FED Tightening, Middle East Oil Exports, and Gold Price Movements
What happened
The Federal Reserve is continuing its monetary tightening cycle, while Middle East oil exports, excluding Iran, surpassed prewar levels last week despite attacks in the Strait of Hormuz, according to Kpler. Gold recently reached US$4,181 after a 6-per-cent decline in September, driven by factors including renewed Federal Reserve tightening and a strengthening US Dollar. The US unemployment rate rose to 4.2 per cent in August, missing projections for job growth.
From theglobeandmail.com
Why it matters
The combination of renewed Federal Reserve tightening and geopolitical tensions in the Middle East is influencing global commodity flows and asset prices. The market currently assigns a 67-per-cent probability to an increase in the Federal Funds rate by the December meeting, though a softer inflation report reduced the implied probability of an October hike to 21 per cent. Central bank buying of gold is also noted as a factor in the market.
From theglobeandmail.com
Who's involved
- FEDThe central bank conducting monetary tightening and adjusting interest rates.
- PolandA central bank noted for purchasing gold.
- Middle EastA geopolitical region where oil exports are being tracked and conflicts are occurring.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- U.S. TreasurySpeculative
U.S. Treasury borrowing costs might be materially affected by the increase in real yields driven by Federal Reserve tightening.
- ShellSpeculative
Shell's operational viability and pricing might be affected by oil market price volatility and higher interest rates.
Keep exploring
The entities involved
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FED
business
- The article discusses the structure of the FED, which includes the FOMC, Gordon advising on real estate finance issues, and Congress setting goals of stable prices and maximum employment.
- The US ISM Services PMI report fell below forecasts, coinciding with lingering fiscal concerns and protests in France, while markets outperformed on higher metal prices.
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Middle East
geopolitical region encompassing Egypt and most of Western Asia, including Iran
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Poland
country in Central Europe
Related events
- Both the FED and the European Central Bank raised rates due to inflation, while attacks on Middle Eastern vessels drove oil price risk and impacted metal stocks.
- Fed rate hikes are influencing regional monetary policy, with GCC countries following the lead and the Kuwaiti dinar pegged to a basket including the dollar.
- Central banks respond to inflation pressures amid oil price volatility and the rejection of an Iranian proposal regarding the Strait of Hormuz.
- High inflation and oil prices push for rate hikes by the Federal Reserve.
- The Middle East conflict is causing oil and gas prices to rise, prompting central banks, including the ECB, to consider interest rate hikes amid global inflation pressures.