Hurmuz Tensions and US Inflation: How Markets Collided?

The escalating US-Iran tensions have raised oil prices and bond yields, tightening global risk appetite as investors' focus shifted to the US June inflation data, which will shape expectations for the Fed's monetary policy.

US Inflation Data and Fed's Expectations ### The US June inflation report came in at 3.1%, signaling a potential delay in the Fed's rate cut to early 2024.

■Inflation reached its highest level since 2022.

■The Fed may defer rate cuts to the second quarter of 2024.

Hurmuz Crisis and Energy Market Impact ### The US-Iran tensions have pushed oil prices up by 10%.

■Brent crude surged from $100 to $110.

■10-year Treasury yields climbed to 4.5%.

Market Reactions ### Global equities fell by 2%.

■Nikkei dropped 3%, DAX fell 2.5%.

■Gold prices rose by 1%.

Markets are shifting into defensive mode. The Fed's potential rate cut delay has increased risk aversion, while the Hurmuz crisis has shaken energy markets. The inflation data has also heightened uncertainty in macroeconomic policies.