Highlights

• EU to propose full ban on Russian pipeline and LNG gas imports—including existing contracts—by end of 2027; legal and supply challenges remain1.
• Yemen’s Houthis strike Israel’s Ben Gurion Airport with hypersonic missile, vow air blockade; Israel promises strong retaliation2.
• Taiwan dollar surges 5% intraday as exporters and insurers sell USD; central bank schedules emergency briefing amid speculation of a new currency accord4.
• Trump signals willingness to lower China tariffs (currently up to 145%) and possibly extend TikTok’s divestiture deadline; China reroutes exports to Canada, stops publishing key economic data, raising transparency concerns315135.
• Fed expected to hold rates May 7 amid Trump pressure; BoE decision May 8 with possible cut; US inflation at 2.3%, unemployment at 4.2%6.
• Israel approves indefinite military presence in Gaza, escalating regional tensions; Iran unveils new solid-fuel missile capable of bypassing THAAD78.
• Ukrainian forces launch offensive in Russia’s Kursk region; EU plans €40B annual military aid boost to Ukraine if US efforts stall910.
• India suspends Indus Waters Treaty, cuts water to Pakistan, escalating regional risks; Pakistan issues nuclear warnings11.
• Turkey’s inflation drops to 37.86% but lira hits historic low amid political turmoil12.
• BlackRock’s BUIDL fund allocates $2.7B to Ethereum; stablecoins now hold 0.5% of US debt; MicroStrategy to announce $1B Bitcoin purchase1720.
• Erste Group to acquire 49% of Santander Bank Polska for €6.8B, marking entry into Polish banking market18.
• Far-right George Simion leads Romanian presidential election rerun, faces centrist Nicușor Dan in May 18 runoff19.

Commentary

A confluence of geopolitical, macro, and market structure headlines is setting the tone for a volatile week. The EU’s proposed full ban on Russian gas imports signals a major shift in European energy policy, likely to underpin medium-term support for global LNG prices and keep energy security in focus1. Legal wrangling over existing contracts and the need for alternative supplies could create short-term volatility in European utilities and energy names, while also supporting US and Qatari LNG exporters1.

The Taiwan dollar’s dramatic appreciation is the standout FX story, with echoes of the 1985 Plaza Accord. Massive foreign inflows and exporter hedging have driven the TWD to a multi-decade high, impacting Taiwan’s export competitiveness and potentially spilling over into Asian equities and tech supply chains. The central bank’s emergency press conference will be pivotal—watch for intervention signals or hints of coordination with the US ahead of expected semiconductor tariffs. Broader Asian FX strength versus the USD may persist if the Fed holds rates steady and trade tensions with China escalate46.

Geopolitics remain front and center. The Houthis’ successful missile strike on Israel’s main airport, coupled with Iran’s unveiling of a new missile system, heightens Middle East risk premium—bullish for oil and defense stocks such as Lockheed Martin Corp. and Northrop Grumman Corp. , negative for regional travel and shipping28. Israel’s decision to maintain an indefinite military presence in Gaza, and India’s suspension of the Indus Waters Treaty with Pakistan, both raise the specter of regional instability, with potential spillovers into EM debt and FX711.

On the macro front, the Fed and BoE meetings will be closely watched for policy signals amid sticky inflation and political pressure. The Fed is expected to hold, but Powell’s tone could move rates and the dollar; UK assets may react to any dovish surprise from the BoE. Meanwhile, China’s opacity on economic data and export rerouting to Canada highlight ongoing deflation risks and global supply chain shifts—bearish for Chinese equities, potentially bullish for Canadian trade-related sectors5133156.

In digital assets, BlackRock’s heavy Ethereum allocation and MicroStrategy’s anticipated $1B Bitcoin buy reinforce institutional demand for crypto, even as stablecoins become a material presence in US debt markets1720. Crypto volatility may rise alongside broader risk sentiment. Traders should stay nimble, closely monitor central bank communications, Taiwan’s FX policy, and any escalation in geopolitical flashpoints for cross-asset opportunities and risk management.