2026-05-07 12:01

Key takeaways Despite ongoing peace talks, traffic through the Strait of Hormuz has yet to pick up… …meaning the risk of shortages is rising and energy prices are staying elevated… …rippling into inflation data, and eventually into growth. The Middle East conflict has now dragged on for more than two months, and the ripples into the global economy continue to build. The US is maintaining a naval blockade in the Strait of Hormuz, and traffic remains limited. Equity markets have recovered, but bond markets are still pointing to higher rates in the coming months. Clearer impacts That said, the economic impact is starting to be clearer. Oil and gas prices remain high and volatile, while Asian economies, such as India, Thailand, and the Philippines, are seeing government policy focusing on limiting energy usage. It’s not just energy, either. Prices for a range of commodities, including fertilisers, urea, sulphur, aluminium, and copper, are also rising, which is making life harder for both industry and consumers. For now, much of this is in supply chains, but the risks are clear for filtering through into consumer prices as well. Source: World Bank. Latest data April 2026. Note: TSP = Triple Superphosphate Source: Bloomberg. Latest data 17 April. Note: ADNOC = Abu Dhabi National Oil Company; NOLA = New Orleans, Louisiana; CFR = Cost and Freight Some of this is already showing up in the CPI data. March and April CPI prints point to a sharp rise in headline inflation, driven by higher energy costs. While some countries are providing fiscal support for retail energy prices, that is not an easy lever for policymakers to pull, especially with public debt already high. On hold All of this complicates the policy mix. With fiscal ammunition more limited, central banks are largely in a wait-and-see mode. Higher price pressures have taken rate cuts off the table for now, but rate hikes also look unlikely in most economies, given that this kind of price shock is likely to weigh on activity as well. Source: Bloomberg. Latest data: 5 May 2026. Note: OIS = overnight index swap Source: Bloomberg. Latest data: 5 May 2026 The growth impact may take some time to be seen. In the US, Q1 GDP accelerated to 2.0% q-o-q (annualised), partly reflecting a rebound in government expenditure after the government shutdown in Q4 2025 and strong AI-driven investment. In Asia, Q1 GDP in mainland China surprised to the upside, while eurozone GDP saw a slowdown. Price hikes However, the PMI surveys, our first tell on the global data, are painting a painful picture of what is to come. While we may have seen some better headline data on the manufacturing front, services PMI data have been much softer. Pricing indices are up across the board, and it may take time for the inflationary shock to filter through to household and business decisionmaking, and with it, the hard economic data on inflation and activity. The risk is, however, that the longer the Strait of Hormuz is closed, the greater the chance of acute shortages or price shocks – something the global economy is ill-prepared for. Source: S&P Global Latest data：April 2026 Source: S&P Global Latest data：April 2026 Source: Bloomberg, HSBC. ⬆ Positive surprise – actual is higher than consensus, ⬇ Negative surprise – actual is lower than consensus, ➡ Actual is in line with consensus Source: LSEG Eikon, HSBC https://www.hsbc.com.my/wealth/insights/market-outlook/macro-monthly/inflation-reawakens/

2026-05-06 07:04

Key takeaways USD-JPY fell sharply after briefly moving above 160. Experience from 2024 suggests USD-JPY may rebound once the initial impact fades. A more durable yen recovery will likely require stronger fundamentals, including BoJ rate hikes and lower oil prices. After USD-JPY briefly moved above 160 on the evening of 30 April (JST), the pair fell sharply. It then saw two further, smaller sudden drops on 1 May (late afternoon) and 4 May (midday), both starting near 157.25 (see the chart below). Source: Bloomberg, HSBC Japan’s Ministry of Finance (MoF) has not confirmed any FX intervention and has kept its comments deliberately unclear, which is typical (the last clear confirmation was 22 September 2022). As a result, markets often look to the Bank of Japan’s (BoJ) daily current account data, notably “Treasury funds”, to gauge potential activity, typically with a one-day delay. Estimates suggest cJPY5.4trn (cUSD34.5bn sold; Bloomberg, 1 May) may have been used on 30 April. The MoF is due to publish the total intervention amount for 28 April–27 May on 29 May, followed by a detailed daily breakdown for 2Q26 in early July. Will USD-JPY stay below 160? Experience from 2024 suggests USD-JPY can rebound soon after FX intervention unless fundamentals improve. In 2024, USD-JPY began rising only days after the 29 April (~160) and 1 May (~158) interventions. It moved above 158 on 14 June after a dovish BoJ meeting, then broke above 160 on 26 June. MoF intervened again on 11 July (~161) and 12 July (~159). USD-JPY fell below 150 after a rate hike by the BoJ and a dovish hold by the Federal Reserve (Fed) on 31 July. In our view, two factors are particularly important: (1) BoJ policy: the next decision is 16 June, with c65% chance of a 25bp rate hike expected by markets (Bloomberg, 4 May). (2) External support: in 2024, weaker US data and a dovish Fed helped; and lower oil prices may be the key driver now. Longer-term support for the JPY would likely require a more hawkish BoJ, continued fiscal discipline, and measures to improve FX flow dynamics. Our base case is that USD-JPY may not trend materially lower, but it should be capped near term by intervention risk, with lower oil prices potentially helping over time. https://www.hsbc.com.my/wealth/insights/fx-insights/jpy-fx-intervention/

2026-04-30 12:01

Key takeaways ^DXY = US Dollar Index, is an index (or measure) of the value of the USD against major global currencies, including the EUR, JPY, GBP, CAD, SEK and CHF. Source: HSBC https://www.hsbc.com.my/wealth/insights/fx-insights/not-the-time-to-chase-tactical-trends/

2026-04-30 12:01

Key takeaways At its April meeting, the Federal Reserve left the federal funds rate unchanged at 3.50%–3.75%, marking a third consecutive meeting on hold, in line with our expectations and market consensus. The Fed remains firmly on hold with no urgency to cut, as persistent inflation, geopolitical risks, and elevated uncertainty reinforce a higher-for-longer stance. While the policy decision was straightforward, the meeting stood out for the degree of divergence within the Committee, with an 8–4 vote, the highest dissent since 1992. Inflation remains the dominant policy constraint, with the Fed explicitly linking pressures to higher energy prices and geopolitical developments. We don’t expect any rate cuts in 2026 or 2027 and remain overweight on US equities supported by strong earnings growth and a resilient macro backdrop. In fixed income, we favour high-quality income through investment grade credit and balanced duration. We continue to emphasise diversification via alternatives, including hedge funds and gold, to navigate macro and geopolitical uncertainty. Please refer to the full report for details about the event and our investment view. “Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/fed-holds-firm-as-inflation-and-uncertainty-persist/

2026-04-30 12:01

Key takeaways The Fed held rates steady for a third meeting… …but three policymakers wished to modify the FOMC’s forward guidance in a hawkish direction. The USD strengthened post-FOMC; a still-patient Fed is likely to limit sustained USD trends in the near term. At the 28-29 April meeting, the Federal Open Market Committee (FOMC) kept the federal funds target range unchanged at 3.50-3.75% for the third consecutive meeting. Of the 12 voting members, 11 supported holding rates steady. Fed Governor Stephen Miran again dissented, favouring a 25bp rate cut. Three voters – Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan – backed unchanged rates but did not support including an easing bias in the statement at this time. In practical terms, they sought more hawkish forward guidance without going as far as voting for a rate increase. The USD strengthened in the aftermath. What was expected – and what moved markets In many respects, the April FOMC outcome aligned with market expectations: the policy rate was unchanged, and from the majority’s perspective, the statement was only marginally different from March. In his press conference, Chair Jerome Powell reiterated that “policy is in a very good place for us to wait and see”, a message that would not typically be a major catalyst for FX on its own. Markets instead focused on what did change: the emergence of three votes against retaining language referencing “additional adjustments”. Given the Fed’s rate cuts in 2024 and 2025, that phrasing had been interpreted as an implicit easing bias. The shift towards a more balanced (symmetric) policy signal helped the USD to rally. Powell’s messaging and leadership transition Fed Chair Powell offered a nuanced read on the significance of the vote. He emphasised that those who wanted to adjust the language still supported holding rates steady, and that the majority did not see an immediate need to change the statement. At the same time, he noted that “the centre is moving toward a more neutral place”, even if the Committee was not ready to signal that shift explicitly. He suggested that such a change could “conceivably come as soon as the next meeting”, which is scheduled for 16-17 June. He also said April would be his final meeting as Chair, with Kevin Warsh the likely successor pending full Senate confirmation, and added he expects to remain a Governor for an unspecified period while keeping “a low profile” under a Warsh-led FOMC. Overall, the USD’s move higher reflects an unexpected shift in the vote dynamics with the Fed’s language drifting towards neutral, but it is not a game-changing development for FX. We will continue to monitor how the conversation moves at the Fed, but, for now, the overall tone still points to a Fed in no rush to change policy amid elevated uncertainty. This will likely continue to prevent any sustained trend move in the USD over the near term. With the meeting now behind markets, attention is likely to rotate back towards geopolitics, risk appetite, and energy prices as key drivers of USD performance. https://www.hsbc.com.my/wealth/insights/fx-insights/usd-the-fed-delivers-a-provocative-hold/

2026-04-30 08:04

Key takeaways Since early April, ceasefire negotiations have led to a rebound in risk appetite. As it will take time for the Strait of Hormuz and oil production to normalise, we believe energy prices are likely to remain elevated. We upgrade Energy to overweight across regions following its recent sell-off, to navigate oil price volatility and generate strong cash flows, while continuing to build resilient portfolios with quality bonds, gold and multi-asset diversification. Recent headlines around the US Q1 earnings season affirm the continuation of the tech capex cycle. As previous concerns over excessive investment and AI disrupting software companies have eased, and Technology continues to be supported by improving earnings expectations and reduced valuations, we have further increased our exposure to global and US technology and upgrade European IT to overweight due to stronger earnings visibility. China’s Q1 GDP grew 5% y-o-y, supported by robust manufacturing and solid exports, along with a policy tilt towards domestic support and innovation. With a diversified energy mix, the Middle East conflict appears to have had a limited impact. Earnings growth is expected to be around 10%, with valuations broadly in line with historical averages at 11x. We continue to favour Chinese equities, balancing innovation and high-quality dividend stocks. We downgrade Japanese equities to neutral due to the country’s vulnerability to higher oil prices and less attractive valuations. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/markets-shift-towards-tech-led-structural-opportunities/