The Iran ceasefire has shifted the focus back to the real economy, with the Federal Reserve and European Central Bank (ECB) now in a better position to manage inflation and interest rates. The $19 decline in WTI crude oil prices, or 17.5%, is a significant retracement in inflation and a huge help for the Fed, which can now 'look through' the energy price spike as it becomes time-limited. However, the 2-year yield is still a long way from the pre-war zone of 3.4%, as the spike in oil prices and the lost oil will make it difficult to get oil back to $60. The market is now pricing in 10.5 bps of easing this year, or a 42% chance of a cut, up from virtually nil last week. The odds of a hike at the April 30 meeting have plunged to just 31.5%, but that rises to 71.9% for June and 91% for September. The Fed funds futures suggest that the April 29 and June 17 meetings, the final two with Jerome Powell as Chairman, are not live. The market is now pricing in two rate hikes for Europe, with the odds of a hike at the April 30 meeting plunging to just 31.5%, but that rises to 71.9% for June and 91% for September. The focus is now on the real economy, with the PCE report and CPI on the horizon. The market's shift in focus and the potential for rate cuts or hikes will have significant implications for the Fed and ECB, as well as the global economy. Personally, I think the market's shift in focus is a positive development, as it allows the Fed and ECB to manage inflation and interest rates more effectively. However, the potential for rate cuts or hikes still raises a deeper question about the future of monetary policy and the global economy. What makes this particularly fascinating is the potential for a 'look through' strategy by the Fed, which could have significant implications for the global economy. In my opinion, the market's shift in focus and the potential for rate cuts or hikes are important developments that will shape the future of monetary policy and the global economy. From my perspective, the Fed and ECB must carefully consider the potential implications of their decisions, as they could have far-reaching consequences for the global economy. One thing that immediately stands out is the potential for a 'look through' strategy by the Fed, which could allow it to manage inflation and interest rates more effectively. What many people don't realize is that the market's shift in focus and the potential for rate cuts or hikes are not just technical developments, but also have significant implications for the global economy. If you take a step back and think about it, the Iran ceasefire and the market's shift in focus are important developments that will shape the future of monetary policy and the global economy. This raises a deeper question about the future of monetary policy and the global economy, and it is important for the Fed and ECB to carefully consider the potential implications of their decisions. A detail that I find especially interesting is the potential for a 'look through' strategy by the Fed, which could allow it to manage inflation and interest rates more effectively. What this really suggests is that the Fed and ECB must carefully consider the potential implications of their decisions, as they could have far-reaching consequences for the global economy. In conclusion, the Iran ceasefire and the market's shift in focus are important developments that will shape the future of monetary policy and the global economy. The Fed and ECB must carefully consider the potential implications of their decisions, as they could have far-reaching consequences for the global economy. Personally, I think the market's shift in focus is a positive development, but it also raises important questions about the future of monetary policy and the global economy.
