Week in Markets: Hormuz Reopens Then Closes, S&P 500 Hits Record, Banks Crush Q1, Kelp DAO Loses $292M

For two days, the war was over. On Thursday afternoon, Iran's foreign minister Abbas Araghchi posted on X that the Strait of Hormuz was "completely open" for commercial vessels through the remainder of the ceasefire. The announcement followed a Trump-brokered 10-day truce between Israel and Lebanon signed Wednesday night. By Friday's close, oil had crashed 11.4% in a single session, the S&P 500 was at a fresh record of 7,126.06, the Nasdaq had logged its longest winning streak since 2009, and the VIX had broken below 18 for the first time since February.

Then Saturday came. Iran reversed itself, declaring the strait closed again until Washington lifted its naval blockade of Iranian ports. By Sunday evening, the USS Spruance had fired into the engine room of an Iranian-flagged cargo ship called the Touska, then sent Marines from the USS Tripoli to fast-rope onto the deck. It was the first direct seizure since the blockade began. Iran promised retaliation. Crude futures ripped 5.7% higher in after-hours trade. Monday will open into a market that just unpriced what Friday took two sessions to price in.

The numbers underneath the geopolitical theater are the more durable story. JPMorgan posted its largest trading revenue ever. Goldman set an equities revenue record. PPI for March came in at 0.5% month-over-month against a 1.1% forecast, with core at just 0.1% versus 0.5% expected, suggesting the energy spike is not transmitting into broader producer prices. China's Q1 GDP printed at 5.0% year-over-year, beating consensus and reversing the H2 2025 deceleration. Bitcoin closed the week up 4.7% even after a $292 million bridge exploit on Saturday wiped $13 billion off DeFi TVL in 48 hours. The story this week is not what happens to the ceasefire. It is what is happening underneath it.

Macro Pulse

PPI Cools as Energy Pulse Fails to Transmit

The week's most important data point landed Tuesday morning. March PPI rose 0.5% month-over-month, less than half the 1.1% Dow Jones consensus and the smallest miss-to-the-downside of the inflation cycle. Core PPI, which excludes food and energy, rose just 0.1% against a 0.5% forecast. On a year-over-year basis, headline PPI sits at 4.0% and core PPI held at 3.8%.

The composition matters more than the headline. Energy producer prices rose 8.5% on the month, with gasoline alone up 20%. But food prices fell, and services prices were flat for the month. The pass-through from oil into services and goods, the mechanism that usually turns an energy shock into a structural inflation problem, did not show up in the March data. The market read it as evidence that businesses are absorbing energy costs in margins rather than raising downstream prices, at least so far.

The reaction was immediate. Bond yields fell, with the 10-year Treasury dropping from 4.31% to 4.26% by week's end. The 2-year fell roughly 10 basis points to 3.71%. CME FedWatch probabilities for an April 28-29 rate hold rose to 97.9%. Markets stopped pricing the rate-hike contingency that the March FOMC minutes had introduced and resumed pricing a single 25 basis point cut for September or November.

Sources - PPI: BLS: PPI March 2026 | CNBC: Wholesale prices rose 0.5% | CNN Business: Wholesale inflation

The Fed Holds, Hawks Quiet for Now

The Federal Reserve maintained the federal funds rate at 3.50-3.75% at its March 17-18 meeting and is widely expected to hold again at the April 28-29 FOMC. CME FedWatch pegs the probability of a hold at 97.9% as of Friday's close, up from 94.8% the prior week.

Two FOMC speakers worth noting this week. San Francisco's Mary Daly told Reuters that the economy is "fundamentally solid" and the labor market has "stabilized," but acknowledged that an oil shock means "getting inflation back to target will take longer." Richmond's Tom Barkin warned that the Iran conflict adds inflation risk at a moment when the labor market is fragile, and signaled he wants more data before any directional move.

The Fed is now boxed in between two competing data series. The April CPI print, due May 13, will show the full force of the Hormuz energy shock on consumer prices. The PPI release Tuesday suggests the pass-through could be limited. The May 6-7 FOMC meeting will be the next major policy catalyst, but markets are pricing patience: the curve now embeds zero cuts before September.

Sources - Fed & Rates: Federal Reserve: FOMC Calendar | SF Fed: Daly on oil shock | Advisor Perspectives: Treasury Yields April 17 | CME FedWatch

China Q1 GDP Surprises at 5.0%

Beijing released first-quarter GDP Thursday morning. The print came in at 5.0% year-over-year, accelerating from 4.5% in Q4 2025 and beating consensus of 4.8%. Industrial production grew 6.1%, with high-tech manufacturing up 12.5% and equipment manufacturing up 8.9%. Total imports and exports rose 15.0%. Retail sales were softer at 2.4% year-over-year, with March alone slowing to 1.7% from a 2.8% pace in January-February.

The print matters for two reasons. First, China is the world's largest oil importer. A 5% growth pace during an active Hormuz disruption suggests demand destruction has been less severe than energy bears assumed, which structurally supports oil prices on any blockade re-escalation. Second, it removes a major tail risk from the global growth narrative. Industrials, materials, and Asian equities all rallied into the print.

The weakness is in domestic demand. Retail sales decelerating into March, despite the headline strength, signals that the manufacturing and export engine is doing the heavy lifting. China's response will likely be additional stimulus into Q2 if the consumer does not reaccelerate.

Sources - China GDP: China Daily: Q1 2026 GDP 5% | China Briefing: Q1 GDP analysis | CNN: China economy growing despite Iran war

The Blockade Week

Monday April 13: Blockade Begins, Markets Hold

The US Navy blockade of Iranian ports took effect at 10:00 AM ET Monday. CENTCOM confirmed the deployment of more than 10,000 personnel, twelve warships, and dozens of aircraft to enforce it. Brent opened at $103.72 per barrel. WTI was near $99. Equity futures had priced part of the escalation into Sunday's globex session, and the cash open was orderly.

The first test came within hours. The Rich Starry, a Chinese-flagged tanker operated by Shanghai Xuanrun Shipping (a US-sanctioned entity since 2018), forced a passage through the strait toward China. There was no military interception. The episode immediately became a Beijing talking point: a Foreign Ministry spokesperson called the blockade a "dangerous and irresponsible act" and demanded the US lift it. The signal markets read was that the blockade had a significant enforcement gap for non-allied flags.

Tuesday April 14: New Sanctions, Lebanon Talks Open

The Treasury announced new sanctions targeting dozens of individuals, companies, and vessels involved in Iranian and Russian oil and gold smuggling networks, primarily through UAE-based shell companies. Simultaneously, the first direct talks between Israeli and Lebanese delegations began in Washington under Secretary of State Marco Rubio. The IDF launched parallel strikes on Aadshit in southern Lebanon, targeting Hezbollah weapons depots.

Wednesday-Thursday: The 10-Day Truce

Wednesday night, Trump personally telephoned Netanyahu and secured agreement to a 10-day Israel-Lebanon ceasefire. Rubio then contacted Lebanese President Aoun. The ceasefire took effect Thursday at 5:00 PM ET. Israel maintained the right to operate in a 10-kilometer security zone in southern Lebanon and the right to retaliate against imminent threats. Lebanon committed to deploying its regular armed forces as the sole national security force.

The Lebanon truce mattered because it directly enabled what came next.

Friday April 17: Hormuz Reopens

Iranian Foreign Minister Abbas Araghchi posted on X: "In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire."

The market reaction was immediate and extreme. WTI crashed from roughly $94 to $83.85, an 11.4% single-session decline and the lowest US oil price since March 10. Brent fell 9% to $90.38. The S&P 500 jumped 1.20% to a record 7,126.06. The Nasdaq added 1.52% to 24,468.48. The Dow surged 1.79% to 49,447.43. Trump told reporters Iran had "agreed to everything," sparking an additional risk-on extension into the close.

Saturday April 18: The Reversal

Within 24 hours, Iran reversed. Tehran declared the strait closed again, citing the US refusal to lift the port blockade as a "breach of trust." The futures market was closed. Tanker traffic, which had not actually resumed in volume during the brief window, paused indefinitely. Trump took to Truth Social to clarify that the US blockade of Iranian ports remained in force regardless of any Iranian gesture on Hormuz.

Sunday April 19: USS Spruance Seizes the Touska

In the Gulf of Oman, the destroyer USS Spruance intercepted the Iranian-flagged cargo vessel Touska, a 900-foot ship transiting toward an Iranian port in violation of the blockade. After a six-hour standoff in which the crew refused to comply, Spruance ordered the engine room evacuated and fired several rounds into it to disable propulsion. Two MH-60S Seahawk helicopters from the USS Tripoli ferried a VBSS team that fast-roped onto the Touska. The ship is now in US custody. Trump announced the operation on Truth Social Sunday evening.

It was the first direct seizure since the blockade began. CENTCOM later confirmed that 25 commercial vessels had been turned around or directed to return to Iranian ports since April 13, but the Touska was the first to refuse and to be boarded by force. Iran has vowed retaliation and has not committed to talks scheduled for the coming week in Pakistan.

S&P futures fell 0.6% in after-hours trading Sunday evening. Brent rebounded 5.7% to $95.50. The original two-week ceasefire technically expires April 22.

Sources - Hormuz & Blockade: CNBC: U.S. oil plunges below $84 | NBC News: Oil plunges 11% on Hormuz open | NPR: Iran says Strait of Hormuz is open | CNN: USS Spruance seizes Touska | CNBC: Trump says US seizes Iran-flagged ship | Al Jazeera: US captures Iranian ship Touska

Markets

Equities: Three Records, One Caveat

The S&P 500 closed Friday at 7,126.06, up 4.54% for the week and at a fresh all-time high. The Nasdaq Composite added 6.84% to 24,468.48, also at a record, and logged its longest consecutive winning streak since 2009. The Dow gained 3.19% to 49,447.43, its third straight weekly advance. The VIX closed at 17.94, its lowest reading since early February and well below the 20 threshold that has marked the post-war regime.

Sector rotation was almost a perfect inverse of the war period. Communication Services led at +5.89%, followed by Consumer Discretionary at +5.81%, Information Technology at +4.82%, and Industrials at +4.69%. The defensives that led during the conflict (Consumer Staples, Healthcare, Utilities) underperformed sharply. Energy was the only sector down on the week, falling 4.07% as oil collapsed.

The intraweek path matters. Monday opened soft on the blockade, then reversed. Tuesday rallied on the soft PPI and Goldman/JPMorgan beats. Wednesday saw the S&P touch 7,022.95 for the first time ever, closing at a record. Thursday consolidated. Friday delivered the Hormuz surge.

The caveat is that the Friday gain was almost entirely a single-headline trade. The S&P moved nearly 1% on the Hormuz tweet alone. By Sunday evening, with the Touska seizure announced and Iran reversed on the strait, S&P futures had given back most of Friday's gain. Monday's open will be the test of whether the weekly print survives or unwinds.

Sources - Equities: Schwab: Stocks soar, oil plunges | CNBC: S&P record close, Nasdaq longest streak since 2009

Bank Earnings: Trading Crushed It, NII Less Glamorous

The big banks delivered the most consequential fundamental signal of the week. The pattern was uniform across Goldman, JPMorgan, Morgan Stanley, and Bank of America: trading desks crushed expectations, investment banking roared back, but net interest income guidance was softer than the market wanted.

Goldman Sachs reported Monday after the open. EPS came in at $17.55 versus a $16.47 consensus, a 7.4% beat. Revenue rose 14% to $17.23 billion. Equities trading revenue hit a record $5.33 billion, up 27% year-over-year, on rising prime brokerage activity from hedge fund clients hedging the Iran shock. FICC was down 10%. Investment banking fees rose 48%, the strongest quarterly print of the cycle. The stock fell on the day, as the market took profits into the print.

JPMorgan reported Tuesday. EPS of $5.94 beat the $5.46 consensus by 9%. Revenue reached $50.5 billion. Markets revenue jumped 20% to $11.6 billion, the largest trading print in JPMorgan's history. Investment banking fees rose 18%. The disappointment was the NII guide: management cut full-year 2026 net interest income guidance to $103 billion from $104.5 billion, and the stock fell nearly 3% on the day.

Wells Fargo and Citigroup also reported Tuesday. Citi beat on a strategic transformation narrative and was the cohort's best stock reaction. Wells Fargo missed on both top line and NII, the only major bank to do so.

Morgan Stanley and Bank of America reported Wednesday. Morgan Stanley posted EPS of $3.43 versus $3.01 expected, with record total revenue of $20.6 billion, record equities trading of $5.15 billion, and record wealth management revenue of $8.52 billion. Bank of America's EPS of $1.11 beat the $1.01-1.02 consensus, with revenue up 7% to $30.3 billion and net income up 17% to $8.6 billion. Critically, BofA raised its full-year 2026 NII guidance to 6-8% growth, assuming no further rate cuts. That guidance is itself a Fed forecast: the largest US retail bank does not expect cuts in 2026.

The cross-cutting message: client activity is accelerating, capital markets are reawakening, credit quality is stable. Bank guidance is incompatible with the recession narrative still embedded in some Fed-cut expectations.

Sources - Bank Earnings: CNBC: Goldman Q1 2026 earnings | CNBC: JPMorgan Q1 2026 | CNBC: Morgan Stanley Q1 2026 | CNBC: Bank of America Q1 2026 | Bloomberg: JPMorgan record trading haul

Commodities: Oil Cracks, Gold Holds

WTI Crude closed Friday at $83.85, down approximately 13% on the week and at its lowest since March 10. Brent settled at $90.38, down roughly 12%. The single-session 11.4% drop on Friday accounted for the bulk of the move; earlier in the week WTI had traded as high as $99.

The physical-futures spread that defined W16 narrowed sharply but did not fully close. Tanker rates and war-risk insurance premiums remained elevated. The brief Iranian declaration of an open strait did not translate into actual tanker traffic resumption before being reversed. Sunday's Touska seizure rebooted the supply-side bid: Brent futures opened the after-hours week up 5.7%.

Gold traded around $4,867 per ounce by Friday's close, up roughly 0.8% on the week and notching its fourth consecutive weekly gain despite the geopolitical de-escalation. The metal's resilience reflects continued central bank accumulation rather than the geopolitical fear bid that drove the prior cycle. Silver and copper followed the broader risk-on tape, supported by the Materials sector's +3.51% weekly gain.

Sources - Oil & Commodities: CNBC: U.S. oil plunges below $84 | Fortune: Gold price April 17 | Reliable Energy: Natural Gas April 13

Global Equities

European markets participated in the rally. The Stoxx 600 gained 1.91% on the week, with Friday alone contributing 1.5% on the Hormuz news. The Euro Stoxx 50 closed near 6,054 points. Germany's DAX, France's CAC 40, and the FTSE 100 all advanced.

Asia was more mixed. The Hang Seng fell 1.01% Friday on profit-taking after the Chinese GDP print, but ended the week higher. The CSI 300 was flat on Friday but positive for the week. Japan's Nikkei 225 advanced.

Sources - Global Equities: CNBC: European markets April 15 | CNBC: Asia markets April 17

Crypto

Bitcoin: From Blockade Bottom to $78K

Bitcoin opened Monday near $70,741, the low of the week, after Sunday's blockade announcement triggered a risk-off liquidation cascade. Buyers stepped in at the $70-71K support zone, and short positions built into the blockade headline became fuel for the recovery. By Monday afternoon, BTC had reclaimed $74K. Tuesday's PPI miss and Goldman/JPMorgan beats extended the bid.

The pivotal session was Thursday April 17. Iran's Hormuz reopening sent BTC from $75,151 to an intraday high of $78,384, the highest level since early February. ETH outperformed in percentage terms, touching approximately $2,400. Total liquidations for the week reached the largest figures since the March selloff, with the bulk concentrated on the Monday morning short squeeze.

By Friday's US close, BTC was trading around $75,200, up 4.7% on the week. ETH closed near $2,350, up 7.3%. Saturday brought the Kelp DAO exploit (see below) and BTC pulled back to around $75,000. By Sunday, with the Touska seizure reverberating through risk markets, BTC slid further toward the low $74Ks. The Fear & Greed Index, which had reached 61 (Greed) on Thursday, fell back to 27 (Fear) by Sunday.

Sources - Bitcoin: CoinDesk: Bitcoin testing January level | CryptBull: BTC breaks $77K on Hormuz | Yahoo Finance: BTC and ETH April 17 | IBTimes: BTC surges past $75K

ETF Flows: Strongest Week Since January

Spot Bitcoin ETFs gathered roughly $1 billion in net inflows on the week, the strongest weekly total since mid-January. Friday April 17 alone saw $664 million in net inflows, with BlackRock's IBIT pulling $284 million and Fidelity's FBTC pulling $163 million. Year-to-date cumulative flows for spot BTC ETFs turned positive, crossing back to roughly +$2.3 billion.

Strategy (the renamed MicroStrategy) announced Monday that it had purchased 13,927 BTC for $1 billion between April 6-12, at an average price of $71,902. Total holdings reached 780,897 BTC. The buy came at the bottom of the prior week's drawdown and is now meaningfully in unrealized profit. It was the fifth-largest single accumulation by Strategy in 2026.

Spot Ethereum ETFs also recorded their strongest week of 2026, with cumulative net inflows hitting an all-time high of $11.68 billion. ETHA (BlackRock) and FETH (Fidelity) led, with ETH ETFs logging six consecutive positive sessions through April 16. The ETH-over-BTC ETF flow rotation was the first sustained intra-crypto rotation in months.

Sources - ETF Flows: The Market Periodical: April 17 ETF $791M | StockTwits: ETF inflows 4-month high | CoinDesk: Strategy bought $1B BTC | CoinDesk: ETH outpaces BTC

The Kelp DAO Exploit: Largest DeFi Hack of 2026

Saturday April 19 at approximately 17:35 UTC, an attacker drained 116,500 rsETH from Kelp DAO's LayerZero-powered cross-chain bridge. Total losses: $292 million. The attack used a single-verifier configuration flaw in the bridge: the attacker compromised two RPC nodes, used a DDoS attack to force failover, and tricked LayerZero's verifier into approving a fraudulent cross-chain message that released the entire rsETH reserve to an attacker-controlled address. LayerZero attributed the exploit preliminarily to North Korea's Lazarus Group and publicly stated it had previously warned Kelp to adopt a multi-verifier setup.

The cascading effects hit nine protocols simultaneously. The attacker used the stolen rsETH as collateral on Aave v3 to borrow wETH, leaving Aave with an estimated $195 million in bad debt. Aave's TVL fell $6.6 billion in 48 hours, and its token dropped 16%. SparkLend and Fluid took similar isolation steps. Lido paused deposits into its earnETH product. Ethena temporarily paused its own LayerZero OFT bridges as a precaution.

The Kelp exploit overtakes the April 1 Drift Protocol hack ($286M, also DPRK-attributed) as the largest crypto exploit of 2026 by margin. Total DeFi TVL fell roughly $13 billion across 48 hours.

The Drift situation also generated W17 news. On April 16, Tether announced a $147.5 million recovery funding package and Drift confirmed it would relaunch using USDT as its settlement layer, replacing USDC. On April 17, a class-action lawsuit was filed against Circle alleging the company had authority to freeze the stolen USDC but did not act in real time. Circle's CEO replied that the company only freezes wallets on law enforcement instruction.

The narrative that 2026 would be DeFi's institutional moment is being tested by the largest two exploits of the cycle landing within 18 days, both attributed to the same nation-state actor.

Sources - DeFi Security: CoinDesk: Kelp DAO $292M exploit | CoinDesk: LayerZero blames Kelp setup | CoinDesk: Aave $6B TVL drop | The Block: Drift-Tether $147M | Bloomberg: DeFi contagion shock

Stablecoins and Monad

The stablecoin market crossed $320 billion for the first time on April 16, an all-time high. USDT held a 57.96% share at $185.5 billion. USDC reached $78.6 billion. Weekly stablecoin inflows totaled +$2.54 billion across the cohort.

The Monad ecosystem held the gains from W16's NYSE/Securitize alliance. MON traded around $0.033 with a fully diluted valuation near $2.2 billion, down from a $4.7 billion ATH. Monad's TVL stayed above $355 million but daily on-chain fee generation remains thin at roughly $3,000 per day. The supply unlock schedule (over 50% of supply locked, with 2026 unlocks ahead) continues to weigh on the token even as TVL holds.

The CLARITY Act ran into headwinds. After Senator Hagerty signaled a Senate Banking Committee markup window late April, the bill was removed from the Senate schedule by April 15, creating fresh uncertainty. The current compromise prohibits passive yields from holding stablecoins but allows rewards tied to payments and transfers. Senator Lummis warned that missing the April markup window would push major crypto legislation past 2030.

Sources - Stablecoins & Regulation: Bitcoin.com: Stablecoin market $320B ATH | Elliptic: CLARITY Act compromise

Week Ahead

The next five sessions are dominated by three converging deadlines and one earnings cluster.

The first deadline is Tuesday's Retail Sales release for March, originally scheduled for April 16 but postponed by the Census Bureau to April 21. The forecast is +1.4% month-over-month for headline and +1.3% for the control group, both well above the prior month. A hot print would suggest consumer resilience despite the energy shock; a miss would feed the soft-landing narrative.

The second deadline is Tuesday's Fed Chairman-Designate Kevin Warsh testimony on Capitol Hill at 10:00 AM ET. Warsh has not yet been confirmed but his nomination is the most consequential Fed appointment of the cycle. Markets will read his framing of the energy shock, his view on rate cuts, and his stance on Fed independence. Any signal that diverges from Powell's posture will move yields and risk assets.

The third deadline is the original April 22 ceasefire expiration. With the Touska seizure Sunday night, the Pakistan talks scheduled for next week may not happen. Iran's response to the seizure is the principal unknown. Any retaliation, even symbolic, would likely send oil back above $100 and reverse Friday's risk-on tape.

Earnings continue. Netflix reports Tuesday after the close. Tesla reports Wednesday after the close. United Airlines is also Tuesday. The market will look for guidance commentary on jet fuel costs and consumer demand into Q2.

The week also brings global flash PMIs Thursday (Eurozone, UK, US), Eurozone consumer confidence Wednesday, and FOMC member Waller speaks Tuesday at 2:30 PM ET. The Fed enters its blackout period Saturday April 25 ahead of the April 28-29 meeting.

Sources - Week Ahead: BLS: PPI Release Schedule | Census Bureau: Retail Sales | Federal Reserve: FOMC Calendar