Federal interest rates and incidents in the Strait of Hormuz in the spotlight
The Federal Reserve of the USA remains in the spotlight for investors, especially in the context of the upcoming FOMC meeting scheduled for July 29. Currently, the interest rate is maintained in the range of 3.50-3.75%, and market expectations indicate a 74.9% chance of it remaining at this level. Only 25.1% of market participants expect an increase to the range of 3.75-4.00%. The current level of interest rates is crucial for assessing future investment decisions, especially in the context of inflation and the overall condition of the US economy. An increase in rates could raise borrowing costs, which could potentially impact consumption and investment.
Geopolitical tensions in the Persian Gulf region, particularly in the Strait of Hormuz, have attracted the attention of the markets. In the last 24 hours, there have been several incidents involving tankers, which prompted reactions from the USA. An American official stated that Iran's actions are unacceptable and will face consequences. The Strait of Hormuz is a key route for oil transportation, and any disruptions in this region can affect global prices of this commodity. Increased tensions may lead to rising oil prices, which in turn can impact inflation and monetary policy.
Published data on industrial production in Germany surprised positively. On a monthly basis, it increased by 0.9%, while only 0.1% was expected. On a yearly basis, production remained at 0%, while a decrease of 0.6% was anticipated. These data suggest some stabilization in the German industrial sector, which is a positive signal for the eurozone economy. Meanwhile, the US trade balance showed a deficit of -77.6 billion USD, slightly better than the projected -78.4 billion USD. Although the trade deficit is still significant, the improvement compared to forecasts may be seen as a sign of improvement in the US export situation.
For tomorrow, investors should pay attention to the developments in the Strait of Hormuz, as any potential escalations may affect oil prices and market sentiment. It is also worth monitoring any new economic data from the USA and the Eurozone, which may influence expectations regarding the Fed's decisions on interest rates.
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