The Week Ahead – Déjà vu?

Hostilities in the Middle East and tensions in the Strait of Hormuz are driving oil price spikes and inflation concerns, prompting markets to recalibrate expectations for central bank rate hikes. US economic data shows resilient growth, with retail sales bolstered by vehicle sales and promotional events, while core CPI remains elevated above the Federal Reserve's target. The Federal Reserve is shifting toward scenario-based policy guidance, incorporating diverse perspectives from newly formed task forces. In Europe, political shifts in the UK and France, particularly Marine Le Pen’s potential candidacy for the 2027 presidential election, remain central to market sentiment. China’s economy faces a marked slowdown in Q2 GDP growth, with weak domestic demand and a K-shaped recovery characterized by an AI-driven boom alongside persistent downward pressure from the property sector. Meanwhile, the Bank of Korea is expected to hike rates to 2.75% amid positive spillovers from the chip cycle.