Rising US inflation heightens rate hike expectations; US tech stocks decouple from energy price surge sentiment; some Bank of Japan members support an early rate hike — 0518 Macro Highlights

Oil prices are unlikely to return to pre-conflict levels due to factors such as persistent psychological resistance and slow supply chain recovery. U.S. employment remains resilient, inflation is rising, and the market expects no rate cuts before 2026, with even a possible rate hike in early 2027. The 30-year U.S. Treasury yield has stabilized above 5%, putting pressure on U.S. equities liquidity.

Despite the continued rise in energy prices, the U.S. technology sector has gradually become desensitized to this sentiment, mainly thanks to strong Q1 earnings reports, and improved trading structures also provided liquidity support. However, there is currently a phenomenon of overextending the fundamentals of technology stocks, making overall market sentiment fragile.

The Chief Economist of the European Central Bank pointed out that if eurozone inflation continues to rise, the ECB must respond forcefully; however, higher oil prices suppress demand and limit the extent of policy tightening. The Bank of Japan's April meeting minutes show that some members support a rate hike as soon as possible.