As the ceasefire in Iran brings a temporary respite from the headlines of war, it's time to refocus our attention on the economic landscape. The US economy, which was showing signs of improvement before the conflict, now presents an intriguing scenario for central banks.
The sharp decline in crude oil prices, a staggering 17.5%, offers a glimmer of hope for the Federal Reserve. With the energy price spike now time-limited, the Fed can breathe a sigh of relief and adopt a more relaxed approach to inflation. This shift in perspective is evident in the market's expectations, with a 42% chance of an interest rate cut this year, a stark contrast to the nil probability last week.
However, the path to recovery is not without its challenges. The 2-year yield, which touched its lowest point since March 18, still has a long way to go to reach pre-war levels. The spike in oil prices and the subsequent decline
