Markets under geopolitical pressure and expectations regarding Fed policy
The Federal Open Market Committee (FOMC) has its next meeting scheduled for April 29, 2026. Current interest rates are at 3.50-3.75%, and market expectations indicate significant stability, with a 97.4% chance of maintaining them. Only 2.6% of the market speculates about a potential increase to the range of 3.75-4.00%. In the context of geopolitical uncertainty, the Fed may be forced to adopt a more cautious approach in its policy, which could impact investment decisions worldwide.
Geopolitical tensions between the USA and Iran have dominated today's news. The American administration is considering a plan for military action in Iran aimed at securing nearly 1000 pounds of highly enriched uranium. Negotiations between these countries are not making progress, as confirmed by reports from Israeli media. Additionally, the planned military action could require the involvement of hundreds, or even thousands, of soldiers, which increases the risk of escalation of the conflict. In the Persian Gulf region, the effects of the tensions have already been noted, such as the suspension of production by EGA, a leading aluminum producer.
The American Energy Information Administration (EIA) reported an increase in crude oil inventories by 5.451 million barrels, significantly exceeding forecasts that anticipated an increase of 2 million. This marks another consecutive week of rising oil inventories, which affects commodity prices in global markets. High inventories may suggest a decline in demand, which in the current geopolitical context could further burden the energy market.
Recent reports indicate that due to attacks on infrastructure in Iran, Amazon's cloud business in Bahrain has been affected. This shows how geopolitical tensions can impact global supply chains and the operations of international corporations. Based on the PMI index, the American industrial sector shows a slight decline, with a final score of 52.3 against expectations of 52.4, which may also reflect current uncertainties and turmoil in the markets.
Tomorrow's events should be monitored for further developments in the geopolitical situation in the Middle East and any potential market reactions to the increase in oil inventories. Investors will also closely watch for any hints regarding future Fed decisions that may impact the stability of financial markets.
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