#financial-crises

#financial-crises

In Gaza, our suffering has come not only from the political war between Hamas and Israel but also from the economic war that we have been living with since October 7, 2023.

The challenges we all face are significant. The list is long but at the top are the terrible ongoing war and violence in Ukraine, the current war in Iran and the broader hostilities in the Middle East, terrorist activity and growing geopolitical tensions, importantly with China.

High energy prices are kryptonite for the housing market. Affordability, especially for those first-time home buyers, is now an elusive dream until oil prices come down and interest rates come down.

The geopolitical backdrop in the Middle East remained tense after renewed threats to Iranian infrastructure from President Donald Trump, although reports of a potential deal could limit the demand for the dollar.

The US dollar returned to the upside as geopolitical fears rebounded after US President Trump's address to the nation. The rhetoric fuelled risk aversion and flows toward the dollar while oil prices surged.

The Bank of Japan's loose monetary policy has turned the yen into the world's cheapest and most reliable funding currency, creating a publicly subsidised funding pipeline for bankers.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the US economy are uncertain, the central bank said in a statement announcing its policy decision and referring to its Federal Open Market Committee.

"Oil prices are higher again this morning, but Treasury yields are lower as the risks to economic growth begin to take precedence over the risks to inflation," Oxford Economics said in a note on Monday.

For the 25 major episodes going back to 1950, we typically see a decline in the S&P of around 4%. Now, usually after a month, the S&P tends to recover that entire decline. Then he immediately walked it back. The playbook, he said, does not apply here.

In my view, interest rates are more likely than not going to head lower over the course of 2026 and into 2027. I'm not saying we're due for a pandemic-like selloff, but I do think that weakness in the labor market is likely more protracted than the government data suggest. As such, I do think the makeup of the Federal Reserve, and which way many of its presidents and voting members lean (toward providing support for the labor market over battling inflation) could lead to much faster rate cuts than many think.

Goldman Sachs now expects Brent crude to average $105 per barrel in March and $115 in April before retreating to $80 by year-end, assuming roughly six weeks of Hormuz supply disruptions.

behind the recent jump are primarily the weak labour market numbers, but almost all the economic data has turned soft since the end of last year. Total nonfarm payroll employment edged down by 92,000 in February, and the unemployment rate changed little at 4.4 percent.

The war with Iran was expected to last four or five weeks, but Tehran's reaction—a blockade of the Strait of Hormuz, the waterway through which a fifth of the world's oil passes—has triggered a surge in energy markets. U.S. President Donald Trump insists the attacks will soon cease, but he is asking allies for help in securing this strategic Middle Eastern passage, while analysts speculate about how long the oil blockade will last.

Rising inflation concerns, hawkish monetary policy signals, and escalating geopolitical tensions weighed on risk assets. Energy markets are adding to the pressure. Oil prices surged following renewed attacks on energy infrastructure in the Middle East, intensifying concerns about inflationary pressure.

"The historical evidence reveals a striking pattern: government bonds have repeatedly generated substantial real losses during these extreme episodes. They have even underperformed equities and real estates which are traditionally regarded as risky assets."