The spiral of escalation in the Iran war continued over the weekend. Market participants may increasingly be abandoning hope for a merely temporary oil price shock. Instead, concerns are growing that the increased prices could last longer than previously assumed. The expectation of short-term oil price peaks is increasingly giving way to the risk that higher prices could become entrenched. The market is increasingly coming to realize that this may not be just a short-term disruption.
The longer the Iran war lasts, the more difficult it will be to reliably assess its impact on the global economic engine. In this context, fear of further interest rate hikes by major central banks is also likely to increase again, in order to effectively counteract impending inflation.
US President Donald Trump issues 48-hour ultimatum
A new escalation in the Middle East conflict is likely to dampen risk appetite at the beginning of the week. US President Donald Trump issued an ultimatum over the weekend to open the Strait of Hormuz. If the strait is not opened within 48 hours, he threatens to attack Iranian energy facilities.
Tehran had in turn threatened that the Iranian military would target all energy infrastructure and desalination plants connected to the USA in the Gulf region should the attack occur.
Currently, shipping traffic in the strait has virtually come to a standstill. Iran had once again threatened to attack ships sailing there.
Economic data calendar manageable - temporary impulses conceivable
However, despite a relatively quiet trading week from an economic calendar perspective, there could still be important impulses from time to time.
This afternoon, Purchasing Managers' indices (S&P Global) for services, manufacturing, and overall are on the agenda (2:45 PM).
On Thursday, keep an eye on durable goods orders and weekly initial jobless claims (1:30 PM).
Monetary policy impulses possible – Some Fed representatives in focus
However, following the Fed's central bank meeting last Wednesday, investors should keep an eye on a series of speeches by various Fed representatives for monetary policy clues.
On Tuesday, Fed Governor Michael Barr (11:30 p.m.) is expected.
Stephen Miran (Member of the Board of Governors) follows on Wednesday (9:10 PM) and Fed Director Lisa Cook on Thursday (9:00 PM). On Thursday night into Friday, Fed Vice Chair Philipp Jefferson (12:00 AM), Lorie Logan (Dallas), and Michael Barr (12:10 AM) will speak.
Mary Daly (San Francisco/4:30 PM) and Anna Paulson (Philadelphia) will round out the trading week.
On Friday, consumer confidence (Uni Michigan) could provide a boost, last but not least (3:00 PM).
Dow Jones Industrial Average Index
