The Iran war is entering its seventh week and President Donald Trump has made another gamble—this time on the U.S. Navy blocking the Strait of Hormuz, but it’s a tough question as to which will capitulate first—the Iranian regime or the global economy. 

The blockade in the vital shipping channel is set to begin Monday after peace talks between Washington and Tehran failed over the weekend. Whether that’s any better than the existing Iranian closure of the waterway remains to be seen. Until the U.S. can show it has definitive control over the strait, it seems unlikely that shipping companies will risk being caught in the middle of a shootout. 

For oil-starved Asian economies, shutting off an estimated one million barrels of Iranian oil a day makes things even bleaker than they already were. And while Trump will hope the move drives China and other states to pressure Iran to accept U.S. demands, the more immediate reaction is likely to be spiking crude prices. 

Meanwhile, the pain is beginning to be felt in the American economy. Although Friday’s annual consumer inflation figure of 3.3% was broadly expected, that’s still the highest level in nearly two years. Economists surveyed by The Wall Street Journal have lowered their forecast for the U.S. economy’s growth in 2026 to 2% from 2.2% when asked in January, and now expected consumer inflation of 3.2% by the end of the year from 2.6% previously. 

The worrying economic picture comes as earnings season kicks off. Although healthy growth in some area—such as U.S. banks, reporting this week—might offset some of the panic about Iran, expect the focus to be on how the war affects guidance and consumer confidence. A blockade rather than a full-scale resumption of fighting offers some hope of a peaceful resolution with the current cease-fire holding for almost a week, but with so much uncertainty and a worsening global economy, markets must brace for choppy waters.

—Adam Clark

Barron’s Live: Where will energy prices head now that a fragile truce has been achieved in the Iran war? Join Barron’s Senior Managing Editor Lauren R. Rublin today at noon when she speaks with senior writer Avi Salzman and Denton Cinquegrana, chief oil analyst at OPIS, about the latest outlook for oil, gas, and energy stocks. Sign up here.

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The U.S. blockade of the Strait of Hormuz begins today at 10 a.m. Eastern time after President Donald Trump ordered it when talks between U.S. and Iranian officials ended with no deal. Iran says military vessels approaching the strait would violate the cease-fire and face a “forceful” response.

• U.S. Central Command will enforce the blockade of maritime traffic leaving and arriving at Iranian ports impartially against vessels of all nations, though traffic to and from non-Iranian ports would not be blocked. Data tracking firms have reported only a handful of ships transiting there in recent days.

• It isn’t clear how soon the U.S. and Iran will resume talks with one week remaining in the cease-fire. Trump has complained about Iran charging tolls for safe passage. Iran’s parliament speaker taunted the White House Sunday with a post saying people would soon consider $4-$5 gasoline nostalgic.

• Trump insisted other countries would help with the U.S. blockade. Oil traders reacted to the developments by pushing benchmark oil prices back above $100 a barrel, while U.S. stock futures tumbled. RBC Capital Markets’ Helima Croft says the blockade signals Trump isn’t ready to cut his losses yet.

• Spot crude prices, what buyers are willing to pay in the physical market, hit a record $144 a barrel last week. If refiners are paying near-record prices for crude, they are less likely to cut prices for consumers. Gasoline prices were averaging $4.125 a gallon, according to AAA.

What’s Next: Oman’s Foreign Minister Badr Albusaidi has called for an extension to the two-week cease-fire agreed to on April 7, to allow talks to continue. “Success may require everyone to make painful concessions,” he wrote on social media.

—Liz Moyer, Avi Salzman, and Janet H. Cho

Quarterly report cards from America’s largest banks are expected to show a rise in first-quarter profit from a year ago, helped by strong investment banking and trading activity, despite geopolitical worries. But the big question on everyone’s minds is whether big banks can keep this momentum going.

• UBS analyst Erika Najarian wonders whether solid results can overcome a wall of worry, including largely negative headlines. Even with lower expectations for interest rate cuts, UBS and other analysts have kept estimates for banks in 2026 and ‘27 largely unchanged. 

• Investors scour bank results because they serve as windows into the economy. Consumer lenders provide data on individual borrowers’ credit quality and spending, while investment banks’ performance shows corporate clients’ confidence in dealmaking and raising capital.

• For several quarters, banks’ results have reflected bumper performance for core Wall Street businesses, and solid but not as ebullient, showings for everyday consumers. Bank CEOs have recently noted, too, that they are seeing a divergence in financial health between high- and lower-income clients.

• Banks may be reluctant to raise expectations for their full-year performances because of macroeconomic uncertainty, says BofA Securities analyst Ebrahim Poonawala. Still, a busy quarter for trading desks and bankers, paired with a decent setup for net-interest income, should drive solid results, he wrote.

What’s Next: Three giant consumer lenders—JPMorgan Chase, Citigroup, and Wells Fargo—are due to report on Tuesday, while Bank of America will follow on Wednesday. In addition to fresh readings on consumer health, investors will also be looking for updates on private credit.

—Rebecca Ungarino and Janet H. Cho

After a year of tariffs, trade deals, and conflicts, former U.S. Trade Representative Katherine Tai sees the need for an “out of the box” trade approach. There should be more winners in trade deals as the world grapples with the U.S.-China rivalry, geopolitical fragmentation and artificial intelligence.

• As trade representative, Tai enforced and implemented trade pacts, including the U.S.-Mexico-Canada Agreement (USMCA) signed during the first Trump term. Tai is now executive director of the Coalition for New Trade and a resident fellow at the Institute of Politics at Harvard Kennedy School.

Barron’s interviewed Tai and the conversation touched on tariff refunds, President Trump’s coming summit with China’s President Xi Jinping, and more. She says people should be expecting more tariffs than were in place Jan. 20, 2025, saying that as long as Trump is president, there will be an active tariff agenda.

• The Trump administration is implementing refunds for tariffs paid by importers that were recently struck down by the Supreme Court. Tai says it’s good that Customs and Border Protection is taking steps to comply with this, but there are going to be few remedies that make anybody whole.

• Tai said it’s been hard to read the administration’s approach to the upcoming summit in China, but adds that one challenge for the Trump-Xi meeting, now rescheduled for May is a directive that there needs to be a show and it needs to make the markets feel good.

What’s Next: As for the USMCA, Tai says keeping the pact in place would be more beneficial than bilateral deals, which would be complex to administer and comply with. Supply chains and rules of origin—in autos and non-autos—are big agenda items, alongside foreign investment. The deadline to renew is July 1.

—Reshma Kapadia

House and Senate lawmakers return to Washington on Tuesday, with long and growing to-do lists. After a two-week recess, Congress will have to deal with several high-priority issues, including the continuing partial government shutdown, the White House’s recent $1.8 trillion budget proposal, and the war in Iran.

• While Transportation Security Administration workers running airport security screenings are getting paid, Congress still has to approve funding for the rest of the Department of Homeland Security. The Senate’s bill to fund all but border patrol and immigration enforcement died in the House before the break.

• House Speaker Mike Johnson, a Louisiana Republican, will have to either corral the more conservative faction of his conference, who believe ICE and CPB funding shouldn’t be broken off from a broader DHS funding bill, into approving the Senate’s DHS funding bill or put forth his own bill.

• Senate Republicans could take up ICE and CPB funding and potentially additional defense spending through a party-line reconciliation vote, a process they last used for Trump’s tax and spending law last July. They aim to have Reconciliation 2.0 ready by the end of April.

• Congress also will begin the multistep process of marking up the White House’s fiscal year 2027 budget request. This debate will pit Congress’s deficit hawks against its defense hawks. Trump asked for $1.5 trillion for the Pentagon, well above the defense budget for the current year.

What’s Next: Democrats have been pressing for a vote on the War Powers Act, something Senate Minority Leader Chuck Schumer could kick off. That will force Republicans to take a public stance on the Iran war, which has cost $17 billion in extra gas and diesel prices, according to Brown University.

—Emily Russell

—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner