Easing crude prices, driven by reduced Iran-US tensions, may ease central bank inflation pressures and reverse bond yield flattening.
Oil prices have declined, nearing a gradual downtrend as Iran-US tensions ease, according to analysts. The drop follows a partial recovery from June losses after Iran paused retaliatory strikes and the US halted further attacks.
Lower crude prices are expected to reduce inflation risks for central banks, potentially reversing the recent bear flattening in global bond yields. Analysts maintain a base case of a continued gradual decline in oil, though geopolitical risks in the Strait of Hormuz remain unresolved.
The macro environment still favors USD strength and carry trades, particularly pairing high-yielding currencies like USD and AUD against low-yielding ones such as EUR, CHF, and JPY.