Risk sentiment is still somewhat resilient despite the absence of any US-Iran deal. Part of it could be complacency (the ongoing limbo resulted in another spike in oil prices this morning) but the other part could be that the energy stresses are just not as acute. Energy prices differ across regions. In the US, gas prices are below pre-war. For Asia and Europe, gas prices are elevated, but not quite as high as peak fear in late March. Meanwhile, we note that the physical premium for crude oil has also collapsed. Granted, the price levels of crude are elevated by recent standards, but market participants do not seem to think that this would have a significant impact on the economy or on sentiment. Some of the pain may also be eased as refiners manage to substitute WTI for Brent. We suspect that firm manufacturing data across the major economies and firm US corporate earnings may have contributed to this. 
The upshot is that we may be facing varying degrees of inflation and slowdown across the DM. The US seems pretty insulated. While high inflation probably means that the Fed will not be able to cut that soon, the odds of any tightening remains low and should continue to anchor the frontend (which have largely priced out cuts for the year). A Fed hold is widely expected this week. In any case, the US is likely to be reasonably resilient from an economic perspective. For Europe, stagflation-lite may become a possibility. Europe is still vulnerable via energy imports even if the sources are now more diversified. Prices may be stickier. And given that the ECB has been more aggressive in cutting rates, some hikes may be needed if energy prices stay higher for longer. We also note that Eurozone rates feel more buoyant than their USD counterparts. Lastly, stresses on Japan appear mainly via the currency front. As a large importer, high energy prices places pressure on the yen (which is threatening 160). However, we still think that the BOJ will only embark on a 50bps per year tightening path at best. Yen weakness will likely first be dealt with via intervention. Rate hikes are probably the next consideration. Regardless JPY rates are likely to buoyant as Japan faces another inflation shock. 
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