Middle East Conflict and New US Tariffs Shake Global Markets

Middle East hostilities are rattling global energy markets, pushing market tightness to a fresh peak.

Geopolitical Tensions Reshape Market Dynamics

U.S. President Donald Trump's contemplation of a major strike on Iran, CENTCOM's announcement of fresh attacks on Iranian military targets, and Iranian media reports of missile launches near Ahvaz and the Strait of Hormuz have heightened regional risk premiums.

■The conflict risk at the Strait of Hormuz directly threatens oil flow.

■Military activity in the Middle East has lifted the regional risk premium by 15%.

Oil Price Surge Fuels Inflation Pressure

Brent crude jumped 4.7% to $94.9 per barrel, the highest level since June 11.

■Brent fell 0.6% today to $94.3.

■Rising energy costs have pushed global inflation expectations up by 78%.

Fed Rate Outlook and Treasury Yield Spike

Markets have priced in a 78% probability that the Fed will raise rates twice this year, with a hawkish move expected at either the September or October meeting.

■2‑year Treasury yield reached 4.38%, a peak not seen since Feb 12 2025.

■10‑year Treasury yield climbed to 4.72%, the highest in 17 months.

U.S. Trade Policy: New Tariffs on Forced‑Labour Goods

The USTR announced customs duties of 10% or 12.5% on imports produced with forced labour.

■10% duty applies to Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, United Kingdom.

■12.5% duty targets the European Union, Taiwan, Japan, South Korea, and Switzerland.

■The tariffs become effective on July 24.

Global Equity and Currency Flows

■S&P 500, -1.21%; Nasdaq, -2.15%; Dow Jones, -0.97% declines.

■The ECB held policy rates steady, citing ongoing energy‑shock risks to inflation.

■Dollar/TRY traded at 47.3450, while Gold slipped to $4,270 per ounce.

Economic Calendar and Market Outlook

Upcoming releases will shape sentiment, especially PMI data and consumer confidence metrics.

■09:00 Germany – GfK Consumer Confidence Index

■09:00 United Kingdom – Retail Sales Index

■10:30 Germany – Manufacturing & Services PMI

■11:00 Eurozone – Composite PMI

■16:45 United States – Manufacturing & Services PMI

Fatih Kılıç: The convergence of heightened geopolitical risk, surging energy prices, and an increasingly hawkish Fed is likely to trigger a short‑term pullback from risk assets. The newly announced U.S. tariffs on forced‑labour products will add cost pressure across global supply chains, amplifying volatility in low‑margin sectors and equity markets.