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On May 19th, Navellier & Associates analyst Louis Navellier stated in a report that interest rates have become extremely sensitive to energy prices, and should fall significantly once the Strait of Hormuz reopens. He noted that upward inflationary pressures will persist until then, adding that any rate cuts by the Federal Reserve will be delayed until the recent surge in energy inflation subsides. Navellier stated, "If the Strait of Hormuz is still not open a month from now, energy prices will almost certainly rise, pushing up inflation and interest rates." He also stated that this would pose problems for the US midterm election cycle, which historically tends to trigger downward market volatility. "Trump is under pressure to resolve the Iran issue as quickly as possible," he said.On May 19th, it was learned from the National Bureau of Data Science that my country is proactively developing a series of cutting-edge standards in the data field. It is understood that relevant units have researched and formulated 12 national guiding technical documents for a nationwide integrated computing power network, including those related to computing power grid connection and pooling; compiled 7 national standards for high-quality dataset construction, format, classification, and quality evaluation; and initiated over 100 research projects on ontology models and computing-power collaboration, laying a solid data foundation for the development of artificial intelligence in my country. Liu Liehong, Director of the National Bureau of Data Science, stated that by 2026, the National Data Standardization Technical Committee will research and formulate no fewer than 80 national standards and technical documents, release no fewer than 30 key standards, and promote the establishment of 2-3 international standards.On May 19th, Thierry Weizmann, global FX and interest rate strategist at Macquarie Group, stated in a report that even if the Federal Reserve takes action hinting at a shift to a neutral stance in June, it may not be enough to stabilize inflation expectations and long-term Treasury yields. He pointed out that the currently slightly upward-sloping overnight index swap forward curve only reflects one rate hike in 2026, and for the Fed to quell inflation concerns, its rhetoric must be more hawkish than what the curve already reflects. He indicated that between now and June 6th, the Fed will have a series of short speeches, at which time it may have the opportunity to decisively shift its rhetoric to a "hawkish" stance.The UKs three-month ILO unemployment rate for March, the number of unemployment benefit claims for April, and the unemployment rate will be released in ten minutes.On May 19, the Ministry of Water Resources held a rolling consultation and assessment of the national rainfall and flood situation, and arranged and deployed flood prevention work. In accordance with the "Emergency Response Procedures for Flood and Drought Disaster Prevention of the Ministry of Water Resources," the Ministry activated a Level IV emergency response for flood prevention at 12:00 on May 19 for seven provinces and autonomous regions, including Jiangxi, Hubei, Hunan, Guangdong, Guangxi, Guizhou, and Hainan. Local water resources departments and river basin management agencies are required to closely monitor the development and changes in rainfall and flood conditions, strengthen monitoring, forecasting, and early warning, enhance consultation and assessment and emergency duty, scientifically and accurately implement flood control scheduling of water projects, strengthen the safe passage of small and medium-sized reservoirs and projects under construction through the flood season, focus on preventing floods in small and medium-sized rivers and flash floods that may be triggered by short-duration heavy rainfall, promptly issue early warning information and urge local authorities to organize the evacuation of people to safe areas, implement emergency response measures for disaster warnings, and make every effort to ensure the safety of peoples lives and property.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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