Two forces are dominating the macro conversation right now: an escalating US-Iran conflict driving oil sharply higher, and a rapid repricing of central bank paths from cuts to probable hikes.
Researchers broadly flag the Strait of Hormuz as the pivotal supply shock — tanker traffic has collapsed, Iranian crude exports have stalled for seven weeks, Brent is near $95–97, and diesel crack spreads have hit record highs. The published consensus argues this oil shock is feeding directly into inflation expectations. Analysts note market-implied odds of a Fed hike in September have jumped to 64–70% after Fed Chair Warsh's hawkish Jackson Hole speech — a near-complete reversal from the rate-cut narrative that opened 2026. A parallel thread highlights that a Bank of Japan hike is now nearly fully priced as Governor Ueda signals normalization, pushing the 10-year JGB toward 3% for the first time since 1996. The Eurozone sits awkwardly between 3.3% headline CPI and a weak economy.
A contrarian view points to NY Fed President Williams, who said energy isn't yet feeding broadly into services inflation and more data is needed — triggering a quick dollar pullback. Some recently published views also flag that upcoming BEA methodology revisions could print core PCE meaningfully lower, adding real uncertainty into the September FOMC.