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Higher U.S. Interest Rates and Strong Dollar Threaten Oil Price Rally

Last week’s crucial US economic releases were singing the same song—higher for longer. Sizzling core readings in the and crushed hopes for a tidy melt in inflation. A ferocious recovery in January sequestered thoughts of a meaningful economic cooldown. Dreams of an imminent end to Fed were lost in the haze of hawkish Fedspeak after Presidents Mester and Bullard implied that a 50bp hike could be on the table for the March Fed meeting. But compounding matters, the lonesome dove on the board, , is set to leave for a top economic post at the White House.


Still lost in the heat of the moment was that traders seldom, if ever, put much weight on these comments because both are known to be hawks and non-voters. Moreover, it does not seem that either Mester or Bullard have updated their view on the terminal rate, but they think we should get there as fast as possible. And that is not a change of view.

Despite the rising last…

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