Institution: Energy prices become a key variable in the Federal Reserve's policy path

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CoinWorld News, Strategy Asset Managers CEO Thomas Hulick stated that energy prices have become a key variable in the Federal Reserve’s policy path.
In a market where it is widely expected that Federal Reserve Chair Powell and the Federal Open Market Committee will keep interest rates unchanged, futures markets show an expectation for oil prices above $85, continuously pushing up inflation expectations and increasing intraday volatility in U.S. Treasury yields.
He pointed out that as long as tensions involving Iran in the Middle East and the blockade of the Strait of Hormuz remain unresolved, the bond market will continue to be sensitive to inflation risks.
He added that to bring yields back to normal, oil prices may need to fall back to around $70 per barrel.
Once energy prices stabilize, inflation expectations should decline accordingly, leading U.S. Treasury yields to revert to more fundamental levels.

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