Macro, Commodity & Currency Markets Update

In this month's report we highlight a more cautious and less dovish global monetary policy environment, as central banks are now forced to weigh weaker growth prospects against renewed inflation pressure from the Middle East energy shock. While the Fed remains the closest to eventual easing, the BoE, ECB and BoJ are all facing stronger arguments for staying restrictive — or even tightening further — if energy-driven inflation proves persistent.

Global activity remains resilient but increasingly uneven, with the US and China still showing positive growth momentum, while the eurozone looks more vulnerable to stagflation risks from higher energy costs. Inflation has reaccelerated across major economies, labor markets remain broadly stable, and business activity is still expanding.

Commodity markets remain shaped by the war’s impact on energy flows, with oil upgraded as physical shortages replace the earlier surplus narrative, while gas is kept more balanced due to softer Asian LNG demand. FX markets remain largely driven by the global energy shock, with the euro and sterling vulnerable, the yen still pressured, and the yuan expected to strengthen gradually.