The past week in financial markets was marked by heightened volatility as macroeconomic data and geopolitical developments intertwined. The U.S. dollar ended the week nearly unchanged after significant fluctuations, while gold prices retreated as the 'war premium' diminished. Oil prices experienced a sharp decline, driven by optimism surrounding a potential Iran deal. Meanwhile, equities extended their rally, posting an eighth consecutive weekly gain—the longest streak since 2023 [1].
A pivotal moment occurred on Friday when the University of Michigan reported a record-low sentiment reading, coinciding with a seven-month high in inflation expectations. Additionally, Kevin Warsh was sworn in as the new Federal Reserve Chair on the same day, adding to the market's focus on monetary policy [1].
Over the weekend, former President Trump announced that a peace deal with Iran had been 'largely negotiated' and that a formal announcement was imminent. However, Iran's Fars news agency contradicted this, stating the claim was 'far from reality' due to unresolved issues regarding the nuclear program, blocked assets, and the administration of the Strait of Hormuz [1]. Bitcoin responded positively to the initial optimism, rebounding from Friday's lows of $75,800 to approach $77,000 [1].
Looking ahead, the upcoming week is shortened by the U.S. Memorial Day holiday, compressing key market events into a four-day window. The release of the April PCE inflation print on Friday is expected to be a decisive catalyst, especially as it coincides with pre-month-end positioning [1].
CONCLUSION
Markets experienced significant swings driven by geopolitical headlines and macroeconomic data, with equities maintaining strong momentum and oil prices falling on Iran deal hopes. The upcoming PCE inflation report is anticipated to be a major market mover in a holiday-shortened week. Investors remain attentive to both central bank leadership and ongoing negotiations with Iran.