I hope everyone has been enjoying their weekend. This week will be heavy with Central Bank action, with the Fed, BOE and BOJ all on tap. The era of excessive dovishness has died; the only question is if and when and how much will they hike from here. Will they choose to get in front of the issue and hike now, or express patience and hope for a miracle within a few months? If they do choose to wait, the bond and/or currency markets may punish them.
The other main event is of course the war developments. Over the weekend, the U.S. has tried to de-escalate the situation. The issue is that Iran took advantage of the prior ceasefire, rapidly sold a ton of oil and rebuilt its missile arsenal. There are also stories that the U.S. is low on interceptors, which if true means Iran will actually try to extract even more concessions in any new negotiations. If it is a temporary band-aid and not a true comprehensive end to the war, the oil inventory situation is getting worse and setting up for bigger issues down the road if/when this deal also falls apart.
It should be a very busy week and it is also month end. In terms of data, Monday has durable good and Dallas Manufacturing. Tuesday has Case Schiller, Trade Balance, Richmond Fed and Dallas Services. Thursday has PCE, GDP, Income/Spending. Friday has ECI and UMICH.
In other major economies, Australia has CPI and its data has improved again so it will be interesting to see if they need to hike again. Japan has employment report on top of its meeting.