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2026-04-04 10:55:44
[Huatai Securities: Inflation Expectations Under High Oil Prices Are the Core of Fed Policy; Even Without Interest Rate Hikes, Substantial Tightening May Occur] (1) Huatai Securities believes that the unexpected rebound in March non-farm payroll data shows that the US job market remains resilient. However, compared to this, the impact of high oil prices under the Middle East conflict on inflation expectations is more critical to the Fed's monetary policy. (2) The recent escalation of the Middle East conflict and the resulting supply gap in crude oil due to the blockade of the Strait of Hormuz have pushed up oil prices and inflation expectations. Inflation has become the core variable of the Fed's policy. (3) The Fed's dual objectives of employment and inflation provide it with some room for maneuver, allowing it to avoid raising interest rates to combat inflation. However, even without raising interest rates, rising inflation expectations may lead to an upward shift in the Treasury yield curve, resulting in substantial tightening.
