Easter Weekend Calm Belies Stagflation Trap: S&P +3% on Week Despite Record Consumer Gloom; Iran Ceasefire Holds; IMF WEO, PPI, and FOMC Decision Loom

Markets closed for the Easter weekend with the S&P 500 approximately +3% for the week of April 7–11 — a misleadingly bullish surface concealing severe underlying stress. The week's gains were driven by the April 7 Iran ceasefire rally (+2.85% Dow) and the better-than-expected March core CPI print (2.6% YoY, 0.1pp below forecast). But offsetting factors were severe: Michigan Consumer Sentiment collapsed to an all-time record low of 47.6 on April 10; year-ahead inflation expectations spiked to 4.8% (the largest one-month jump in the survey's 70+ year history); and headline CPI surged to 3.3% from 2.4% — driven by a 21.2% monthly jump in gasoline prices reflecting the Iran war oil shock. The 10-year Treasury yield settled at approximately 4.31% — below the 4.46% April 4 peak but elevated vs the 2026 start. WTI crude held in the $93–96 range post-ceasefire, roughly 17–20% below the $113 April 4 peak, providing measured energy relief. The US-Iran ceasefire held through Easter weekend — its two-week window running until approximately April 21 — but remained fragile: Iran and US positions conflicted on key terms, Israeli strikes on Lebanon continued, and Iranian media outlets questioned the arrangement's permanence. The US-China bilateral trade situation remained in near-embargo configuration: US tariffs on Chinese goods at ~104%, China retaliation at 84% — levels not seen since the 1930s Smoot-Hawley era. The critical week ahead included: (1) IMF World Economic Outlook April 2026 (April 14) — growth downgrade of ~0.8pp from 3.3% January baseline; (2) March PPI (April 14) — first upstream inflation read with full tariff pass-through potential; (3) IMF-World Bank Spring Meetings (April 13–18, Washington) — 191-country gathering focused on Iran war, tariff war, and debt sustainability; (4) FOMC April 29–30 — the most consequential Fed meeting since March 2020, facing a true stagflation policy trap: core PCE at 3.06%, headline CPI at 3.3%, Michigan year-ahead expectations at 4.8%, while GDP decelerates toward potential contraction.