U.S. Indices were slammed on Friday as geopolitics continues to dominate, while a heavy week of central bank activity marked a hawkish shift due to the US/Iran war. The downside saw the Russell fall 10% from peaks, officially entering correction territory. Reports had suggested that US President Trump is considering plans to occupy Kharg Island to pressure Iran to reopen the Strait of Hormuz, but reports stated that Iran is maintaining its hard line on Hormuz. The US is also sending thousands of troops to the Middle East, and CBS suggested the US is preparing for a ground invasion into Iran, but no final decision has been made. The escalating tensions saw oil prices rally, in turn seeing Treasury Yields surge in the US and Europe with Money Markets pricing in more hawkish global central bank activity, with rate cut bets turning to rate hike bets. Fed speak saw Waller voice inflation concerns from the War, while Bowman said she pencilled in three rate cuts in 2026. In the UK, 10-year Gilt yields hit the highest level since 2008, while Bund yields hit the highest level since 2011. In FX, both the Canadian Dollar and US Dollar outperformed on energy prices and haven demand, respectively. Meanwhile, AUD, JPY and NZD underperformed with Antipodes hit by risk sentiment while Yen was hit by surging US yields. Gold and Silver also plummeted on the hawkish central bank shifts seen this week, while Bitcoin was slightly lower, but not to the same extent as stocks and metals. Shortly before the close, President Trump issued remarks, saying we can have dialogue with Iran, but don’t want a ceasefire. Governor Waller took on board the risks the Middle-East conflict poses, walking back his calls for more imminent rate cuts. He said he thought he would dissent after the last jobs report at Wednesday’s meeting, but the Iran conflict has changed things. He notes that if oil stays high for months, at some point it will bleed into core inflation, with a high and persistent oil shock not having a transitory impact on inflation, which the Fed cannot look through. He believes this caution is warranted, wants to wait and see how this evolves before deciding on rate cuts for later this year and how the economy changes. On that, he would advocate for cuts again late in the year if the labour market is weak. Waller does not think there is a need to consider rate hikes, and markets have not shown any unanchoring of inflation expectations. Investors understand inflation will drop as tariffs roll off. Meanwhile, Waller expects labour force growth to be close to zero, which changes the breakeven level of job growth. Separately, he sees no reason to make bank reserves scarce just to reduce the balance sheet. Fed Member Bowman said she has pencilled in three interest rate cuts for 2026; a more dovish outlook on the rate path this year than the Fed Median SEP of one 25bps cut. Bowman says she is still concerned about the labour market. Regarding Iran, she said it is too early to say what the Iran war means for the Fed. On banking, she noted that the new bank rule proposals have broad support and hopes the changes will pull more activity back into the banking sector. Elsewhere, Oil closed higher by 3% while Gold ended its worst week in 43 years with a loss of 3% on Friday.
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For anyone following my Platinum Service it lost 140 points on Friday and is now ahead by 4131 points for March having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points whe ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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