- Ceasefire eased oil below $95, raising odds for earlier Fed rate cuts.
- Mixed US data show modest GDP growth and a resilient labor market.
- Crypto markets sharply reacted, led by Ethereum and Bitcoin liquidations.
The odds of Federal Reserve rate cuts in June are in flux after the recent US-Iran ceasefire. Analysts, including Mohamed A. El-Erian, note that markets are closely watching US economic data, including PCE inflation, GDP, and jobless claims, to gauge monetary policy direction.
While the PCE index remains the Fed’s preferred inflation gauge, attention has shifted to upcoming CPI data for March, as it reflects more recent price movements. Consensus expects core monthly inflation to rise slightly to 0.4% and annual core inflation to ease to 3.0%.
Headline inflation is forecast at 0.4% monthly and 2.8% annually. These numbers will strongly influence market expectations.
War Impacted FED Rate Cut Outlook
According to Bull Theory, the Iran war erased expectations for four Fed rate cuts this year, leaving only one plausible. The Fed maintained its policy rate at 3.50%–3.75%, with two members favoring cuts but ultimately outvoted.
Rising inflation, now at 3.0%, combined with oil surging above $115 during the conflict, reinforced the Fed’s caution. Fed Chair Powell emphasized that oil price shocks drive short-term inflation, yet long-term inflation expectations remain anchored. Consequently, the Fed views recent increases as temporary rather than structural.
However, the ceasefire has shifted dynamics. Oil prices quickly fell below $95, easing immediate inflation pressure. If this level holds through April and May, the Fed could move its planned rate cut forward.
Investors are also watching for a leadership transition, as Kevin Warsh is set to replace Powell in May. Known for favoring lower rates, Warsh could accelerate market expectations for cuts, especially if inflation continues moderating.
Economic Data and Market Response
Recent US economic releases offer mixed signals. GDP Q4 2025 final estimates show a 0.7% annual growth rate, unchanged from previous reports, indicating modest growth after a 4.4% Q3 expansion.
Initial jobless claims for the week of April 4 reached 210K, slightly above prior levels at 202K. Hence, labor markets still show resilience despite slowing momentum.
Source: Coinglass
Cryptocurrency markets reacted sharply to broader macroeconomic volatility. Ethereum led liquidations with $42.73 million of long positions closed, while Bitcoin followed with $33.83 million. Solana also saw $5.63 million of long liquidations.
Meanwhile, Chainlink’s short positions were liquidated for $2.59 million. Hence, crypto markets remain sensitive to both geopolitical events and macroeconomic signals, reflecting risk-off sentiment.
Related: Bithumb Seeks Court Freeze to Recover Mispaid Bitcoin Funds
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