Meantime, President Trump continued his hardball strategy: floating fresh military action while urging Tehran to strike a peace deal, all while talking up prospects for a breakthrough. Oil prices spiked once more on Thursday, however, after Tehran appeared to harden its stance on its nuclear programme, underscoring the distance that remains between the two sides’ negotiating positions.
The clock is ticking for energy markets. Experts including IEA chief Fatih Birol warned this week of a looming crunch point as the world’s crude inventories threaten to hit critically low levels in the near future if the Strait of Hormuz stays effectively shut. That could mean the global market is only months away from a breaking point.
While any let-up in oil prices could relieve pressure in the bond market, the summer months could be a real crunch in disrupted fuel supplies.
Indeed, the past week’s ructions could be a foreshadowing of what’s in store for markets now that – under the new leadership of Kevin Warsh – they can no longer assume that the Federal Reserve will always step in to buy bonds in a pinch.
Warsh is taking over the helm at a difficult moment. Set to be sworn in at the White House later today, Warsh has been expected to seek rate cuts once in his post, in keeping with the president’s long-stated wishes. But that might not be possible given the inflation backdrop.
Curiously enough, though, President Trump seemed to step back this week from his call for immediate rate cuts. In remarks made to the Washington Examiner, he told the paper he would let Warsh “do what he wants to do” on rates.
Is that an acknowledgement that rates simply cannot come down as price pressures compound? Perhaps, and Fed policymakers increasingly seem to agree. Minutes from its April policy meeting, released on Wednesday, gave more colour around the hawkish dissents in last month’s statement.
Given that accelerating inflation has pushed real interest rates into negative territory both in the U.S. and elsewhere, policymakers may soon be forced to raise rates – whether they want to or not.
In company news, this week brought one of the most hotly awaited events of the earnings seasons as chip giant Nvidia reported first-quarter results. It produced a strong beat, though the share price response was muted. That’s a sign of how much optimism is already in the price and how high the bar is for the world’s most valuable company to continue wowing markets – a bar that threatens to rise further as bond yields soar.
Elsewhere in the AI value chain, a planned strike by Samsung workers dragged down the tech giant’s shares on Wednesday, though the South Korean chipmaker surged 8.5% to a record high on Thursday – pulling the broader KOSPI index up with it – after an 11th-hour deal averted the strike.
There’s more excitement to come where tech is concerned as Elon Musk’s SpaceX filed on Wednesday for its long-awaited IPO, which could be the largest in history. It could list its shares as early as June 12 on the Nasdaq, according to Reuters sources. There were also reports OpenAI plans to file for an IPO shortly, with a possible listing date in early September and AI rival Anthropic is also expected to hit the Street.
For more data-driven insights on markets and commodities, check out Reuters Open Interest. You can learn:
