Ceasefire Unravels: Islamabad Talks Collapse, Trump Orders Hormuz Blockade — Oil Back Above $104
Today’s Brazil morning call opens with the ceasefire’s promise shattered and a new military escalation underway. This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets.
Last week’s ceasefire euphoria — the Dow’s best day in a year, the Ibovespa’s surge to all-time highs above 197,000, oil’s crash below $95 — has been violently reversed. After 21 hours of face-to-face negotiations in Islamabad, VP Vance left Pakistan without a deal on Sunday, citing Iran’s refusal to abandon nuclear ambitions. Iran blamed Washington’s “excessive demands.” Trump immediately ordered a U.S. naval blockade of the Strait of Hormuz, targeting all vessels entering or leaving Iranian ports. CENTCOM confirmed the blockade begins at 10 AM ET today. WTI surged 8.5% to ~$105, Brent jumped 8% to ~$103. S&P 500 futures sank 1.1%, Dow futures dropped 517 points, Nasdaq futures fell 1.2%. Asia traded lower: Nikkei −0.4%, Kospi −1.4%. The two-week window that was supposed to buy time for peace has instead produced a new military escalation — the first U.S. blockade of the Strait in modern history.
The blockade transforms the conflict from a temporary disruption to a structural one. Iran’s oil exports — its economic lifeline — are now under direct naval interdiction. Trump is also considering resuming limited military strikes per the Wall Street Journal. The ceasefire technically remains in force, but its practical meaning has collapsed. The Ibovespa enters Monday after closing at 197,324 on Friday — its third consecutive ATH — with RSI at 71.79, deep in overbought territory. The collision of extreme bullish positioning with a weekend escalation creates maximum volatility risk at the open.
Monday’s calendar: OPEC Monthly Report (06:00 ET — critical supply assessment), IMF Meetings begin, BCB Focus Market Readout (07:25 BRT), Existing Home Sales (10:00 ET, cons: 4.07M). Bank earnings season launches: Goldman Sachs, Citigroup, Wells Fargo, JPMorgan, Morgan Stanley, and Bank of America all report this week. War Day 44.
Three Things That Matter
| Friday | S&P 500 −0.11% to 6,817 (7-day streak snapped). Dow −0.56% to 47,917. Nasdaq +0.35% to 22,903 (Nvidia +2.58%, AMZN +2.05%). Weekly gains: S&P +3.6%, Nasdaq +4.7%, Dow +3.0% — best week since Nov. March CPI: headline +3.3% YoY / +0.9% MoM (below 3.4% cons); core +2.8% YoY / +0.3% MoM. Michigan Sentiment dropped. Ibovespa +1.12% to 197,324 (3rd consecutive ATH, intraday 197,554). USD/BRL −0.85% to R$5.0061 — broke R$5.01. Oil rebounded: WTI closed ~$96.57. Trump told NY Post warships “reloading with best ammunition.” Vance/Witkoff traveled to Islamabad for weekend talks |
| Weekend | TALKS COLLAPSE: 21 hours of face-to-face negotiations in Islamabad ended without deal. Vance: Iran “chose not to accept our terms” on nuclear program. Iran: “excessive demands by America prevented agreement.” Key sticking points: nuclear ambitions, Strait toll/control, war reparations, frozen assets, Lebanon/Hezbollah. TRUMP ORDERS BLOCKADE: “Effective immediately” — U.S. Navy to blockade all ships entering/leaving Strait of Hormuz. CENTCOM: blockade of Iranian ports starts 10 AM ET Monday. Non-Iranian port traffic allowed. Trump: “No one who pays an illegal toll will have safe passage.” WSJ: Trump considering resuming limited strikes. Pakistan urges continued engagement |
| Today | BLOCKADE BEGINS: 10 AM ET — U.S. Navy starts interdicting vessels at Iranian ports. S&P futures −1.1%, Dow futures −517pts, Nasdaq futures −1.2%. WTI +8.5% to ~$105, Brent +8% to ~$103. Asia: Nikkei −0.4%, Kospi −1.4%, ASX −0.6%. OPEC Monthly Report (06:00 ET — supply outlook critical). IMF Meetings begin. BCB Focus Readout (07:25 BRT). ECB’s De Guindos (06:00, 08:15). Existing Home Sales (10:00, cons: 4.07M). China credit data (05:30). German Bubill auctions. Bank earnings week begins. War Day 44 |
Where We Left Off FRIDAY, APR 10 + WEEKEND
Friday’s session was mixed but capped an exceptional week. The S&P 500 slipped 0.11% to 6,816.89, snapping its seven-day winning streak, while the Nasdaq rose 0.35% to 22,902.89 on semiconductor strength (Nvidia +2.58%, Broadcom gains). The Dow fell 0.56% to 47,916.57. For the week, the S&P 500 gained 3.6%, Nasdaq +4.7%, and Dow +3.0% — the best weekly performance for all three since November. The March CPI came in slightly below feared levels: headline +3.3% YoY (below the 3.4% consensus) with +0.9% MoM, while core held at +2.8% YoY / +0.3% MoM. The energy surge was the primary driver, but core resilience at 2.8% provided modest relief. BMO’s Vail Hartman noted the Fed “can take some solace in the tameness of core” but warned of upward pressure if the energy shock persists.
The Ibovespa extended its record-breaking run. From the chart: O:195,130, H:197,554, L:195,129, C:197,324 (+1.12%). A third consecutive all-time high — the index has now gained over 9,000 points in four sessions. RSI surged to 71.79 (MA: 58.15), firmly in overbought territory above 70 for the first time in this rally. MACD histogram at 3,043 (MACD: 1,610.93, signal: 1,432.11) — the bullish expansion continues but at extreme levels. The USD/BRL crashed below R$5.01 for the first time: chart shows O:5.0061, H:5.0061, L:5.0061, C:5.0061. RSI at 42.49 (MA: 30.84) — the moving average is in deeply oversold territory, the most extreme BRL strength reading of the entire rally.
Then the weekend destroyed the narrative. After 21 hours of negotiations in Islamabad, Vance left without a deal. The talks broke down over nuclear ambitions, Strait control, war reparations, and Lebanon. Trump immediately announced a U.S. naval blockade of the Strait — CENTCOM confirmed interdiction of Iranian ports begins at 10 AM ET Monday. WTI surged 8.5% to ~$105, Brent jumped 8% to ~$103. S&P futures fell 1.1%, Dow futures dropped 517 points. As covered in Friday’s Morning Call, the ceasefire rally carried extreme overbought risk — and the weekend delivered the catalyst for a sharp correction. The Ibovespa’s RSI at 71.79 entering a blockade announcement is the textbook setup for a gap-down open.
Market Snapshot DATA AS OF FRI, APR 10 CLOSE + OVERNIGHT
| Indicator | Close / Level | Change |
|---|---|---|
| Ibovespa | 197,324 | +1.12% (3rd ATH) |
| USD/BRL | R$5.0061 | −0.85% (BRL ↑) |
| S&P 500 | 6,817 | −0.11% |
| S&P 500 Futures | ~6,741 | −1.1% (overnight) |
| WTI Crude | ~$105 | +8.5% (overnight) |
| Brent Crude | ~$103 | +8% (overnight) |
| Gold | ~$4,702 | −1.78% |
| Bitcoin | ~$71,040 | +0.42% (Fri) |
| VIX | 19.23 | −1.33% |
What to Watch MONDAY CATALYSTS
The blockade activation at 10 AM ET is the defining event. CENTCOM confirmed that U.S. forces will begin interdicting all maritime traffic to and from Iranian ports, while non-Iranian traffic through the Strait will be permitted. The distinction matters — this is targeted at Iran’s oil exports, not a full Strait closure. But the escalation risk is severe: if Iran retaliates against U.S. vessels, the ceasefire is formally dead. Trump also said the U.S. is “ready to act at the appropriate moment,” and the WSJ reports he is considering resuming limited strikes. Any military incident during the blockade’s first hours could send oil toward $110+ and trigger a broader equity selloff.
The OPEC Monthly Report at 06:00 ET is the most consequential supply-side data point in weeks. If OPEC revises production assumptions downward or signals inability to offset the Hormuz disruption, oil’s surge accelerates. The BCB Focus Market Readout at 07:25 BRT will show how Brazilian economists are reassessing inflation and Selic expectations after Friday’s IPCA and the weekend blockade. Existing Home Sales at 10:00 ET (cons: 4.07M) are secondary but reflect the mortgage-rate drag on housing from war-elevated yields.
Bank earnings season launches this week with Goldman Sachs, JPMorgan, Citigroup, Wells Fargo, Morgan Stanley, and Bank of America all reporting. Their trading desks have had the most active quarter in years — the war’s volatility was a revenue machine for FICC trading. Guidance on credit quality, loan demand, and energy-sector exposure will set the tone for the reporting season. The IMF Meetings beginning today may produce public commentary on the economic impact of the Strait closure and blockade.
Ibovespa Setup TECHNICAL LEVELS
The Ibovespa closed Friday at 197,323.87 (+1.12%) — its third consecutive ATH. From the chart: O:195,130, H:197,554, L:195,129, C:197,324. RSI at 71.79 (MA: 58.15) — above 70, deep in overbought territory, flashing the strongest exhaustion signal since the war began. MACD histogram at 3,043 is extreme. The index has gained over 9,000 points in four sessions. This is the technical setup that most reliably precedes sharp corrections — and the blockade provides the fundamental catalyst. Expect a gap-down open Monday, potentially testing the 192,000-193,000 support zone established by last Wednesday’s ATH.
Resistance: 197,324 (Friday close / ATH) → 197,554 (intraday ATH) → 200,000 (psychological — deferred).
Support: 195,885 (mid-range) → 193,603 (prior ATH cluster) → 192,201 (Wednesday’s ATH, now key support) → 189,673 / 189,557 (SMA vicinity) → 187,927 (mid-Bollinger) → 186,297 / 186,297 (SMA cluster) → 185,150 (lower band) → 184,764 (20-day) → 173,642 (lower Bollinger) → 157,241 (200-day).
Copom Watch SELIC AT 14.75% · NEXT MEETING: APR 28-29
The blockade is unambiguously hawkish for the BCB. Oil back above $105 with a U.S. naval interdiction underway removes any possibility of a May rate cut. The ceasefire’s dovish window — which briefly reopened the cut discussion — is now firmly closed. Today’s BCB Focus Readout at 07:25 BRT will likely show economists pushing Selic expectations higher and inflation forecasts upward in response to the weekend events.
Friday’s IPCA at +4.00% YoY and +0.77% MoM confirmed the inflation challenge was real even before the blockade. With oil surging back to $105, the pass-through to Brazilian fuel prices will intensify in coming weeks. The USD/BRL at R$5.01 provides some offset — the strongest real since mid-2024 — but even that remarkable level may come under pressure if the blockade triggers a broader EM risk-off. The April 28 Copom meeting, just 8 days after the ceasefire’s technical expiration on April 21, now faces the prospect of assessing a full blockade scenario rather than a de-escalation. Expect a hold at 14.75% with hawkish language emphasizing “vigilance” and “upside risks to inflation.”
Economic Calendar MONDAY, APR 13
| Time | Event | Impact |
|---|---|---|
| Pre-Market | China credit data: New Loans (05:30, cons: 3,465B), M2 (cons: 8.9%), Total Social Financing (cons: 5,400B). German Bubill auctions. Portuguese CPI. India CPI (06:30, cons: 3.48%). ECB’s De Guindos (06:00, 08:15). IMF Meetings begin. OPEC Monthly Report (06:00 ET — supply outlook under blockade) | HIGH |
| 07:25 BRT | BCB Focus Market Readout — first post-blockade consensus on Selic, inflation, BRL expectations. Critical for Copom positioning ahead of April 28 | HIGH |
| 10:00 ET | BLOCKADE BEGINS: 10 AM ET — CENTCOM starts interdiction of Iranian ports. Existing Home Sales (10:00, cons: 4.07M). Canada Building Permits (08:30, cons: −0.4%). German Buba Balz speaks (12:00). Bill auctions (11:30) | CRITICAL |
Latin America Markets FRIDAY CLOSE / CHART DATA
| Index | Close | Change | RSI (14) | Signal |
|---|---|---|---|---|
| Ibovespa | 197,324 | +1.12% | 71.79 | Overbought |
| IPC (Mexico) | 70,023 | −0.41% | 50.07 | Neutral |
| COLCAP (Colombia) | 2,302 | +0.33% | 50.94 | Neutral |
| IPSA (Chile) | 11,077 | +1.08% | 62.69 | Bullish |
| MERVAL (Argentina) | 2,998,770 | −0.03% | 58.33 | Neutral |
Chile’s IPSA continued its remarkable recovery, surging to 11,077 (+1.08%) with RSI at 62.69 — the strongest reading in LatAm outside Brazil. The copper-heavy index benefited from the ceasefire’s commodity repricing and may now face pressure from the blockade’s implications for shipping lanes beyond Hormuz. Mexico’s IPC gave back gains, falling 0.41% to 70,023 with RSI moderating to a neutral 50.07. Argentina’s MERVAL flirted with 3 million again but settled fractionally lower at 2,998,770. Colombia’s COLCAP edged up 0.33% to 2,302 — the oil-producer may now benefit from the crude surge as the blockade narrative plays out. The Ibovespa’s 71.79 RSI represents the widest overbought divergence from the rest of the region this cycle. As covered in the latest market report, the question is whether the blockade triggers a healthy correction or a structural repricing.
Risk Map BULL vs BEAR
| Bull Case | Bear Case |
|---|---|
| The blockade is a negotiating tool, not an end-state — Trump has repeatedly used maximum-pressure tactics that precede deals. Vance left with a “final and best offer” on the table. Pakistan is urging continued dialogue. The ceasefire technically holds. The blockade targets only Iranian ports, not all Strait traffic — a calibrated escalation, not a full closure. If Iran accepts terms within days, the rally resumes from higher levels.
Bank earnings season is a potential catalyst — Goldman, JPMorgan, and peers report this week. War-era volatility was a FICC trading bonanza. Strong trading results + resilient credit quality could lift financials and support the broader market even amid geopolitical stress. The Ibovespa’s correction from ATH is a buying opportunity, not a trend change — The structural bid (14.75% carry, BRL at R$5.01, commodity exports) survives the blockade. A pullback from 197,324 to the 190,000-193,000 zone would reset RSI toward 60 without breaking the bullish structure. Brazil’s distance from the conflict remains its primary advantage. |
The blockade ends the ceasefire’s pretense — the war is escalating, not winding down — 21 hours of face-to-face talks produced nothing. The sticking points (nuclear program, Strait control, reparations) are not bridgeable. Trump is considering resuming strikes. The blockade is an act of economic warfare that Iran will view as an escalation. If Iran retaliates — attacks on U.S. naval vessels, strikes on Gulf allies — the conflict enters a new and more dangerous phase.
Oil at $105 destroys the inflation narrative that powered the ceasefire rally — Last week’s CPI at +3.3% was pre-blockade data. With WTI back above $105, gas prices are heading to $5. March was supposed to be “peak oil shock” — the blockade means April and May will be worse. The Fed, which some officials were already considering hiking, now faces an even more hostile inflation environment. Rate cuts are off the table globally. The Ibovespa’s RSI at 71.79 + a blockade = gap-down risk — Three consecutive ATHs with RSI above 70 is the most overbought reading since the war began. The index gained 9,000 points in four sessions on ceasefire hopes that have now materially deteriorated. Energy stocks (Petrobras) may rally, but banks, rate-sensitives, and the broader market face the return of war premium pricing. A 3-5% pullback to 190,000 is the base case; a deeper correction toward 185,000 is possible if the blockade triggers military confrontation. |
Positioning BOTTOM LINE
The ceasefire week is over. It delivered the best weekly gains since November, three Ibovespa ATHs, and a historic oil crash. And then it collapsed over a weekend in Islamabad. The blockade ordered by Trump represents a fundamental escalation — the first U.S. naval interdiction of the Strait in modern history. Even if it targets only Iranian ports, the signal is unmistakable: the war is intensifying, not ending. Last week’s 3.6% S&P gain and 9,000-point Ibovespa surge were priced on hope. Monday reprices on reality.
The Ibovespa at 197,324 with RSI at 71.79 is the most technically extended the index has been since the war began. The blockade provides the fundamental catalyst for the overbought correction that Friday’s session hinted at but didn’t deliver. Expect a gap-down open — the question is magnitude. If the blockade activation at 10 AM ET proceeds without military incident, the selloff may be contained to 2-3%, testing the 192,000-193,000 zone where Wednesday’s ATH provides support. If an Iranian retaliation occurs, the correction deepens toward 188,000-190,000.
Sector positioning shifts back to war mode. Energy (Petrobras, PRIO) will benefit from $105 oil. Banks face renewed rate uncertainty. Rate-sensitive sectors give back ceasefire-week gains. The USD/BRL at R$5.01 may bounce toward R$5.10-5.15 on risk-off, though the carry floor remains. The BCB Focus Readout at 07:25 will show how quickly the market is repricing — expect Selic expectations to firm and cut hopes to fade.
The week ahead is defined by the blockade’s implementation, bank earnings, and the ceasefire clock. The two-week window expires April 21 — just eight days away. If no deal materializes before then, Trump has already signaled he will resume strikes. The market bought two weeks of hope and got five days of rally. Now it must price the possibility that the hope was misplaced. Reduce directional exposure. Lean toward energy and exporters. Watch the Strait — not the headlines, but the ships.
RT Staff Reporters · This newsletter is for informational purposes only and does not constitute investment advice. Always consult a licensed financial advisor before making investment decisions. Past performance does not guarantee future results.