This global economy briefing covers Wednesday, April 29 — the most consequential day of the entire war cycle for monetary policy. Three central banks spoke: the Fed held at 3.75% in what is likely Jerome Powell’s final meeting as chair; the BoC held at 2.25%; and the BCB stunned markets with a surprise 25bp cut to 14.50% (consensus was a hold at 14.75%) — the first rate cut by any major EM central bank since the war began.
Trump rejected Iran’s proposal to reopen the Strait of Hormuz and told aides to prepare for an extended blockade, sending oil higher with Brent near $105. The Senate Banking Committee confirmed Kevin Warsh as the next Fed chair, sending his nomination to the full Senate — he could be installed by May 15. US durable goods beat at 0.8% MoM (consensus 0.4%), core durables at 0.9%, and the critical nondefense capital goods ex-aircraft surged 3.3% (consensus 0.5%).
Housing starts exploded 10.8% to 1.502M (consensus 1.380M). But building permits collapsed -10.8%. German CPI came in at 2.9% YoY (consensus 3.0%) — a marginal undershoot — while Spanish CPI eased to 3.2% (consensus 3.5%). EZ core CPI eased to 2.8% (prior 2.9%). EIA crude drew 6.2M barrels (consensus +0.3M). Brazil’s CAGED created 228,210 jobs (consensus 150,000). China’s Caixin manufacturing PMI beat at 52.2 (consensus 50.9).
The S&P 500 edged -0.04% to 7,135.95, the Nasdaq rose +0.04% to 24,673.24, and the Dow fell -0.57% to 48,861.81. As this global economy briefing series has tracked for two weeks, the Copom was binary on oil — and the BCB chose to cut anyway. This is part of The Rio Times’ daily global economy briefing for the Latin American financial community.
The Big Three
The BCB stunned markets by cutting the Selic rate 25bp to 14.50% (consensus was a hold at 14.75%) — the first rate cut by any major emerging-market central bank since the Iran war began on February 28. This is the most audacious central bank decision of the war cycle. With oil at $100+ WTI, Brent above $105, the UAE exiting OPEC, and Trump preparing for an extended blockade, the BCB looked at its domestic data — IPCA-15 at 4.37% (below 4.48% consensus), services at 0.5% YoY, retail at 0.2% YoY, IBC-Br at 0.60% — and concluded that the domestic slowdown warranted relief regardless of the external energy shock. The CAGED report, released hours before the decision, showed 228,210 jobs created in March (consensus 150,000), suggesting the labor market is strong enough to absorb a modest easing. FX flows swung dramatically to +$9.184 billion from -$2.450 billion — the largest weekly inflow of the year. Brazil’s PPI surged 2.37% MoM (prior -0.16%), confirming energy pass-through, but the IGP-M at 2.73% MoM (consensus 2.50%) was treated as manageable. The BCB’s message: domestic stagflation requires action even if global oil is unresolved.
The Fed held rates at 3.75% unanimously in what is likely Jerome Powell’s final meeting as chair — and Trump rejected Iran’s proposal to reopen the Strait of Hormuz, telling aides to prepare for an extended blockade. Powell said he will stay on the Board of Governors for an “indefinite period” while a renovation probe continues. The Senate Banking Committee confirmed Kevin Warsh, clearing him for a full Senate vote that could install him as chair by May 15. The 10-year yield jumped 5bp to 4.41% after the decision. The Fed statement maintained the cautious hold posture: inflation above target, labor market resilient, economic activity solid. Powell’s press conference — possibly his last — was expected to reinforce that the oil shock is a supply-side phenomenon that monetary policy cannot address. Trump’s rejection of the Iran deal, reported by Axios and WSJ, is the most consequential geopolitical development: the blockade continues indefinitely, Hormuz remains closed, and oil’s war premium becomes structural rather than temporary.
US durable goods orders beat at 0.8% MoM (consensus 0.4%), core durables at 0.9% (consensus 0.4%), and nondefense capital goods ex-aircraft surged 3.3% (consensus 0.5%) — while housing starts exploded 10.8% to 1.502M (consensus 1.380M). The capex proxy (nondefense ex-air at 3.3%) is the single most bullish investment data point since the war began — businesses are investing at six times the expected rate. Housing starts at 1.502M versus 1.380M consensus represents a massive beat that contradicts the NAHB collapse (34) and mortgage rates above 6.35%. But building permits crashed -10.8%, the steepest decline in years, signaling that starts are running on previously-permitted projects while new authorization has collapsed. The goods trade deficit widened to -$87.87B (consensus -$87.50B), and wholesale inventories surged 1.4% (consensus 0.4%). EIA crude inventories drew 6.234M barrels (consensus +0.3M) — the largest draw in months — while gasoline drew 6.075M and distillates fell 4.494M. The product demand destruction narrative is now fully dead.
Economic Dashboard
| INDICATOR | ACTUAL | EXPECTED | PREVIOUS | VERDICT |
|---|---|---|---|---|
| BCB Selic Rate Decision | 14.50% | 14.75% | 14.75% | ▼ Surprise Cut |
| Fed Interest Rate Decision | 3.75% | 3.75% | 3.75% | Hold as Expected |
| BoC Interest Rate Decision | 2.25% | 2.25% | 2.25% | Hold as Expected |
| US Durable Goods MoM (Mar) | 0.8% | 0.4% | −1.2% | ▲ Strong Beat |
| US Nondefense Cap Goods Ex-Air MoM | 3.3% | 0.5% | 1.6% | ▲ Massive Capex Beat |
| US Housing Starts (Mar) | 1.502M | 1.380M | 1.398M | ▲ +10.8% Surge |
| US Building Permits MoM (Mar) | −10.8% | +10.9% | −4.7% | ▼ Collapse |
| German CPI YoY (Apr Flash) | 2.9% | 3.0% | 2.7% | ▼ Below Consensus |
| Spanish CPI YoY (Apr Flash) | 3.2% | 3.5% | 3.4% | ▼ Easing |
| EZ Consumer Inflation Expectations (Apr) | 49.1 | — | 43.5 | ▲ De-Anchoring |
| EIA Crude Oil Inventories | −6.234M | +0.300M | +1.925M | ▼ Massive Draw |
| Brazil CAGED Net Jobs (Mar) | 228.21K | 150.00K | 255.32K | ▲ Strong Beat |
| China Caixin Manufacturing PMI (Apr) | 52.2 | 50.9 | 50.8 | ▲ Strong Beat |
| German 10Y Bund Auction | 3.080% | — | 2.920% | ▲ +16bp |
| EZ Business & Consumer Survey (Apr) | 93.0 | 95.2 | 96.2 | ▼ Below 2022 Lows |
Europe
German CPI Undershoots at 2.9%, Spanish CPI Eases, But Inflation Expectations De-Anchor
German CPI at 2.9% YoY (consensus 3.0%) and German HICP at 2.9% (consensus 3.1%) represent the first below-consensus inflation readings from Germany since the war began. The monthly print eased to 0.6% from 1.1%. Regional state CPIs ranged from 2.6% (Baden-Württemberg) to 2.9% (Bavaria, Brandenburg, Saxony). Spanish CPI eased more dramatically to 3.2% (consensus 3.5%, prior 3.4%), with the monthly print at just 0.4% (consensus 0.6%). Eurozone core CPI eased to 2.8% from 2.9%. These are the first signs that the energy pass-through may be peaking — but the ECB cannot celebrate yet.
The ECB decides tomorrow. Today’s data creates a paradox: headline CPI is easing (German 2.9%, Spanish 3.2%), core is edging down (2.8%), but consumer inflation expectations are de-anchoring at 49.1. The survey data (business/consumer at 93.0, services sentiment at 0.9) says the economy is in recession. The bond market (Bund 3.08%, +16bp) says inflation expectations are rising. The ECB must choose which signal to follow: the easing headline CPI argues for a cut, the de-anchoring expectations argue for a hold or hike, and the services recession argues for emergency easing. As flagged in our April 24 briefing, the services PMI at 47.4 was the recession signal — Wednesday’s survey data at 93.0 confirms it.
Verdict
German CPI at 2.9% (below 3.0% consensus) and Spanish CPI at 3.2% (below 3.5%) are the first below-consensus inflation prints of the war — the energy pass-through may be peaking. But inflation expectations at 49.1 and selling price expectations at 31.1 show the horse has bolted: expectations are de-anchoring even as headlines ease. The business/consumer survey at 93.0 is below 2022 crisis levels. The Bund at 3.08% (+16bp) says the bond market doesn’t believe the disinflation. Tomorrow’s ECB decision is the most important since the war began: cut into de-anchoring expectations, or hold into a services recession. Neither option is good.
United States
Powell’s Final Stand, Warsh Confirmed, Capex at 3.3%, EIA Draws 6.2M, Trump Prepares Extended Blockade
The Fed’s hold at 3.75% was unanimous and unsurprising — the drama was around Powell. He confirmed he will stay on the Board of Governors, and the Senate Banking Committee confirmed Warsh with Sen. Tillis providing the swing vote after the DOJ dropped its investigation into Powell. Warsh could be installed as chair by May 15. The 10-year yield jumped 5bp to 4.41% post-decision. The S&P 500 finished essentially flat at 7,135.95 (-0.04%), the Nasdaq crept up 0.04% to 24,673.24, but the Dow fell 280 points (-0.57%) as consumer staples and healthcare dragged. Visa surged 6%+ on a 17% revenue beat, Starbucks gained 5% on a same-store sales beat, and T-Mobile rose 2% on raised guidance.
The durable goods and housing data was extraordinarily strong. Nondefense capital goods ex-aircraft at 3.3% MoM (consensus 0.5%) is the clearest signal that US businesses are investing at an accelerating pace — this is the capex boom the Philly Fed (capex plans 35.2) and machinery-orders data previewed. Core durables at 0.9% (consensus 0.4%) confirm the breadth. Housing starts at 1.502M versus 1.380M consensus represents the strongest residential construction activity in months. But the permit collapse to -10.8% is the forward indicator: builders are working through existing permits while refusing to authorize new projects at 6.35%+ mortgage rates. The EIA crude draw of 6.234M barrels (consensus +0.3M) was stunning — the tightest reading in weeks — while gasoline drew 6.075M and distillates 4.494M. Demand is strong across all products. Atlanta Fed GDPNow held at 1.2%.
Trump’s rejection of the Iran Hormuz proposal and instructions to prepare for an extended blockade is the session’s most consequential development for oil markets. The Axios report that Trump sees Iran’s nuclear program as non-negotiable means the blockade becomes a structural feature of the global energy market, not a temporary war premium. This changes every central bank’s calculus: oil at $100+ is not a spike to be waited out but a new baseline to be incorporated into inflation forecasts. For the Fed, it means headline CPI stays elevated for longer. For the incoming Chair Warsh — who called for a “new inflation framework” — the extended blockade provides the justification for higher-for-longer rates. Alphabet, Amazon, Meta, and Microsoft reported after the close — their guidance will determine Thursday’s open.
Verdict
Nondefense capex ex-air at 3.3% versus 0.5% consensus is the US economic story in one number: businesses are investing at six times the expected rate while the war rages and oil tops $100. This is not a fragile economy. The EIA’s 6.2M crude draw with 6.1M gasoline and 4.5M distillate draws says demand is robust across the entire product spectrum. Trump’s extended-blockade preparation transforms oil from a temporary shock to a structural cost — every inflation model needs revision. Warsh’s confirmation means the transition from Powell to Warsh is now on a 2-3 week timeline. The Dow’s 280-point drop is the consumer-staples/healthcare rotation out, not a macro signal — the S&P and Nasdaq held flat because tech absorbed the blow. Hold through the Mag 7 results.
Asia-Pacific
China Caixin PMI Beats at 52.2, Korea IP Rebounds, Japan IP Misses, NZ Confidence Crashes
China’s Caixin manufacturing PMI at 52.2 (consensus 50.9, prior 50.8) is the strongest reading from China’s private-sector manufacturing survey in months and contrasts with the official NBS manufacturing PMI at 50.3 (consensus 50.1) — both expansionary but the Caixin significantly more so. The divergence suggests that smaller, export-oriented Chinese manufacturers are benefiting from the weak yuan and global demand more than the large SOEs captured by the NBS survey. China’s non-manufacturing PMI dipped to 49.4 (consensus 49.9) — the services sector slipping below 50 for the first time, mirroring the eurozone pattern. The composite fell to 50.1 from 50.5 — barely expanding.
Korea’s March industrial production rebounded 3.6% YoY (consensus 3.8%, prior -2.3%), returning to growth after February’s contraction. Monthly IP rose 0.3% (consensus 0.2%). Korean retail sales surged 1.8% MoM (prior -0.3%) and services output jumped 1.4% MoM (prior 0.3%). Japan’s IP missed at -0.5% MoM (consensus +1.0%) — the second consecutive monthly decline — but large retailers’ sales beat at 1.3% MoM and retail sales surged 1.7% YoY (consensus 0.9%). Japan is Showa Day holiday Thursday but the overnight data keeps the BoJ’s stagflation narrative alive: weak production (-0.5%) with strong consumer spending (1.7% retail). New Zealand ANZ business confidence collapsed to -10.6 from 32.5 — a 43-point crash.
Verdict
China’s Caixin at 52.2 versus the official NBS at 50.3 says small exporters are thriving while large SOEs struggle — the Yuan weakness is the driver. China’s non-manufacturing dipping below 50 means the world’s two largest service economies (eurozone and China) are now both in services contraction. Korea’s retail and services rebound (1.8% and 1.4% MoM) partially offset the consumer confidence crash (99.2). Japan IP missing at -0.5% while retail beats at 1.7% is the producer-consumer split in reverse: consumers spending, factories struggling. NZ confidence crashing 43 points is the Pacific’s most dramatic sentiment collapse. Trump’s extended blockade makes every Asian energy importer’s 2026 outlook worse.
Latin America & Africa
The BCB Cut — 14.50% Shocks Consensus — CAGED Strong, FX Flips to Inflow, IGP-M Hot
The BCB’s 25bp cut to 14.50% is the most consequential LatAm monetary policy decision of the year and arguably the most contrarian rate move by any major central bank since the war began. Every other major central bank — Fed, ECB, BoE, BoJ, BoC, RBA — held in April. The BCB cut. The justification is clear in the domestic data: IPCA-15 at 4.37% (below consensus), services at 0.5% YoY, retail at 0.2% YoY, IBC-Br decelerating from 0.80% to 0.60%. The economy is slowing despite the Selic at 14.75%, and the BCB concluded that maintaining the rate would deepen the domestic slowdown without materially influencing the oil-driven inflation that dominates the headline.
The CAGED report — 228,210 jobs created (consensus 150,000) — provided the labor-market cover: the BCB can argue that the cut will not destabilize employment because the market is already absorbing 228K new positions per month. FX flows swung dramatically to +$9.184 billion from -$2.450 billion — the largest weekly inflow reversal of the year, suggesting foreign capital is flowing into Brazil ahead of (or in anticipation of) easier monetary conditions. Brazil’s PPI at 2.37% MoM confirms the energy pass-through at the producer level, and IGP-M at 2.73% MoM (consensus 2.50%) is running hot. But the BCB looked through the wholesale-price surge and focused on the consumer-level data. The Ibovespa’s 200,000 target is now the obvious Thursday trade — the surprise cut is the catalyst this global economy briefing series has tracked since April 15.
Chile’s rate decision was expected at hold (4.50%). Chile’s unemployment rose to 8.9% (consensus 8.6%, prior 8.3%) — the Chilean labor market is deteriorating. The BoC held at 2.25% as expected in Canada, with Governor Macklem’s press conference addressing the CPI surge (2.5% on record gasoline) and housing weakness (starts miss at 235.9K). This global economy briefing’s Copom countdown — which began on April 15 and ran through 14 consecutive daily editions — concludes with the BCB’s surprise. We said the Copom was binary on oil. The BCB decided oil was not the binding constraint. The domestic economy was.
Verdict
The BCB’s surprise cut to 14.50% is the boldest central bank decision of the war. With oil at $100+, the UAE exiting OPEC, and Trump preparing an extended blockade, the BCB looked at the domestic data and said: the economy needs relief more than inflation needs restraint. CAGED at 228K and FX inflows at +$9.18B gave them the cover. The Ibovespa gaps higher Thursday toward 200,000. DI Jan 2027 contracts rally hard. The BRL’s reaction is the key risk — if it weakens past R$5.10, the BCB’s credibility is questioned. If it holds near R$5.00, the cut is vindicated. This global economy briefing’s two-week Copom daily coverage concludes with the most surprising outcome we modeled: a cut into $100 oil. The BCB saw something the consensus didn’t.
Trades & Tilts
→ The BCB’s surprise cut to 14.50% is the Ibovespa’s 200,000 catalyst — go long Ibovespa at Thursday’s open; the FX flows flipping to +$9.18B and CAGED at 228K provide the fundamental support; watch BRL — if it holds near R$5.00, the rally extends to 202,000+; if it breaks R$5.10, take profit
→ US nondefense capex ex-air at 3.3% versus 0.5% consensus is the investment boom that justifies S&P 7,136 — the economy is investing six times faster than expected; hold US equities through the Mag 7 earnings gauntlet; housing starts at 1.502M add construction-sector support
→ Trump’s rejection of Iran’s Hormuz proposal and preparation for an extended blockade makes $100+ oil the new baseline — buy Dec 2026 Brent calls at $110 strike; the structural-blockade scenario makes every oil-linked inflation forecast obsolete; this is the most important geopolitical shift since the ceasefire
→ German CPI at 2.9% (below 3.0% consensus) and Spanish CPI at 3.2% (below 3.5%) give the ECB cover to cut tomorrow — but inflation expectations at 49.1 argue against it; position for an ECB hold with a dovish tilt via receiving 2Y EUR swap rates ahead of tomorrow’s decision
→ China Caixin at 52.2 versus NBS at 50.3 says small Chinese exporters are the post-war winners — long CSI 300 via targeted exposure to export-oriented industrials; non-manufacturing at 49.4 confirms China’s services weakness but the manufacturing beat is the equity-relevant signal
Previously: Global Economy Briefing — April 29, 2026 · Global Economy Briefing — April 28, 2026 · Global Economy Briefing — April 24, 2026 · Global Economy Briefing — April 18, 2026 · Sources: Trading Economics · CNBC Markets · Federal Reserve · The Rio Times