Fed’s Musalem says he has lowered the probability of the baseline scenario and increased the likelihood of alternative scenarios; US economy was already overheated during the 2022 oil price shock and did not overheat now

Musalem's comments suggest a shift in the Fed's stance, signaling caution around inflation and potential supply shocks, especially given repeated disruptions in recent years.

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US EIA Heating Oil Stocks Change (Mar/27) -0.809M

US EIA Gasoline Production Change (Mar/27) -0.152M (Prev. 0.309M)

Fed’s Musalem says he has lowered the probability of the baseline scenario and increased the likelihood of alternative scenarios; US economy was already overheated during the 2022 oil price shock and did not overheat now

EIA Expectations: Crude 2.0M, Distillate -1.1M, Gasoline -1.9M

Iranian Foreign Ministry spokesman says there is no truth to US President Trump's statements that Iran requested a ceasefire

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  • Fed needs to stay vigilant on supply shocks and inflation, noting this is the fourth supply shock in five years.
  • Lower labour force and population growth could limit US economic growth.
Context

His emphasis on lower labor force growth indicates a more complex economic outlook, which could influence rate decisions and market expectations, particularly regarding the dollar and fixed income markets.

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