Who’ll blink first: Trump, Iran or the markets?
How did the U.S. labour market perform?
Jobless claims continue to send the same message in the United States. Initial claims came in at 210,000, essentially unchanged and still hovering near some of the lowest levels seen in decades. Continuing claims fell to 1.819 million, the lowest since mid-2024.
The labour market is stuck in place. Companies are not hiring aggressively, but they’re not laying off either. That dynamic explains the disconnect between hard data and sentiment. Surveys still point to a labour market that feels weak, with jobs harder to find. But the data shows layoffs remain limited.
For now, stability is winning, with most participants in a “wait and see” mode, at least in the U.S. In Canada, the labour market is weaker. Last week’s Labour Force Survey showed employment falling by 84,000 in February, with the unemployment rate rising to 6.7%. The weakness was concentrated in youth employment, with youth unemployment rising to 14.1%. That same figure sits at 9.5% south of the border.
What’s happening with AI memory stocks?
Memory stocks had a rough week, underperforming sharply, even after last week’s strong earnings from Micron. The catalyst was Google’s TurboQuant announcement, a potential breakthrough in AI memory efficiency that could significantly reduce hardware needs.
The market read this as a direct hit to the memory story. If models can run with a fraction of the memory, demand should fall. But it doesn’t always work that way. Greater efficiency can lower costs, expand accessibility and ultimately increase adoption. We’ll see how this plays out, but for now the market is choosing to price the threat, not the opportunity.
How did markets react to stalled negotiations?
Negotiations between the U.S. and Iran remain at a standstill. Iran rejected the U.S. proposal and put forward its own conditions, including reparations and full control over the Strait of Hormuz. The chances of either side accepting the other’s terms remain effectively zero.
At the same time, the clock is ticking on the U.S. timeline, while diplomatic efforts continue on the margins with allies and intermediaries. Europe is split, with some backing coordination efforts, and others distancing themselves from the conflict.
And yet, markets have stabilized. After sharp swings earlier in the week, volatility has compressed. Oil has settled near $100, and bond yields are trading in tighter ranges than in previous weeks. Reactions to headlines are still there, however, with the markets seeing lots of movement during the day. Markets look stuck in a tug of war.
What data will we see next week?
Looking ahead, the upcoming month-end and quarter-end will bring a heavy slate of macro data. But for now, in the words of James Hetfield, nothing else matters: all eyes remain on Iran.
Listen to the latest podcast from the IG Investment Strategy Team for further insights.
