WS #7012

The dominant macro theme remains the escalating US-Iran conflict, with President Trump rejecting Iran's peace proposal as 'totally unacceptable,' confirmed by multiple sources including Bloomberg, Al Jazeera, and BBC. This rejection signals continued supply disruption from the Strait of Hormuz, supporting elevated oil prices. Saudi Aramco reported a 25% jump in Q1 profit and warned of long oil supply disruption, reinforcing the bullish oil thesis. However, a potential counter-signal emerged: Iran's counterproposal includes recognition of sovereignty over Hormuz, and three supertankers successfully exited the Strait by switching off transponders, suggesting some traffic is still moving. Separately, China confirmed Trump will visit Xi Jinping from May 13-15, a key test for the fragile trade truce. China's April CPI rose to 1.2% (vs 0.9% est.) and PPI surged to 2.8% (vs 1.7% est.) on commodity spikes, indicating inflation pressures from the energy shock. China's April vehicle sales fell 2.5% YoY, while new energy vehicle sales rose 9.7% YoY. Asian markets defied the oil surge, with tech rallies and summit hopes offsetting Hormuz tensions. The narrative arc is ESCALATING on the US-Iran conflict, with no de-escalation signals, but the Trump-Xi meeting and continued oil traffic through Hormuz provide partial offsets.