US-Iran Peace Agreement and Fed Speeches Set Stage for Market Volatility

The US-Iran peace agreement has dominated market attention in recent weeks, with potential breakthroughs expected to restore risk appetite and improve sentiment across equities and crypto markets.

An interim agreement could reduce oil prices, ease inflation pressure, and compress rate hike expectations, according to experts. The stakes are high, as the conflict's impact on global markets has been significant, pushing oil prices up 55% since February and driving inflation re-acceleration.

The week ahead will feature a series of key events that could influence market sentiment. On Tuesday, the US Conference Board Consumer Confidence Index for May will be released, providing a second read on household confidence following last Friday's record low reading.

Wednesday's speeches by Bank of Japan Governor Kazuo Ueda and Federal Reserve officials will also draw attention. The BOJ's intentions regarding its own rate path will be closely watched, particularly after Japan's 30-year bond yields hit a record high last week.

The core PCE inflation data on Thursday is the most critical release of the week, with expectations for a higher-than-expected reading adding to rate hike odds. A softer reading could provide relief by creating room for the Fed to pause rather than hike.