This content was published on
July 14, 2026 - 03:53
5 minutes
(Bloomberg) — Oil extended gains and Treasuries held their losses after the standoff between the US and Iran intensified, raising concern that supply disruptions will reignite inflation and strengthen the case for higher interest rates.Brent climbed as much as 2.8% to $85.64 a barrel before paring gains. The commodity jumped 9.6% on Monday — its biggest gain since May 2020 — after President Donald Trump reinstated the US blockade of Iranian ships transiting the Strait of Hormuz and demanded a 20% reimbursement on all other cargo shipped through the waterway.Treasuries and the dollar steadied as traders viewed the odds of a US interest-rate hike later this month as a coin toss ahead of Tuesday’s US consumer price index data. Money markets priced in about 50% odds of a Federal Reserve hike in July as Governor Christopher Waller said officials may need to raise rates to tame price pressures.Asian shares slipped 0.2% after fluctuating between small gains and losses. The chip sector remained in focus, with SK Hynix Inc. shares wavering after its American depositary shares tumbled 9.3%, extending an AI-driven selloff from Seoul to the US market.The latest wave of attacks between the US and Iran dashed hopes for a near-term normalization of traffic through the Strait of Hormuz. The escalation adds another layer of uncertainty ahead of a pivotal week for markets, with earnings season kicking off alongside US inflation data and Fed Chair Kevin Warsh’s congressional testimony, both seen as key to the outlook for interest rates.“The energy sector is once again in the limelight as the status of the Strait of Hormuz is driving price action in global markets,” said Ian Lyngen at BMO Capital Markets. “There is a growing sense that the situation is likely to get worse before it de-escalates.”The flare-up comes as investors are increasingly questioning whether the enormous sums being poured into artificial intelligence will generate commensurate returns.An AI-fueled stock rout in South Korea on Monday spilled over into the US market, underscoring concerns that the boom has become overextended. The Philadelphia Semiconductor Index slumped 4.8%.“Uncertainty around the Middle East continues, but we think the AI wave is what will drive markets over the next few weeks, especially as earnings season kicks off,” said Sonu Varghese at Carson Group.What Bloomberg’s Strategists Say…“Crude’s 9% jump on Monday delivered some pain to other assets, but the read across was still rather modest with equities. A key reason for that dynamic is the way that market-based inflation expectations signal an enduring assessment that energy costs won’t sustainably feed through into the real world.”— Garfield Reynolds, Markets Live team leader. For more on the analysis, click here.Investors are now turning their focus to US inflation data after Waller said policymakers may need to raise rates in the near term if underlying inflation continues to signal broad price pressures.Treasury two-year yields, which are relatively sensitive to changes in Fed policy expectations, held at 4.28%, after touching the highest since February 2025.The surge in short-term 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.In data due Tuesday, the consumer price index is expected to slow to 3.8% in the year through June, from 4.2% in May, according to a Bloomberg survey of economists. Warsh will also make his first appearance before Congress as Fed chair.“If we get another hot reading on core inflation this week, then the FOMC will need to consider tightening monetary policy in the near term,” Waller said Monday, referring to the central bank’s rate-setting committee.Corporate News:Shein Global Holdings Ltd. is seeking to list in Hong Kong as soon as in August after securing approval from China’s securities regulator, according to people familiar with the matter. A unit of billionaire Kumar Mangalam Birla’s conglomerate agreed to buy Shell Plc’s renewable energy assets in India for an enterprise value of 172 billion rupees ($1.8 billion) in one of the largest clean energy deals in the country. Some of the main moves in markets:StocksS&P 500 futures fell 0.2% as of 10:42 a.m. Tokyo time Japan’s Topix rose 0.3% Australia’s S&P/ASX 200 fell 0.4% Hong Kong’s Hang Seng fell 1.1% The Shanghai Composite fell 0.4% Euro Stoxx 50 futures fell 0.9% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1388 The Japanese yen was little changed at 162.39 per dollar The offshore yuan was little changed at 6.7869 per dollar CryptocurrenciesBitcoin rose 0.4% to $62,421.07 Ether rose 0.9% to $1,782.46 BondsThe yield on 10-year Treasuries was little changed at 4.62% Japan’s 10-year yield declined one basis point to 2.775% Australia’s 10-year yield advanced five basis points to 4.90% CommoditiesWest Texas Intermediate crude rose 1.6% to $79.39 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.–With assistance from Rob Verdonck.©2026 Bloomberg L.P.
