UBS's chief economist pointed out that it's too early to say whether the US April jobs data has been affected by the war, and expects moderate job growth and stable wages. He also emphasized that the University of Michigan's consumer inflation expectations data has limited economic significance—it only matters when consumers change their behavior as a result; however, on a political level, these figures are exacerbating the perception of an "affordability crisis," putting pressure on the US government and indirectly affecting sentiment towards the dollar.

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Geopolitical games, employment data and political pressure

I. Iran is not in a hurry to reach an agreement; the closure of the Straits may last longer than expected.

UBS analyzed the current geopolitical situation: Iran attacked US Navy ships and the UAE, prompting a US airstrike against Iran. According to the Washington Post, the CIA believes the Iranian government is capable of avoiding further economic hardship in the coming months and still possesses a large number of missiles and launchers. This suggests Iran has no incentive to rush into an agreement with the US—implying that the US must make further concessions, otherwise the closure of the Strait of Hormuz may last longer than the market expects.

II. Trump's tariff ultimatum: The market doesn't buy it, but the trade direction is clear.

Trump extended the deadline for approving the trade agreement with the EU to July 4. UBS notes that markets don't pay much attention to such deadlines because they often change or are forgotten. Furthermore, the US Trade Court ruled the 10% Section 122 tariffs illegal—but only applicable to the plaintiffs in this case. This suggests that trade policy remains a medium-term variable.

III. April Non-Farm Payrolls: The Impact of the War Has Not Yet Been Manifested

UBS emphasizes that the April jobs data will not be affected by the war in Iran—it's too early to say. Research shows that deporting illegal immigrants has actually reduced employment for American citizens. The market expects moderate job growth and stable wage growth.

IV. Inflation Expectations: Limited Economic Significance, Immense Political Pressure

The importance of "inflation expectations" in Michigan's consumer confidence data at the economic level depends on whether consumers change their behavior as a result. However, at the political level, these figures are reinforcing public perceptions of an "affordability crisis," thereby putting pressure on the government during wartime and indirectly affecting sentiment towards the dollar.

The impact of non-farm payrolls is limited in the short term; in the medium term, attention should be paid to geopolitical and political pressures.

UBS believes that the April non-farm payroll data will not reflect the impact of the war, and the market focus should be more on geopolitical games—Iran's reluctance to compromise may mean that the closure of the Strait of Hormuz will last longer than expected, which will have a profound impact on oil prices and the US dollar. Meanwhile, consumer inflation expectations are putting pressure on the government through political channels, constituting a hidden variable in dollar sentiment. Although the tariff ultimatum has been temporarily ignored by the market, it suggests that a trade war remains a potential agenda item for Trump after the war.