Once again, all eyes are on the Strait of Hormuz. Over the weekend India managed to get safe passage through the narrow waterway for two of its tankers, while U.S. President Donald Trump pressured NATO allies - as well as China - to offer naval support to help convoys.
But progress on that front is mixed. Several countries called upon by Trump said, as of Monday, that they had no plans to send vessels to the Middle East to assist with this plan, even as the Trump administration is reportedly set to announce - as early as this week - that several countries have agreed to form such a coalition.
Meanwhile, Asian trading was mixed on Monday as Japan’s Nikkei edged down 0.3% and South Korea’s KOSPI added over 1% after last week’s selloffs. Elsewhere, Europe's STOXX 600 opened lower while U.S. futures were up before the bell.
The dollar, which jumped over 1% against a basket of major currencies over the past week, softened slightly on Monday, while gold is holding steady.
Clearly, the big fixture of the coming week looks set to be the slew of central bank meetings, which are being held just as the economic impacts of the war with Iran are being weighed.
The Fed isn’t expected to shift rates on Wednesday, but investors will be listening closely for warnings about the inflation risks from a prolonged oil spike as well as concerns about the softening labor market.
Core inflation rose to 3.1% in February, according to personal consumption expenditures (PCE) data released on Friday, even as U.S. GDP growth was revised down to just 0.7% in the fourth quarter. While both sets of figures precede the Iran crisis, they underline the twin risks from an oil shock of higher inflation and slower growth.
A second Fed cut this year has disappeared from the futures strip, and the one still fully priced in isn’t expected until December.
Australia may be the only central bank to change rates this week, possibly hiking for the second time this year. The rest are in wait and see mode.
In China, retail and industrial numbers for the January-February period came in above forecast on Monday, tallying with its boom in trade for those two months. But these figures also precede the oil spike.
Staying with Beijing, attention will turn early this week to U.S.-China trade talks in Paris, which entered their second and final day on Monday. The talks, led on the U.S. side by Treasury Secretary Scott Bessent, come ahead of the U.S. state visit to China slated for later this month.
That also looks set to be overshadowed by the Iran crisis, however, as Trump indicated the visit could be delayed if China did not cooperate on helping to break the Hormuz blockage.
Finally, returning to the theme of AI job destruction, Meta is reportedly planning to lay off up to 20% of its staff, three sources familiar with the matter told Reuters.
