Market volatility and a rise in the oil price are expected after the US strikes Iran. The USD could rise with oil. US business sentiment paints a negative growth picture, as one Fed Governor breaks ranks by saying a July rate cut is possible.
In our deep dive interview, ANZ Group Chief Economist Richard Yetsenga assesses how long the US Fed will hold off lowering rates as it waits to see the impact tariffs have on inflation.
5 things to know in 5 minutes:
A major escalation in the Middle East conflict saw the United States directly bomb Iran over the weekend, with retaliatory strikes by Iran on Israel. ANZ Senior Commodity Strategist Daniel Hynes expects the oil price to jump when trading opens Monday.
West Texas Intermediate prices closed Friday down slightly at US$74.93 a barrel. Daniel says gold might also rise amid heightened geopolitical risk.
The US dollar index closed down 0.2% at 98.71 on Friday. ANZ Head of FX Research Mahjabeen Zaman says, while the US dollar still faces downside risk over the year, these events may see a near term increase, particularly as the oil price rises.
On Friday the S&P 500 closed down 0.22%. The Philadelphia Fed’s business outlook for June painted a negative picture for the US economy, says ANZ Economist Bansi Madhavani.
The focus of the US Fed’s decision last week has been Chair Jerome Powell’s view that time is needed to assess the inflationary impact of tariffs. Fed Governor Christopher Waller broke ranks on Friday though, saying cuts could come as soon as July.
Cheers,
Alex (standing in for Bernard).
PS: Catch you tomorrow with further analysis of the developing Middle East conflict.
