Weekly

While most of July was marked by renewed tensions in the Middle East, the past few days have brought a modest easing of the situation. However, shipping traffic through the Strait of Hormuz remains very limited. At the same time, the oil price is hovering around USD90 per barrel, European gas prices remain close to historical highs, and government bond yields across most advanced economies are significantly above their February levels, by 80 basis points in Poland's case. These are not conditions that the global economy could painlessly accept as a new status quo. (...)

The middle of the holiday season can hardly be described as a quiet period this year. The conflict in the Middle East has once again entered an escalatory phase, pushing up oil and gas prices and rekindling concerns about inflationary effects. As a result, the domestic interest rate market has shifted from pricing in rate cuts immediately after the dovish press conference of the NBP Governor at the beginning of the month to once again pricing in rate hikes. By the end of this week, forward instruments were pricing in roughly two 25 bp rate hikes over the next 12 months (...)