US CPI and Iran Conflict to Dictate the Market: 3-Minutes MLIV
Speakers
Adam Linton
— Markets Live Strategist, Bloomberg
Tom Mackenzie
— Anchor, Bloomberg
Summary
The panel previews the week ahead, focusing on the US CPI report's potential to sway the Fed and bond markets, the near-term upside in oil from Iran tensions but with a cap on optimism, and the continued upward momentum in dollar-yen as the yen remains the worst G10 performer.
- CPI is the dominant event this week; the market is more sensitive to a hot print.
- A hot CPI could reinforce hawkish Fed messaging and create a more hawkish Jackson Hole.
- Treasuries faded into the Friday close ahead of the CPI report.
- Oil has a short-term upside bias on Iran/US security shakeup news.
- Oil's upside is capped by a high bar for a durable US-Iran deal and cautious central banks.
- Dollar-yen is above 150 and the market buys dips, with momentum to the upside.
- The yen is the worst performing G10 currency this month, reflecting intervention fatigue.
Ideas
Oil has near-term upside bias
Oil has a near-term upside bias driven by rising Iran tensions, a US security shakeup, and reports that Khamenei is now on the scene, though any rally may be short-lived because the market cares more about a durable US-Iran deal, the bar for repricing optimism is high, and the ECB remains cautious, capping gains.
Dollar-yen has further upside momentum
The path of least resistance in dollar-yen is higher, with the pair above 150 and the market happy to buy dips; the yen is the worst G10 performer as intervention jolts fade and momentum carries the pair toward levels where the MOF intervenes, while the Fed remains hawkish.
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