“Freedom Initiative” Paused While Blockade Continues; U.S.-Iran Standoff Remains Elevated

Daily News

Summary:

Trump: the blockade will remain in effect while the “Freedom Initiative” is paused temporarily; Iran formally launches new shipping regulations for the Strait of Hormuz...

Top News Highlights

1. Trump: Blockade to remain in force; “Freedom Initiative” paused temporarily

2. U.S. Secretary of State says Washington is advancing a “maximum pressure” campaign against Iran

3. Iranian presidential chief of staff: No اختلاف between the president and IRGC commanders

4. Iran officially launches new shipping rules in the Strait of Hormuz; vessels must obtain transit permits

5. U.S. Defense Secretary: Ceasefire agreement with Iran remains valid

6. Bond traders bet the Fed’s next move will be a rate hike rather than a cut

7. Global oil inventories approach an eight-year low; pace of drawdown raises concerns

8. Reserve Bank of Australia raises rates by 25 bps to 4.35%

Detailed News

Trump: Blockade to remain in force; “Freedom Initiative” paused temporarily

U.S. President Donald Trump said in a post on Truth Social that, in response to requests from Pakistan and other countries, along with the significant progress made in military operations against Iran and in negotiations toward a final agreement, all parties have agreed to temporarily suspend the “Freedom Initiative” while maintaining the blockade in full effect.

Trump stated that the move is intended to assess whether a final agreement can be reached and signed. This means the U.S. will maintain its maritime blockade on Iran while pausing the “Freedom Initiative,” which was designed to guide vessels through the Strait of Hormuz, thereby creating space for diplomatic negotiations.

U.S. Secretary of State: Advancing “maximum pressure” on Iran

On May 5 (local time), U.S. Secretary of State Marco Rubio said during a media briefing that U.S. forces are continuing operations under the “Freedom Initiative” in the Strait of Hormuz to restore freedom of navigation in this critical international waterway. He emphasized that the operation is defensive in nature, and while the U.S. will not initiate hostilities, it will respond if attacked.

The U.S. aims to ensure open sea lanes and eliminate mining and transit fees. Economically, Rubio stated that Washington is simultaneously advancing a “maximum pressure” campaign against Iran, including intensified sanctions and blockade measures. He added that President Trump still prefers a diplomatic resolution.

Iran: No اختلاف between president and IRGC commanders

According to Iran’s Tasnim News Agency on May 5, the Iranian presidential chief of staff, Haji Mirsayee, denied rumors of disagreements between President Pezeshkian and commanders of the Islamic Revolutionary Guard Corps (IRGC). He stated that all decisions made in meetings attended by both sides are reached by consensus.

Earlier that day, another official from the presidential office also denied rumors that President Pezeshkian might resign, calling such claims media speculation aimed at attracting attention.

Iran launches new shipping regulations in the Strait of Hormuz

Iran has officially implemented a new mechanism to manage maritime traffic in the Strait of Hormuz. All vessels intending to transit the strait will receive an official email outlining the applicable rules and regulations. Ships must adjust their operations accordingly and obtain a transit permit before passage.

This measure, described as part of a sovereign governance framework, is now in effect in the Strait of Hormuz, which Iran has controlled since the early stages of the conflict.

U.S. Defense Secretary: Ceasefire with Iran remains valid

U.S. Defense Secretary Hegseth stated that U.S. actions to protect commercial vessels in the Strait of Hormuz from Iranian threats are temporary, and Washington has no intention of escalating the conflict. The ceasefire agreement with Iran remains in effect.

Trump launched the “Freedom Initiative” on Monday to restore control over the strategic waterway. Hegseth emphasized that the initiative is defensive, limited in scope and duration, and focused solely on protecting innocent commercial vessels. He noted that U.S. forces do not need to enter Iranian waters or airspace.

Meanwhile, Trump again urged Iran to make a prudent decision and reach an agreement to end the war, stressing that he does not want further Iranian casualties. U.S. media, citing Israeli sources, reported that Israel is coordinating with the U.S. on potential new strikes against Iran, targeting energy infrastructure and senior officials to increase pressure in negotiations.

Bond traders bet on Fed rate hike rather than cut

Bond traders are increasingly betting that the Federal Reserve’s next policy move will be a rate hike rather than a cut. Interest rate swaps linked to central bank policy decisions currently indicate that the probability of a rate hike before April next year exceeds 50% prior to any cuts.

More traders are also increasing positions to hedge against rising rate hike risks by year-end. This shift comes amid growing divergence among policymakers regarding the interest rate outlook.

LPL Financial’s Chief Fixed Income Strategist, Lawrence Gillum, noted that while rate cuts are still possible this year, the likelihood diminishes as the Iran conflict persists.

Global oil inventories near eight-year low

Goldman Sachs reported that global oil inventories are approaching their lowest level in eight years, warning that the pace of drawdowns is becoming a concern due to constrained supply through the Strait of Hormuz.

Following U.S. naval efforts to restore shipping, Iran attacked multiple vessels in the strait and set fire to an oil port in the UAE. Goldman estimates that global inventories currently cover 101 days of demand and could fall to 98 days by the end of May.

While total inventories may not reach operational minimums this summer, the rapid depletion in certain regions and products is concerning. Commercial refined product inventories have dropped from 50 days of demand pre-conflict to 45 days, with easily accessible buffer stocks nearing critically low levels.

RBA raises rates by 25 bps to 4.35%

The Reserve Bank of Australia raised its benchmark cash rate by 25 basis points to 4.35% on Tuesday, in line with market expectations, marking the third consecutive rate hike in 2026.

The central bank noted that inflation rose significantly in the second half of last year and has been further exacerbated this year by higher fuel and commodity prices driven by Middle East tensions. Inflation is expected to remain above target for some time, with risks tilted to the upside, particularly regarding inflation expectations.

The board deemed it appropriate to raise the cash rate target, noting that after three consecutive hikes, monetary policy is well-positioned to respond to evolving conditions and will take necessary actions to achieve price stability and full employment.

Today’s Focus

14:45 (UTC+8) France March Industrial Output MoM

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20:15 (UTC+8) U.S. April ADP Employment Change

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01:00 (UTC+8) Chicago Fed President Goolsbee speech

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