Farewell, Rate Cuts – Markets Weekly Outlook

• Discover our Weekly Market Outlook, exploring themes and events that forged financial flows throughout the week.
• Large repricings changed the Market picture after the FOMC and major Central bank week.
• Get ready for next week's action by exploring upcoming events across global Markets.

After all these talks throughout the beginning of the year about a New World Order, what fundamentally changed was the actual shift in Market pricing, which came progressively since the late January FOMC and kept looming over investors until this fateful week.

This week marked a new turn in Central Banking, with not less than 8 rate decisions across Majors, including the Bank of Japan, Bank of England, Royal Bank of Australia, the People's Bank of China, the Federal Reserve, Bank of Canada, the Swiss National Bank, and the European Central Bank.

The verdict? Only one actual change: A rate hike for the RBA.

But the true verdict was the swift repricing for hikes all around the globe, which brought headwinds to virtually all asset classes. Add to it longer expectations for the ongoing US-Iran-Israel War, and you get a spicy combo.

Neither Stocks, Metals, nor Bonds eat spicy, so they all puked. Global assets were only temporarily rejoicing in more optimistic hopes for the War just yesterday (Thursday 19th), but that faded quickly with President Trump's latest plan to occupy Iran's Kharg Island to apply pressure on Iran to stop blocking the Strait of Hormuz.

The idea shouldn't be too bad for Markets, but the issue here is that this would lengthen the Iran operations much longer.

Traffic is barely picking up after 20 days of conflict, and many large importers like Japan, India, and South Korea (including many others) are facing heavy pressure.

To learn more, I strongly invite you to check out this website – Some information is slightly outdated but explain the main factors affected by the de-facto closure with detail.

The largest Market visualization for such is the widening spreads between WTI (North American) and Brent (London) Crude.

After the FOMC Meeting, which was neither hawkish nor dovish all things considered, Fed Members have started to reappear, and their outlook isn't so bright. Fed's Waller really took a turn from his previously softer communications, insisting on the potential de-anchoring of inflation expectations if Oil prices remain so high. And rightfully so, as they've remained surprisingly stable since the beginning of March.

But Markets are ruthless, and with the turn in Central Bank communications, Gold, Bonds, and Stocks all took a significant hit. The two former got hit particularly hard, as the flight-to-safety not only failed to materialize but also backfired.

Metals were once again battered by the recent repricing across Central banks, putting a swift end to their year-long honeymoons.

This could actually be a good point to enter (slow and progressively) in case you missed the boat.

Gold and Silver could still easily retrace to their August levels ($3,500 and $40) so keep some bullets in case.

Discover:

• US Yields explode, dampening Investor sentiment – Dow Jones and US Stock Market Outlook
• Metals dive lower from the global Hawkish repricings, Opportunity or Trap? – Silver (XAG/USD) and Gold (XAU/USD) Outlook
• USD strength vs Euro vulnerability: What’s next for the EUR/USD pair?

Next week will be calmer in terms of pure Central Banking, but Traders will still have to be attentive to the many Governor and CB Presidents speaking throughout next week, to get a better idea of who really turned the page on rate cuts and who didn't.

After this week's heavy Central Bank week for APAC Markets, things should be getting somewhat calmer, or at least more focused.

The pricing for the next Bank of Japan meeting is still uncertain, with a current 60% of hikes priced in – So traders will be paying close attention to the Japanese National CPI on Monday evening.

But Australia (and the AUD) will be taking the focus yet again. The RBA just hiked again to 4.10% this week and Tuesday's CPI should bring further clarity on upcoming decisions.

And don't forget RBNZ Governor Breman's speech on Monday.

European Traders will await the streak of PMI releases on Tuesday, starting with France at 4:14 (ET), before Germany (4:30), The Eurozone (5:00) and the UK release at 5:30.

PMIs have moved Markets to a lesser extent as of late, but a hunch tells me that Markets will react much more to Economic growth releases in coming weeks, as it will be the final gauges for hikes.

The UK will come back at the center stage at on Wednesday with their CPI and PPI combo which will be definitely anchor (or delay) a potential BoE Rate Hike at the next meeting.

Retail Sales on Friday could also help to cement the decision.

For Euro traders, keep close attention to the thousands of speeches throughout next week.

The US will be back to the center stage, but without much to account for it.

Only US PMIs on Tuesday morning will provide economic clues for rate expectations. And as mentioned before, Economic performance data should become important again.

Of course, don't forget to check the classic Oil and US Dollar to help to find trades across Markets – Finally, pay close attention to Fed Speeches throughout next week to see where voters stand.

Those include Fed's Barr, Miran, Jefferson, Paulson and Logan.

Keep a close eye on geopolitical developments, particularly those involving the US-Iran war progess, as they are likely to continue influencing Commodity and broader Markets.

Today marked another large shift in Markets, maybe the largest since the beginning of the Week, as traders pulled the plug on any hopes of cuts.

Metals, Bonds and Stocks got hurt the most, in order – But Cryptos are remaining quite resilient. I wouldn't be surprised to see them perform well next week.

Safe Trades and enjoy your weekend!

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