Just over a month ago, markets widely anticipated that U.S. benchmark interest rates would remain stable. However, with the release of the latest U.S. inflation data, increasing signals suggest that interest rate hikes may be imminent.
Central banks in the U.S., Europe, and Japan have hinted at potential rate increases. Reuters reported on the 20th, citing sources, that a June rate hike by the European Central Bank is almost certain. Although the ECB held rates steady in April, internal discussions have taken place regarding hikes, with signals indicating a high likelihood of an increase on June 11, driven by persistently high energy costs.
The ECB's stance on subsequent policy moves remains ambiguous, aiming to temper market expectations for another rapid hike in July. According to financial market pricing, markets currently anticipate the ECB may raise rates three times over the next year, with a July hike already fully priced in, and the final hike expected in February next year.
Across the Atlantic, the latest meeting minutes from the Federal Reserve also signaled a potential rate hike. CNBC reported on May 20 that minutes released on Wednesday showed most officials at the Fed's recent policy meeting believed a rate hike would be necessary if the U.S.-Iran conflict continues to exacerbate inflation.
Although the Federal Open Market Committee (FOMC) again voted to keep the benchmark rate unchanged in the 3.5%–3.75% range, the meeting recorded four dissenting votes—the highest since 1992—highlighting a significant intensification of disagreements among Fed officials regarding future monetary policy direction.
Simultaneously, central banks in Asia are also taking action. Bank Indonesia announced on the 20th that it would raise its benchmark rate by 50 basis points to 5.25%, a larger increase than market expectations. This marks the first rate hike by Indonesia's central bank since April 2024.
Bank of Japan Policy Board member Junko Koeda stated publicly on Thursday, May 21, that with price pressures from the U.S.-Iran conflict, core inflation could rise above the 2% target, and the BOJ should raise rates at an "appropriate pace." This statement has further heightened market expectations for a potential rate hike in Japan as early as June.
Prior to the U.S.-Iran conflict, U.S. inflation had eased and was gradually approaching the Fed's 2% target, leading markets to generally anticipate potential rate cuts. However, with the closure of the Strait of Hormuz disrupting energy transport and causing sharp spikes in prices of commodities like crude oil, the inflation situation has reversed again.
Data shows that the U.S. Consumer Price Index (CPI) rose 3.8% year-on-year in April, significantly higher than the 2.4% in February. This inflationary pressure is gradually permeating more sectors and spreading globally.
Even if the Strait of Hormuz were to reopen tomorrow, global central banks would still need to address the inflation triggered by the actual closure of the strait for several months.
Gold and stock markets are facing pressure. International gold prices have recently corrected, with spot gold falling below $4,500 per ounce during the evening of May 19, Beijing time. A major catalyst behind this is market expectations that the Fed may restart rate hikes.
According to analysis, the renewed signals of rate hikes from major global central banks may indicate that the global liquidity environment is shifting from previous "easing expectations" back toward "higher rates for longer."
For gold, this could exert short-term pressure. Rate hikes tend to push up U.S. dollar interest rates and global real interest rates. As a non-yielding asset, gold's opportunity cost of holding increases, leading some capital to flow back into dollar-denominated assets and bond markets. Consequently, markets often see a correction in gold prices first.
Analysts note that the rising expectations for global central bank hikes are primarily due to increased global inflationary pressures from geopolitical risks. However, if rate hikes proceed too quickly, raising risks of economic stagflation and financial market turmoil, gold's safe-haven attributes may come into play, providing some support for prices.
Following the outbreak of the U.S.-Iran conflict, global stock markets initially suffered significant setbacks, but recently, the three major U.S. stock indices have repeatedly刷新历史新高, particularly with growth sectors like chips and semiconductors attracting capital inflows. These high-growth companies are more sensitive to funding costs.
High-interest-rate environments can compress market valuations, especially pressuring tech and growth stocks, while rising corporate financing costs may also impact future profit expectations. Therefore, if global central banks simultaneously adopt a hawkish stance, volatility in global stock markets is likely to increase significantly, with potential repricing in some previously high-valuation sectors that relied on low-interest-rate support.
Analysts point out that rising calls for rate hikes by central banks directly boost the U.S. dollar index and U.S. Treasury yields, which is bearish for global stock markets and could trigger adjustments. This impact may be particularly pronounced for U.S. stocks, which have recently reached consecutive record highs, accumulating substantial profit-taking pressure.
Overall, markets are gradually shifting from "rate-cut trading" to "inflation and high-rate trading," suggesting that future volatility in global asset prices may intensify noticeably.
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