Macro Update
Oil prices climb more than 3%: Fresh Houthi strikes on Saudi Arabia and Iranian attacks on Gulf shipping intensified supply concerns following the closure of the kingdom’s East-West pipeline, which puts up to 4% of global oil supply at risk, sending Brent to $109 a barrel.
AI stocks tumble across Asia: Asian technology shares fell after the CEOs of Anthropic, OpenAI and xAI called for a slowdown in AI development to address potential threats to humanity, with SoftBank plunging as much as 13.2% and Kioxia falling 9.8% in Tokyo.
Fed hike firmly priced in: A hotter-than-expected US consumer price report on Friday pushed markets to price an 86% probability of a 25-basis-point rate increase on Wednesday, which would be the Fed’s first hike since mid-2023.
BOJ tightening expected on Friday: Markets are pricing around a 76% chance that the Bank of Japan will raise its policy rate by 25 basis points to 1.25%, while the yen remains close to last week’s seven-month high of ¥152.88 per dollar.
Treasury yields remain near multi-year highs: The 10-year Treasury yield held around 4.973% after two-year yields surged 26 basis points last week, weighing on equity valuations as the yield curve flattened.
Sterling slips ahead of Bank of England: The pound eased to $1.3486 ahead of Thursday’s policy decision, with rates expected to remain at 3.75%, although policymakers could once again deliver a split vote.
