Federated Hermes: Weekly Markets Wrap Up 30 April 2026
In this week’s markets wrap, our investment teams discuss central bank caution amid oil‑driven inflation pressures, rising policy dissension, early takeaways from earnings season and debt relief efforts in Kenya.
Mitch Reznick, Head of London Fixed Income at Federated Hermes
BOE: The markets appear not to want to get 'ahead of themselves'
After Governor Andrew Bailey’s comments earlier this month that markets were 'getting ahead of themselves' with expectations for an April Bank Rate hike, it is no surprise that the Committee took a 'wait and see' approach today by holding the rate to 3.75%.
We expected more of a split decision, but one vote to lift rates is more symbolic than material. The language of the press release is consistent with Baily’s prior comments that the Committee is prepared to act if inflationary pressure reveals itself to be a systemic challenge because of the oil supply shock.
Though appearing to expect the pressure on UK CPI to continue before acting, the Committee wants to see the net effect of accelerating prices versus a decelerating economy due to the oil shock. Following the announcement, the 10-year gilts briefly crossed the 5% threshold for the first time since 2008.
ECB: No change to ‘no change’…for now
As was widely guided and expected, the ECB’s Governing Council elected for prudence in keeping the Deposit Facility Rate at 2% despite some early signs of rising prices. Whilst there is no change to its recent trend of ‘no change’, there is a shift in the Council’s language. The Council is clearly giving itself the flexibility to take action at the next meeting in June, for which the market has fully priced in hikes to the ECB’s key interest rates.
That being said, and as acknowledged by the Governing Council in its press release, the path forward may be complicated by the countervailing combination of 'upside risks' to inflation and the 'downside risks' to economic activity, both due to the effects of the oil supply shock.
Paul Dalton, Investment Director for Equities at Federated Hermes
Earning Season: Initial Takeaways
Mega‑cap tech earnings from Alphabet, Amazon, Microsoft and Meta reinforced a familiar headline: strong revenue growth, sharply higher capex, persistent capacity constraints and rising demand for agentic AI and compute.
After a year of alternating hype and caution, however, this season feels more like a 'show‑me' moment. Fundamentals are becoming increasingly important. It is no longer sufficient simply to have exposure to the AI theme; capital discipline and valuation are under greater investor scrutiny, with an increasing focus on execution, returns and margin sustainability.
Cloud performance remains strong across platforms, but the relative winners are increasingly those with diversified business models and deep ecosystems, such as AWS within Amazon and Google’s Gemini, which are viewed as increasingly valuable as enterprise demand for agentic AI scales.
Beyond tech, earnings commentary suggests the Iran conflict is feeding through in a more uneven, sector‑specific way, reinforcing dispersion in earnings, guidance and market leadership. Energy companies remain clear beneficiaries, while some consumer and industrial firms are beginning to flag second‑order margin and demand risks into H2, which could become more pronounced if the conflict persists in to summer.
Susan Hill, Head of Government Liquidity Group at Federated Hermes
Will he stay or will he go?
The answer today is stay, at least for now. At his last press conference as Fed Chair, Jerome Powell has committed to remaining on the Fed as Governor until the investigation is concluded with finality and transparency. Powell's presence could lead to an awkward transition for Kevin Warsh after his expected confirmation, or it could result in a more definitive statement from the Department of Justice that could allow him to leave fairly soon.
The FOMC composition aside, this week’s meeting was characterized by an unusual amount of dissension. Dissents on statement language are unusual, and this week’s statement reflects a growing shift on the FOMC toward concerns about the inflationary impact of the Iran war as it persists.
Mohammed Elmi, Senior Portfolio Manager for Emerging Market Debt at Federated Hermes
Kenya Plans for Debt-for-Food Swap
Debt swaps for social projects in highly indebted frontier economies represent a welcome development within the official sector’s sustainable sovereign debt architecture. Building on the Covid era Debt Service Suspension Initiative and its successor, the Common Framework, these transactions offer tangible fiscal relief.
The anticipated finalisation next month of Kenya’s USD 1 billion Debt for Food swap, together with Angola’s World Bank–backed Debt for Education swap expected in June, will provide both countries with greater fiscal flexibility to address pressing social needs.