FROM WHERE I SIT · WEEKLY RECAP · MAY 2026

Week of 18 May: The new Fed Chair has an oil problem on day one

Kevin Warsh just became the most powerful central banker on Earth — and inherited an inflation problem he can't fix with rate cuts. What it means from where we are in ASEAN.

Adezeno · Unit Trust Consultant, Eastspring Investments · May 18, 2026 · 6 min read

The View From Here

This is the first issue of From Where I Sit, my weekly read on what happened in global finance and why it actually matters from where we are in ASEAN. Most macro writing is written from New York or London for people in New York or London. I write from Kota Kinabalu for people in KL, Jakarta, Singapore, Manila, and points in between. Different vantage point, different things you notice.

I'm publishing this one on a Monday afternoon instead of the usual Sunday evening because the story this week was too good to wait — and because launch day was today regardless of where the calendar landed. From next week, it's Sunday 8pm Malaysia time, every week.

If you filled up your tank in KK or KL last week, you felt this week's story before you read about it. Brent crude closed Friday at around $109 a barrel, up 8% in just five days. The ringgit held at 3.95 to the dollar — which is actually historically strong — but the petrol price you pay isn't set in ringgit. It's set in global oil. And the reason oil keeps climbing is the same reason America just got a new central banker. The two stories are tangled.

The Big Thing

Kevin Warsh was confirmed as the new Chairman of the United States Federal Reserve on Wednesday in the closest Senate vote for the role in American history. He officially took over from Jerome Powell on Friday afternoon.

That sentence probably sounds remote if you're reading this from Sabah or Selangor or Sumatra. Let me explain why it isn't.

The Fed Chair is the most powerful unelected economic official on the planet. What this one person decides about US interest rates moves through every currency, every mortgage, every emerging market bond, and every Asian stock market within about 24 hours. When the Fed raises rates, money rushes back to the United States to chase higher yields, and emerging markets — including all of ASEAN — typically see their currencies weaken and their stocks come under pressure. When the Fed cuts rates, the reverse happens. The ringgit, the rupiah, the peso, the baht — they all dance to the music coming out of Washington, whether their finance ministers like it or not.

Here is the problem Warsh inherited the moment he was sworn in. President Trump installed him explicitly to cut interest rates. But US inflation flared back up in April — and not because of anything happening in America. It flared back up because oil prices are spiking, and oil prices are spiking because the Strait of Hormuz — the shipping lane that carries roughly a quarter of all the seaborne oil in the world — has been effectively closed since the United States and Iran went to war back in February. The blockade has taken enough oil off the global market to leave it structurally short, and analysts warn that gap could persist for months — even if the war ends soon.

So Warsh sits down at his first Federal Open Market Committee meeting on June 16-17 with three bad choices in front of him. He can cut rates the way the President wants him to, and watch inflation get worse and his own credibility crater on day one. He can hold rates steady, which is what the data actually argues for, and infuriate the President who appointed him. Or he can do something genuinely creative — change how the Fed communicates, change the inflation target framework, signal patience — and try to buy himself time. Markets are currently betting he holds.

What this means for you: Expect the ringgit to stay relatively strong against the US dollar over the next four to six weeks, because Asia is now functioning as a kind of safe haven within emerging markets — money that used to chase yield is parking in stable Asian currencies while the Middle East and Fed picture clears. But also expect petrol, transport costs, and the price of anything you import from the US to stay sticky to expensive. If you've been planning a big USD purchase — overseas flights, US stock investments, USD-denominated subscriptions — the next four weeks are probably a reasonable window before this resolves in either direction.

Also Worth Knowing

China's April economic data dropped on Monday morning and it was ugly. Industrial output grew 4.1% (analysts expected 5.9%), retail sales grew just 0.2% (expected 2.0%), and fixed-asset investment actually shrank 1.6% year-to-date when economists were looking for 1.6% growth. Translation in plain English: Chinese consumers stopped spending and Chinese businesses stopped investing, both at the same time. This matters for Malaysia, Indonesia, Thailand, and Vietnam because China is the largest single trading partner for all four. If China sneezes, ASEAN exporters catch the flu about two quarters later.
Japan is reporting its first-quarter GDP on Tuesday morning. If growth comes in above 1.5% on an annualized basis, the Bank of Japan is likely to raise interest rates in June — for the first time in any meaningful way in roughly three decades. This is one of those slow-motion regime changes that affects every Asian currency, because Japan has been the world's "cheap money" source for thirty years. When that ends, the entire architecture of how money flows around Asia changes.
Nvidia reports earnings Wednesday after the US market close, which is Thursday morning Malaysia time. The options market is pricing in an 8% move in either direction. The entire global AI stock rally — and a meaningful chunk of every Asian tech-heavy index, including parts of the KLCI — is riding on whether this one American company beats or misses. It is genuinely strange that we live in a world where one company's quarterly result moves 60 markets, but here we are.

What I Might Be Wrong About

I'm assuming the Hormuz situation stays unresolved for at least another month. That's a real assumption, and it's not bulletproof. If Trump and Iran cut a face-saving deal next week — which has actually happened twice already during this conflict, with both sides walking back from the edge — then oil could realistically fall to $85 by month-end. That would break the inflation narrative, give Warsh permission to cut rates the way the President wants, and a weakening US dollar would actually push the ringgit and rupiah down rather than up. The whole story I just told you reverses.

It's not my base case. The blockade has held for nearly three months despite two ceasefire attempts, and the underlying dispute hasn't budged. But it's not crazy either, and anyone who tells you with certainty how Middle East conflicts end is selling you something. Watch Iranian state media this week. If the rhetoric softens, the whole picture shifts.

Watch Next Week

Tuesday 7:50am Malaysia time — Japan Q1 GDP. A sub-1.5% reading likely delays the BOJ rate hike from June to October. Yen extends weakness. A beat does the opposite.
Wednesday after US market close (Thursday morning MY) — Nvidia earnings. Revenue guidance below $80B for next quarter is the level that breaks the AI trade.
Friday morning Malaysia time — Bank Negara Malaysia releases monthly statistics. Watch the foreign bond flows line. Foreign money has been buying ringgit bonds aggressively in 2026; if that reverses, ringgit strength reverses.

From where I sit,

Adezeno — the land below the wind

Sources

Adezeno

Unit Trust Consultant · Eastspring Investments · 13 years experience · Sabah, Malaysia
Macro investing and chart analysis for everyday investors. About · LinkedIn

Adezeno is a licensed Unit Trust Consultant with Eastspring Investments based in Kota Kinabalu, Sabah. He writes about global macro and what it means for ASEAN retail investors at adezeno.com. Views expressed here are personal, not his employer's, and are not investment advice or a recommendation to buy or sell any security.