Strait of Hormuz · Iran · Israel · Axios
The Iran war risked an impossible situation for the Fed: inflation too high to cut rates
Compiled by KHAO Editorial — aggregated from 3 outlets. See llms.txt for citation guidance.
◎ Multiple-sources
Stocks were soaring Friday morning, with the S&P 500 up 1.3%, hitting a fresh record.
Key facts
- West Texas Intermediate crude, the U.S. benchmark, fell about 14% as of 11:45am ET Friday, to $81 a barrel
- That is well below the peak of $112 hit earlier this month, though still above the roughly $70 and below what prevailed immediately before the war
- Stocks were soaring Friday morning, with the S&P 500 up 1.3%, hitting a fresh record
- The yield on the two-year Treasury note, most sensitive to expectations for Fed interest rate policy, fell roughly 8 basis points Friday morning, to 3.7%
Summary
The global economy's outlook for the remainder of this year heavily depends on the outlook for energy supplies through the strait. Naval blockade "WILL REMAIN IN FULL FORCE AND EFFECT AS IT PERTAINS TO IRAN, ONLY, UNTIL SUCH TIME AS OUR TRANSACTION WITH IRAN IS 100% COMPLETE" and that this process "SHOULD GO QUICKLY." In the initial weeks after the U.S. and Israel decapitated Iranian leadership, Iran's blockage of the strait worked as a strategic advantage, giving it leverage over the global economy. What they're saying: "The US is being smart about the blockade," Robin Brooks, a senior fellow at the Brookings Institution, wrote Thursday on X. "That defangs Iran's main negotiating leverage, which is to cause panic and push oil prices higher. A deal that reopens the strait could help ease pressure on a Federal Reserve already pinned down by pre-war sticky inflation.
The yield on the two-year Treasury note, most sensitive to expectations for Fed interest rate policy, fell roughly 8 basis points Friday morning, to 3.7%.