Financial markets under pressure from conflicts and expectations regarding monetary policy
Financial markets are anxiously awaiting the upcoming FOMC meeting, which will take place on July 29. The current Fed interest rate is 3.50-3.75%, and the majority of analysts (83.4%) predict that it will remain unchanged. Only a small portion of the market (16.6%) expects an increase to the range of 3.75-4.00%. This situation is reflected in the current Fear & Greed Index, which stands at 39/100, indicating ongoing fear in the markets. A week ago, the index was at 40/100, suggesting a gradual increase in uncertainty among investors.
Significant geopolitical tensions related to the Middle East are attracting market attention. Donald Trump announced that Iran will pay for the recent attacks leading to the deaths of American soldiers. These threats may lead to an escalation of conflicts, which affects the uncertainty of oil markets. At the same time, the Houthis announced a ban on maritime navigation for Saudis, which may impact oil prices. On the other hand, Yemen plans to resume oil exports starting Monday, which may ease pressure on commodity prices.
In the UK, there have been changes in key government positions. John Healey has been appointed the new Chancellor of the Exchequer, which may influence the country's future fiscal policy. UK Prime Minister Andy Burnham announced the use of 'any flexibility' within British fiscal rules and consideration of changing the threshold for the personal income tax allowance. These decisions may have significant consequences for the British economy and its attractiveness to foreign investors.
Canada has published inflation data that surprised the market. The CPI for June was -0.4% m/m, compared to the expected decrease of -0.2% and the previous increase of 1.0%. Such results may influence the policy of the Bank of Canada, which may be forced to consider further actions to stabilize the economy. The decline in inflation suggests a possible economic slowdown, which may affect expectations regarding future monetary decisions.
Tomorrow may bring further tensions related to the situation in the Middle East and speculation surrounding the Fed's monetary policy. Investors should pay attention to any new information regarding US-Iran relations and the upcoming macroeconomic data that may influence central bank decisions.
The Flash Services PMI is an indicator that measures activity in the services sector. It is an important gauge for assessing the health of the economy, as the services sector constitutes a large part of GDP. Readings above 50 indicate expansion, while readings below 50 indicate contraction. **Watch...
Flash Manufacturing PMI is an indicator that measures activity in the manufacturing sector. It is an early reading that can indicate future trends in the economy. A value above 50 suggests expansion, while below 50 indicates contraction. **Watchlist:** DXY reaction, UST yields, credit spreads
The German Flash Services PMI is an indicator that measures activity in the services sector in Germany. It is an early reading that can indicate future trends in the economy. An increase in this indicator suggests improvement in the services sector, which is significant for investors and analysts as...
The German Flash Manufacturing PMI is an indicator that measures activity in Germany's manufacturing sector. A reading above 50 indicates expansion, while below 50 indicates contraction. It is a significant indicator for investors, as Germany is the largest economy in Europe, and its performance can...
The French Flash Manufacturing PMI is an indicator that measures the condition of the manufacturing sector in France. Readings above 50 indicate expansion, while readings below 50 indicate contraction. This is a significant indicator for investors as it can influence decisions regarding the monetary...
