Quick Read – Trump declared the ceasefire “over” after Iran struck three Strait of Hormuz tankers, sending oil from $68 back toward $74 a barrel. – Overnight, market odds of a Fed rate hike at the December meeting jumped from 48% to 57%, reflecting renewed inflation fears from…
sing oil. – With one-fifth of global petroleum flowing through the Strait of Hormuz daily, sustained oil price spikes could force the Fed to resume tightening. – Financial markets had finally begun to breathe easier. The ceasefire between Iran and the U.S. had sent oil prices tumbling from more than $100 a barrel to roughly $68, easing fears that another energy shock would reignite inflation
Combined with recent economic reports showing slower growth and a cooling labor market, investors increasingly believed the Federal Reserve could keep interest rates unchanged for the rest of the year. Overnight, however, that outlook shifted. Renewed fighting in the Middle East has put oil back in focus, and with it, the possibility that the Fed may have to fight inflation all over again.
The Ceasefire Didn’t Last Long The fragile truce unraveled after Iran reportedly struck three tankers transiting the Strait of Hormuz, prompting renewed U.S. military action overnight. Speaking afterward, President Trump made clear he no longer viewed the ceasefire as meaningful. “I don’t want to deal with them anymore … as far as I’m concerned, it’s over.” Trump added that negotiators were free to continue discussions with Tehran, but called it “a waste of time dealing with” Iran. Markets responded almost immediately.