Market Insights Podcast – Higher for longer interest rates back in vogue, US CPI, ECB and

OANDA Senior Market Analyst Kelvin Wong joins Jonny Hart to discuss this week’s key economic data and events. Firstly, a quick recap on what happened last week week where the initial Fed dovish pivot narrative has been watered down due to a hawkish Fed Speak from Minneapolis Fed President Kashkari that suggested interest rate cuts may not be needed in 2024 coupled with a red-hot US non-farm payroll jobs data for March. All in all, it has led to a repositioning and rethinking on the pace and quantum of the upcoming Fed funds rate cut cycle as market participants continued to push down further the expected first cut to come in July now from a chance of 76% pencilled in earlier for June right after the recent 20 March FOMC meeting based on data obtained from CME FedWatch Tool.

Secondly, Gold (XAU/USD) and WTI crude recorded stellar gains last week with a weekly return of +4.3% and 4.2% respectively supported by a revival of stagflation risk and sticky geopolitical tension in the Middle East.

For this coming week, the focus will be on US CPI, ECB President Lagarde press conference ex-post monetary policy decision (market participants will be paying close attention on any hints of a change in stance on the timing of ECB’s first rate cut; it has been guided previously to come in June), and lastly on Friday, the release of  Q1 earnings results of the major US banks/financial institutions; JP Morgan, Wells Fargo, Citigroup, and BlackRock.

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