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Markets Reset on Iran War as Oil Rebounds and Fed Cut Bets Fade

Investors now treat the disruption as lasting, driving a shift toward higher-for-longer rates.

Overview

  • Crude retakes $100 as tanker attacks and a near-halt in Strait of Hormuz traffic constrain supply despite the IEA’s 400 million‑barrel release.
  • U.S. 10‑year Treasury yields hover near 4.22% and the dollar strengthens, while the S&P 500 slips and volatility stays elevated.
  • Futures and rate markets now price fewer Federal Reserve cuts in 2026, with implied easing near 22 basis points versus about 60 a month ago.
  • Goldman Sachs revised forecasts to faster inflation, slower growth, and higher unemployment as Wall Street plans for a longer disruption.
  • Policy steps such as U.S. risk insurance for Gulf shipping and talk of naval escorts have yet to restore flows, heightening political risks for President Trump ahead of the midterms.