, April 2026 US inflation provided the clearest signal of the shifting macro backdrop, with the latest print coming in at 3.3% versus 3.4% expected, largely reflecting the pass-through from higher energy prices following the oil spike. Despite the slight downside surprise, the broader trend has reinforced a more cautious rates outlook, particularly as inflation risks remain skewed to the upside. At the beginning of the year, markets were pricing in around two rate cuts in the US for 2026. This has now fully reversed, with no cuts currently in sight – although this may evolve once Kevin Warsh assumes his position as Fed Chairman. While rate hikes are still not the base case, this hinges on inflation being contained and, crucially, on a moderation in long-end yields. As shown in Figure 2, US 10-year Treasury yields rose sharply during the conflict, peaking at around 4.5% from just below 4% previously, and have since eased slightly to 4.29%, but would likely need to fall closer to the 4% level for rate cuts to come back into consideration. A similar dynamic has played out in Europe, where yields have moved even more aggressively, with German 10-year Bunds rising from 2.65% to 3.09% and UK 10-year gilts from 4.27% to 4.84%, reflecting heightened inflation concerns and a broader repricing of the interest rate path across developed markets. Figure 2: 10-Year Bonds Yields in the US, the UK, and Germany Since the Beginning of 2026, Source: Investing.com, April 2026 US equities have shown a notable degree of resilience over the past two weeks, recovering from initial declines and moving back towards pre-conflict levels, as shown in Figure 3. Yet, the underlying market structure has become increasingly narrow and fragile. While headline indices have stabilised, performance has been driven by a limited group of large-cap names, masking broader weakness across cyclicals and rate-sensitive sectors. This reflects a shift in investor focus away from macro uncertainty alone towards earnings durability, particularly in an environment of higher yields and persistent inflation risks. As a result, the market is now entering a more critical phase, where the sustainability of current valuations, especially in large-cap technology, will depend on the ability to deliver on expectations. With consensus still pointing to strong year-on-year earnings growth, the upcoming reporting season will be pivotal in determining whether recent equity resilience can be maintained or whether the market begins to reprice in line with the more challenging macro backdrop. Figure 3: S&P 500 YTD and Daily Gains and Losses since the Beginning of 2026, Source: Investing.com, April 2026 Private debt is currently in a more fragile phase, with rising redemption pressure, tighter liquidity and growing scrutiny of valuations and underlying credit quality, particularly in software-heavy portfolios. While the market is clearly under strain and defaults are likely to rise further, the stress still appears concentrated in specific fund structures and borrower groups rather than signalling a broader systemic event. For institutional investors, this leaves private debt in an unusual position: near-term sentiment and liquidity dynamics have weakened materially, but the longer-term structural case remains intact, especially for scaled managers with stable institutional capital and the ability to deploy into wider spreads. Private equity remains under pressure from weak exit activity, extended holding periods, high financing costs and persistent valuation gaps, all of which continue to slow capital recycling and weigh on sentiment. That said, the outlook has become slightly more constructive as the market begins to focus on a potentially stronger IPO pipeline, with SpaceX reportedly having filed confidently for a public listing and names such as OpenAI and Anthropic also seen as possible future candidates. Even so, the benefit to broader exit conditions is far from assured, as blockbuster IPOs are likely to absorb a large share of available capital and investor attention, which could leave smaller, less exceptional companies still facing a difficult path to market in an environment of tight financial conditions and elevated selectivity. Macro Eagle: Views for April by Bobby Vedral I - March RECAP Despite Trump’s reassurance that Iran has been “totally defeated” (March 13) and that the US has “destroyed 100% of Iran’s military capability” (March 14), the ZERO % of Iranian capabilities that remains has managed to cause the “biggest energy-supply shock in history” (IEA).  As one meme stated: “April Fools Day is cancelled this year, because no made-up prank could match the sh1t going on in the world right now”.  While wondering why Mr Market is so relaxed (more below), worth noticing a few “behavioural patterns”: (1) Trump likes “drama” when markets are closed, like the Veny stunt on Saturday, Feb 3rd; the Iran attack on Saturday, Feb 28th; or the “48-hour ultimatum” on Saturday, March 21st. (2) He then does a U-Turn or spreads positive news as soon as the trading week starts. (3) Iran on the other hand, likes to hit ships and targets on Wednesdays – right in the middle of it. The result: markets rise at the start of the week, then fall into the weekend as market participants de-risk. See graph below. In other news: (1) On March 5th the Chinese Communist Party announced its latest five-year plan, setting the lowest growth target ever while also vowing to become “the world’s primary AI innovation centre”. (2) On March 25th a jury in California ruled against Meta/Google in the first social media addiction trial. (3) SpaceX kickstarted the IPO-rush, that might create some capital shortage this autumn (more below).  II – March TOP 10 (1) Oil prices in March saw their biggest monthly increase in at least the last 40 years – left graph. (2) Fiscal worries sent UK 10 year yields above 5%, last seen in 2008 – middle graph. (3) Korean equities saw their biggest ever 1-day fall on Wednesday, March 4th – right graph. (4) Meta/Google lost the first ever social media addiction trial. (5) Gold, -12%, had its worst month in decades. (6) The IEA announced its largest oil reserve release ever: 400mb. (7) Various Asian currencies, including the IDR, INR and PHP sunk to record lows. (8) A US submarine torpedoed and sank an Iranian ship in Sri Lankan waters, a first since WW2. (9) China set its lowest growth target since 1991 at 4.5-5.0%. (10) Chuck Norris, the only man who could have re-opened the Strait of Hormuz, died. Or as one meme said: “If 2026 can kill Chuck Norris – the rest of us are screwed”. III – April PREVIEW The chart below should be pretty self-explanatory: Trump’s Iran deadline tomorrow and CPI on Friday the highlights of this week. Next week we have the IMF’s Spring meetings in DC and JPM kicking-off the Q1 earnings season. Week four is relatively quiet and then comes the last week bazooka: FOMC, GDP Q1 data and BigTech earnings.  All while we follow the Trump Show … IV – On WAR & MARKETS As mentioned above, broad equity markets have reacted remarkably calm despite the 60%+ rise in oil prices. Before I muse about the reason for that in the next section, here a few other observations: (1) As the middle graph shows, consensus expectations for S&P500 corporate earnings have continued to rise. Which means the fall in equities is driven by multiple contraction, reflecting uncertainty – which makes sense. That makes the upcoming Q1 earnings season especially important to follow. (2) The press is full of chatter that US bond yields have risen on the back of higher inflation worries. That’s not correct. Looking at the right chart, real rates have risen, while inflation break-evens have stayed largely flat. What seems to have driven bond yields higher are stimulus expectations and therefore fiscal worries.  V – Why are markets so RELAXED? There are many reasons to fear the worst: (1) oil prices are up 60%+; (2) most energy industry experts expect a car crash; (3) Iran has the incentive to inflict max damage to the global economy as possible to deter future US/Israeli attacks; (4) the White House has deployed the 31st MEU, 11th MEU and 82nd Airborne – which has a whiff of “boots on the ground”; (5) the Pentagon has asked Congress for $200bn to finance the conflict. Given that the first week cost $11bn, that means 20 weeks total. Wait. What?  So, here is my view of why Mr Market seems so relaxed: (1) TACO: Trump backs off every time US 10 yields hit 4.50. He also has a date with Xi in mid-May, by which time he may want to wrap this up. He can look for a win elsewhere: say Cuba. (2) Crying Wolf: Experts predicted Armageddon after “Liberation Day” one year ago. The opposite happened. Global trade grew 5% in 2025, markets rallied. (3) Congress won’t authorize the use of force beyond the 60-90 days allowed under the War Powers Resolution Act of 1973. (4) China/India might get Iran to open the Strait, which would put pressure on DJT to end the War. (5) Bailout syndrome: ever since the Great Financial Crisis, there has been a Fiscal or Fed Put whenever markets crash. Investors have learned that “bears sounds smart, but bulls make money”. (6) Supply elasticity is higher than expected: there are “workarounds” (KSA/Red Sea, suspension of Jones Act and Russian sanctions) and “alternatives” (mainly coal, shale, etc).  Bottom line: 15+ years of “bailout mentality” have created a dangerous incentive to stay “long risk”. As Charlie Munger used to say: “Show me the incentive and I’ll show you the outcome”. VI – On Trump’s STRATEGY (or lack thereof) As the memes below make clear, the market believes Trump either has no strategy or is making one up on the go. Which is probably true, as he constantly moves the goalpost: from “regime change”, to “removing (400kg of enriched) uranium”, to “opening the Strait”, to “destroying all ballistic missiles”, to “take the oil”, to “bomb [them] back to the Stone Age, where they belong”.   I think there is a good chance that Trump gets bored, declares victory (“We broke it. You fix it”) and goes home. Here is why: (1) Iran is fighting an asymmetric war and has time on its side: it can inflict max pain on the world economy at minimum cost; its sensitivity to casualties is low; and like the Vietcong it does not have to win, it just needs to survive. (2) The US can claim partial victory having set Iran back a few decades in its military capabilities and even having achieved some sort of “regime change”: a military junta, the IRGC, seems to be in charge now. (3) It is not obvious what additional military action can achieve. As the reality of diminishing returns kicks in, the growing political cost makes it easier to see regime change in Congress this autumn than in Teheran.   The biggest losers will be the Gulf states, whose “business plan” (finance, expats & tourism) will need revisiting with an IRGC-led Iran at its border.  VII – On EUROPE In March Europe made headlines for all the wrong reasons: (1) total geopolitical irrelevance – as it has no means to influence either way what is going on in the Gulf. (2) Yet another looming supply/energy crisis thanks to decades of self-important climate-change virtue-signalling instead of strategic risk management; (3) Local elections in Germany and France as well as a general snap election in Denmark and a referendum in Italy where the common outcome is less clarity and more fragmentation. With all of this, and government debts at all-time highs (another risk management failure) no wonder bond markets have become nervous (right graph), fearing a repeat of the 2022 interventions playbook, especially in gas-dependent countries.  One can only hope that “it is darkest before dawn”. Britain thinking about drilling in the North Sea and Germany thinking about nuclear gives some hope. At the end of the day: “no energy = no industry = no independent decision making”, especially in a geopolitically contested world.  VIII – My BRO (= Binocular of Risks and Opportunities) The main market drivers continue to be: the War (and its impact on corporate earnings, financial conditions and inflation); AI-Angst (winners/losers, China/US, software/private credit) and government finances (incl. risk of stimulus ahead of the mid-terms).  Combining the last two we might run into a “financing problem” this autumn. Here is why: (1) with SpaceX targeting to raise $75bn via IPO for a $1.75trn valuation and Anthropic/OpenAI probably probably wanting to do the same; (2) add $10trn of US treasury refinancing; (3) $2trn of budget deficit, i.e. new debt;  (4) $2trn of gross corporate debt issuance - also largely AI capex related; and (5) account for the fact that the Gulf probably needs its money for capex/defence at home … and I would say “Houston, we have a problem”. .  IX – PORTFOLIO The market reaction on March 31st tells me this market wants to go up. The “Fear & Greed” indicator below is now a good contrarian indicator.  The problem is that any “relief rally” will be short-lived as the pre-War worries of AI disruption, private credit, tighter financial conditions, high energy prices and the uncertainty caused by the US midterms will return.  So – I’m sticking to my overall portfolio focused on European autonomy (infrastructure, energy and defence-related, conscious that there is a bubble in defence stocks); Latam (energy, minerals, consumer) as well as thematic allocation to Japan and Korea. Largely avoiding US BigTech, credit, duration and anything illiquid.   I wish you all a great APRIL and as always: MAY THE MARKET BE WITH YOU! Bobby The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Stone Mountain Capital LTD. Readers should refer to the Disclaimer. Bobby Vedral MacroEagle E : [email protected] M : +447899996595 Bobby is a macro-political analyst who runs his own fund MacroEagle. He is also the UK representative of the German Economic Council (Wirtschaftsrat Deutschland) focused on the German-British relationship post-Brexit. Bobby left Goldman Sachs in March 2018, where he was a Partner and Global Head of Market Strats. His previous responsibilities included Systematic Trading Strategies, eProduct and FX/EM Structuring. In his external functions he was Member of the ECB's FX Consulting Group. Before Goldman Sachs, Bobby worked at Deutsche Bank and UniCredit/HVB. This perspective is neither an offer to sell nor a solicitation of an offer to buy an interest in any investment or advisory service by Stone Mountain Capital LTD. For queries or for further information around our research and advisory services please contact email: [email protected] under Tel.: +442037228175. 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