Overview
- On Tuesday U.S. forces struck Iranian military targets near Larak Island and Iran responded by targeting U.S. assets in the region, marking a sharp uptick in direct exchanges of fire.
- Brent crude moved into the mid‑$90s and WTI rose above $90 as traders feared disruptions to shipments through the Strait of Hormuz, a chokepoint for roughly a fifth of global oil flows.
- A synchronized bond selloff pushed 10‑year sovereign yields to multi‑year highs — the U.S. 10‑year near 4.79–4.82%, Japan’s 10‑year above 3%, and German and U.K. yields at decade-plus peaks — raising borrowing costs worldwide.
- Markets now assign about a 65–70% probability of a Fed rate increase in mid‑September after hawkish comments from Fed officials and the market reaction, which has hit long‑duration tech stocks while lifting energy shares.
- Traders are watching ADP, Friday’s nonfarm payrolls and the next consumer inflation prints as the last inputs before the Sept. 15–16 Fed meeting because sustained oil-driven inflation and large fiscal supply could keep yields high and raise costs for households and businesses.