Key facts
- Investor expectations for Fed rate hikes in the second half of the year remain.
- Easing Middle East tensions have not significantly altered these expectations.
- LBBW believes Iran conflict resolution could reduce pressure for tighter monetary policy.
- LBBW's base case remains unchanged despite geopolitical shifts.
Investor sentiment suggests a continued expectation for Federal Reserve rate hikes in the latter half of the year, even with a de-escalation of Middle East tensions. Analysts at LBBW note that the resolution of the Iran conflict might alleviate some pressure for more restrictive monetary policy. However, the institution's fundamental outlook and base case projections are not expected to change as a result of these geopolitical developments.