Inflation

• US S&P 500 futures hovered near flat Friday morning as investors balanced elevated borrowing costs, sticky inflation and Middle East tensions pushing energy prices. • 10-year Treasury yield held at 4.41%, pressuring credit cards and business loans, while 30-year mortgage rates reached 6.38%, making home buying costlier. • Spain's inflation at 3.3% underscores persistent living costs; interest-rate sensitive sectors like banks, real estate and small caps face tighter credit conditions.

OECD says the Middle East war will test the world’s resilience with Australia expected to suffer from higher rates and inflationGet our breaking news email, free app or daily news podcastThe world economy is on the brink of a major inflationary spike as soaring fuel prices threaten growth in European and Asian nations, the OECD has warned, and local economists are slashing Australia’s growth prospects for this year and the next amid the ongoing US-Israel attack on Iran.The Organisation for Economic Cooperation and Development’s latest interim outlook said the US-Israel war on Iran will “test the resilience of the global economy”, and warned of the “significant downside risk” to their forecasts should the oil supply disruptions prove more persistent and push energy prices even higher. Continue reading...

February annual rate in line with analysts’ expectations but outlook has shifted because of effects of conflictThe UK inflation rate was unchanged at 3% in February, before Donald Trump’s Iran war drove up global energy costs, threatening a renewed price jump.Official figures showed the consumer prices index (CPI) remained at 3%, in line with economists’ expectations but still well above the government’s 2% target. Continue reading...

PMI figure reveals impact on economy of rise in oil prices driven by Iran warBusiness live – latest updatesThe UK’s manufacturers have suffered the sharpest one-month acceleration in costs since the aftermath of Black Wednesday in 1992, as conflict in the Middle East has driven up oil prices, new survey evidence shows.The closely watched purchasing managers’ index (PMI) lays bare the impact of the conflict on the UK economy, with growth slowing sharply across manufacturing and services and costs rising. Continue reading...

• Rising yields across US and international bond markets reflect growing inflation expectations stemming from the energy shock caused by the Iran-US conflict, with 10-year gilts rising 14 basis points. • Market participants are increasingly betting on a Federal Reserve rate hike later this year as inflation anchoring concerns mount amid geopolitical disruptions to energy supplies. • The bond market deterioration follows Friday's significant equity selloff and signals potential monetary policy tightening ahead, with the Fed focused on ensuring inflation expectations remain anchored despite external supply shocks.

• All major central banks adopted hawkish stances last week as energy market disruptions reignited inflation concerns, prompting global reassessment of monetary policy outlooks and eliminating prior rate-cut expectations. • U.S. Federal Reserve rate cut bets over the next 12 months have been priced out entirely, while most other advanced economies have begun pricing in additional rate hikes; the December Monetary Policy Report that implied a 25 basis point rate cut to 3.75% by Q4 2026 is now obsolete. • The combination of persistent energy price shocks and hardening central bank stances creates a "brutal combo for risk assets," with the dollar index remaining anchored in the 96.00-100.00 range as USD risks remain skewed to the upside during periods of financial market stress.

Decision to hold interest rates is backed by gloomy assessment of economy as Iran war pushes up oil pricesBank of England holds interest rates at 3.75%Business live – latest updatesThe US-Israel attack on Iran has already driven prices higher and not just at the petrol pumps, the Bank of England said on Thursday in a gloomy assessment of the UK’s economic outlook.An inflation rate that was on track to fall from 3% to the Bank’s 2% target in the coming months is now expected to rise to 3.5%. That is one probable impact of the US and Israel’s war on Iran. Continue reading...