Overview
- U.S. and Iranian forces exchanged missile and drone attacks over the weekend, and Tehran said it closed the Strait of Hormuz while President Donald Trump said on Monday the United States was reinstating a naval blockade.
- Global oil benchmarks jumped about 3–4 percent after the weekend exchanges, with Brent trading in the high $70s per barrel as markets priced a higher near-term supply risk.
- The dollar finished mostly flat after intraday gains driven by safe-haven flows and rising real U.S. Treasury yields above 2.3 percent, while traders hold the largest speculative net-long dollar positions since 2015.
- The yen slid toward roughly ¥162 after Reuters reported Tokyo has no immediate plan to change GPIF allocations, reviving concerns about possible Japanese FX intervention and putting pressure on importers of energy.
- Investors are waiting for U.S. CPI and PPI prints and Fed Chair Kevin Warsh's testimony as the next major catalysts that could amplify or reverse market moves and influence expectations for further rate hikes.