The hope for an agreement between Washington and Tehran in the Middle East conflict could lure market participants out of their reserves, even if lingering doubts about an actual peace deal remain.
In the new trading week, in addition to geopolitical developments in the Iran conflict, inflation and interest rate concerns are likely to move more into investors' focus. From the perspective of the economic calendar, new price data in particular should be exciting.
Due to the holiday, the Wall Street stock exchanges will remain closed on Whit Monday because of "Memorial Day.".
Despite the prospect of a possible peace deal in the Iran conflict, some doubts are likely to remain.
While investors may give the recent hopes some credit, it is likely still too early for genuine praise given the fragile situation. Accordingly, skepticism among investors is likely to persist. Too often have investors recently assumed supposed progress, only for new threats or geopolitical setbacks to follow. The crucial factor will likely be whether concrete agreements actually follow the political signals this time.
Trump had told the broadcaster CBS that the U.S. and Iran were much closer to reaching an agreement. The U.S. president is convinced that the final agreement will prevent Iran from acquiring nuclear weapons, it was stated. The Strait of Hormuz is also to be reopened with Iran as part of an agreement. The final details of the agreement are still being negotiated and will be published shortly.
However, Trump later dampened hopes for a swift agreement with Iran. Trump had reportedly instructed his representatives not to rush into any deals. US Secretary of State Marco Rubio had stated in New Delhi on Monday that a „pretty solid offer“ was on the table.
Numerous economic data are expected on Thursday – US price data in focus
Important inflation data are on the agenda for Thursday with the core personal consumption expenditures rate (2:30 PM).
At the same time, the second estimates for U.S. GDP growth rate and new orders for durable goods are also expected.
Kevin Warsh officially took office as the new Fed chairman last Friday. He replaces Jerome Powell, who held the position for eight years. It will be interesting to see how Warsh plans to combat the wave of inflation threatened by the Iran war. Trump had repeatedly pushed for interest rate cuts in the past. Doubts about the central bank's independence could fuel new uncertainties.
As the CME Group's FedWatch Tool signals, 98.1 percent of market participants currently expect an interest rate pause at the upcoming Federal Reserve meeting on June 17, and 1.9 percent expect a 25 basis point rate hike. The interest rate range itself is currently between 3.50 and 3.75 percent.
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