The Latest Escalation.
The duck and the dog.
“I can’t do my job without News Items.” — Jim Cramer, CNBC.
1. Bloomberg:
The US and Iran exchanged fresh strikes overnight into Monday as they continued their tit-for-tat attacks while issuing conflicting declarations over whether the Strait of Hormuz was open to shipping.
US Central Command said American forces carried out a new round of attacks to degrade Iran’s ability to threaten shipping in the narrow waterway. Dozens of targets were hit, including Iranian air-defense systems, coastal radar sites, and missile and drone capabilities, Centcom said Sunday in a post on X.
Tehran retaliated Monday with attacks on US allies in the Persian Gulf and beyond, targeting US bases in Kuwait, Bahrain and Jordan, according to Iranian state media outlets. The Islamic Revolutionary Guard Corps said earlier that it had intercepted two vessels it viewed as endangering shipping in Hormuz by proceeding along an “illegal route.”
The latest escalation extends a pattern of attacks and counterstrikes that has continued for about a week. The US attacks over the weekend marked one of the heaviest bombardments since a June agreement intended to halt the fighting, while Iran’s retaliation is also widening, targeting an increasing number of Arab states in the region. Oil prices rose on fears that renewed clashes could further disrupt flows through Hormuz, with global benchmark Brent trading 4.3% higher at over $79 a barrel as of 5:54 a.m. in London.
Centcom said over the weekend that its forces struck about 140 targets under orders from President Trump. (Source: bloomberg.com)
2. Bloomberg:
Treasury two-year yields climbed to their highest level since early 2025 as renewed tensions in Iran pushed up oil prices, fanning speculation that the Federal Reserve will need to raise interest rates to combat inflation.
The rate-sensitive two-year yield rose as much as three basis points to 4.24%, the highest since February 2025, while the benchmark 10-year yield added three basis points to 4.59%. Brent crude jumped more than 4% after the US and Iran exchanged fresh strikes, with the two sides offering conflicting statements on whether the Strait of Hormuz remains open.
The advance in Treasury yields reflects growing expectations that the Fed will need to raise rates sooner to rein in price pressures from the rebound in global energy prices and signs of a resilient US economy. Traders are almost fully pricing in a Fed rate hike in September, up from about a 66% probability a week ago, according to swaps compiled by Bloomberg. (Source: bloomberg.com)
3. Javier Blas:
In total, about 10% of the world’s refining capacity is probably out of operation currently, according to industry estimates. That’s about 8 million barrels a day of processing capacity, more than the fuel consumption of France, Germany, Italy, Spain and the UK combined. The longer the world’s refining capacity remains constrained, the longer the cost of fuels such as gasoline and diesel will remain elevated, even if the crude price remains low. With seasonal demand ramping up with the start of the Northern Hemisphere summer holiday, consumers are in for more pain. (Source: bloomberg.com)
