Markets will have to deal with the increasing issue of geopolitics after airstrikes by the US and UK to quell the concerns around Middle East shipping briefly saw oil prices surge. Escalation appears to not be very far away with many predicting more flare-ups in the region. Gold certainly found a bid late Friday in response to strikes, which raised the precious metal’s appeal as a safe haven.
Taiwanese elections on Saturday kick off a year when for the first time ever, over half the world’s population will go to the ballot boxes to vote in their next leaders. The US election in November will be front and centre with the journey to the White House actually starting next week. The vote for the Iowa Republican candidate will be cast with former President Trump the clear favourite to win the Republican candidacy. This so-called “caucus” is often seen as a bellwether for the rest of the spring.
On the economic front, markets took the mild upside surprise in the latest all-important US inflation data in its stride. Services inflation is still proving tricky but bond markets especially, looked through the figures with bets on a March Fed rate cut moving higher above 80%. Next week’s US data highlight should be the retail sales figures which will shine a spotlight on the mighty US consumer. Any signs of retrenchment could undermine the expectations of a soft landing that has helped boost stocks markets over the last few months.
The UK reveals its latest inflation and wage growth figures with the most recent CPI data bringing the economy more into line with its other developed market peers. That said, the road back to the 2% target for inflation is expected to be bumpy with sticky services prices seen continuing in the near term. Easing food and goods prices are expected further out, though markets will be wary of any sings that oil prices don’t upset the current disinflation trend for lower petrol prices later in the year. GBP has got off to a relatively solid start this year but another soft inflation reading would prove unwelcome.
Here are the key data releases:
