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00:00 We started this year with the investors' price that the Federal Reserve will reduce interest by about 150 points.
00:08 We reached a meeting in March for the US Federal Reserve and after a series of economic data, the market reduced its expectations to be at about 75 points.
00:19 But the surprise was in yesterday's data, which showed strength for the industrial sector in particular.
00:25 This sector has returned with strength to witness expansion, and it is the first expansion we have seen in this sector since September 2022.
00:35 The manufacturing sector is not the main sector if we look at the US economic structure, which relies more on the service sector.
00:44 But to witness this expansion in a sudden way, this has caused concern to the markets,
00:49 because the US Federal Reserve may be forced to maintain high interest rates for a longer period.
00:54 First, let's talk about the numbers before we talk about the impact of these numbers on market expectations.
00:59 The ISM indicator for the industrial sector recorded a reading at 50.3, which is above 50, which separates between expansion and contraction.
01:10 But it is not the only factor that has caused concern to the markets.
01:14 The second factor is the prices, the pricing. This component recorded a reading at 55.8, with a high increase in the prices of production inputs.
01:25 This means that at the end of the year, this increase will reflect on future inflation data.
01:32 These numbers have caused severe pressure on the market to lower interest rates.
01:39 Federal expectations indicated a threefold decrease this year, with a 75% base.
01:46 But after the release of these numbers, we have seen a sharp decline in these expectations.
01:51 And a decline in the June meeting.
01:53 Before the release of the data, the market was estimated to reach 70% until June meeting will have the first low interest rate.
02:01 After the release of these data, we reached a price of only 50% probability, because June meeting will have the first low interest rate.
02:11 And in general, we have seen a decline in market expectations for the next meetings because of these economic data.
02:20 What has increased the pressure on market expectations is that oil prices have returned to the high.
02:26 Brent is heading to 90 dollars per barrel because of the rise in geopolitical risks.
02:31 Oil prices will lead to increases in inflation rates, whether basic or even those that exceed food and energy prices.
02:39 Because oil prices also affect the price of the services sector.
02:43 And inflation in the services sector, if it continues to rise, will be more problematic for the US federal government.
02:49 All in all, these data that we have seen have affected not only the US bonds markets or stocks, but also the global bonds markets.
03:00 The interest rates of the British, German bonds and others have all risen after these numbers because of the price.
03:06 The US federal government may remain high interest rates for a longer period.
03:10 The most important test will now be the data of the non-agricultural jobs added to the US economy.
03:15 These numbers will be released at the end of this week, which will create a greater sensitivity for investors, whether in the stock market or bonds, especially if expectations rise.