Hamas Leader Assassinated

Word of the Week Wednesday

?thlon: The Greek word “athlon” meaning “contest” is the root word for many Olympic events including triathlon, pentathlon, and decathlon. (The beginning of each word of course indicating the number of different events within the sport: tri- meaning “three,” pent- meaning “five,” and deca- meaning “ten.”)

Hamas Leader Assassinated

The political leader of Hamas, Ismail Haniyeh, has been assassinated following an airborne strike in Tehran.

It’s understood that Haniyeh was in Iran to attend the swearing in of President Masoud Pezeshkian and meet other allies of the Iranian regime.

While allies Iran and Hamas have blamed Israel for the assassination, Israel has not yet commented. An official spokesperson has however indicated that the IDF are carrying out a “situation assessment”.

Haniyeh has unsurprisingly been a key target for Israel, not least following the 7 October Massacre. As the Telegraph’s James Rothwell says “Footage from inside his Doha office showed Haniyeh celebrating the attack with other Hamas officials” and he subsequently became the “the public face behind the attack”.

Commentators are suggesting that the assassination could see Hamas walk away from the ceasefire negotiations taking place in Qatar. Wider questions also centre on how the Iranians will respond, given that the strike took off lace in Tehran.

This comes just hours after The Israeli military claimed it killed the right-hand man to the Hezbollah leader, Fuad Shukr. The Israeli strike follows Hezbollah’s attack on a football field in the Golan Heights over the weekend which left 12 children dead. Questions are thus mounting on the way in which Hezbollah may respond to Fuad Shukr’s assassination.

Such questions raise fears over rising tensions in the region and the prospect of regional escalation.

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FOMC

At 19:00 this evening, attention will turn to the FOMC where the Federal Reserve will make their latest interest rate decision.

Here, policy makers are expected to hold rates for an eighth consecutive time at the 5.25-5.5% target range. Indeed, money markets are implying that there just a 4% chance of a rate cut being priced in this morning.

According to the last meeting’s minutes policy makers want to see more conclusive evidence that inflation is falling before loosening monetary policy from its tightest level in 23 years. The minutes stated that policy makers “did not expect that it would be appropriate to lower the target range for the federal funds rate until additional information had emerged to give them greater confidence that inflation was moving sustainably toward”. Such sentiments therefore reiterated the Fed’s “wait and see” approach.

At the time of the June FOMC, the latest PCE figures showed inflation stood at 2.7% (over April), unchanged from March’s level, but crucially above December, January and February’s level of 2.6%, 2.5% and 2.5% respectively. Given concerns over a rise in inflation (which nonetheless eased to 2.6% during May), the minutes stated that “several participants observed that, were inflation to persist at an elevated level or to increase further, the target range for the federal funds rate might need to be raised”.

Subsequent data showed headline inflation easing from 3.3% in May to 3% in June, while the latest PCE data released five days ago show prices rose 0.1% in June, core increase 0.2% and the 12-month PCE index fall to 2.5% from 2.6%.

Since the Fed’s last meeting Unemployment also rose from 4% to 4.1%, marking the highest level since November 2021 and indicative of how an easing labour market will ease inflationary pressures on the world’s largest economy, raising the possibility of cut being conducted sooner.

The minutes from the meeting accompany the dot plot from the June meeting which indicated that policy makers were forecasting just one cut this year – down from the three cuts projected during their March meeting. Since markets were pointing towards six rate cuts over 2024 at the start to the year, the downward revision of market expectations of rate cuts has underpinned much of this years’ headlines around the Fed’s monetary policy.

Attention therefore turns to the Fed’s rate decision at 19:00 this evening and press conference half-an-hour later.

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Also Today

Aside from the Fed’s interest rate decision, today will also see the release of Eurozone inflation figures at 10:00, where markets are expecting to see core subside from 2.9% to 2.8% while see headline HICP drop to 2.4% from 2.5%. At 13:15 we will also see the release of ADP employment figures from the US as markets look for an insight into the health of the US labour market ahead of Non-farms on Friday.