Rarely have two headlines been so far apart in the same week. On one side, an oil price that posted its biggest daily jump since 2020 on Monday, as the United States reinstated its blockade around Iran. On the other, a US inflation print that fell month on month for the first time in six years. War and disinflation, simultaneously, in a single week. The market had to decide which story carries more weight. The answer, for now: a bit of both.
Hormuz locks down again
The weekend set the tone. After exchanges of strikes between the US and Iran, President Trump announced on Monday that the naval blockade around Iranian ports would return. He declared the US the guardian of the Strait of Hormuz and initially even demanded a fee of twenty percent on all cargo passing through the waterway. That toll was withdrawn a day later, but the signal had been sent. Brent surged nearly ten percent on Monday to above 83 dollars, its largest daily gain since May 2020, and climbed towards 85 to 87 dollars in the days that followed.
Meanwhile, conditions on the water grew darker. Iran hit two tankers belonging to the Emirati company ADNOC, killing one mariner, and US forces carried out strikes on Iranian targets for several nights in a row. Shipping traffic through Hormuz has fallen sharply. Anyone who still viewed June's interim agreement as a turning point now knows better. This conflict is back, and the oil market is pricing it in.
The inflation that briefly vanished
That very week, the US inflation report delivered a surprise. Consumer prices fell 0.4 percent in June on a monthly basis, the first decline in six years, largely thanks to the temporary ceasefire that pushed energy prices lower. Annual inflation cooled from 4.2 to 3.5 percent, core inflation from 2.9 to 2.6 percent. A day later, the producer price index followed with a fall of 0.3 percent. Two cool readings in a row, precisely as Fed Chair Kevin Warsh appeared before Congress for the first time.
Warsh refused to celebrate. He called the report a single data point and repeated that the policy committee has no tolerance for persistently elevated inflation. Five years above target, he argued, has been a tax on American households, one he intends to abolish. On rates, he deliberately gave no direction. Warsh is breaking with the tradition of forward guidance, which leaves the market more dependent on each data point than ever. The odds of a hike in late July shrank considerably after the cool prints, but a hike later this year remains priced in. The irony is bitter: June's decline was largely driven by cheaper energy, and that same energy has already become more expensive this week.
Chips search for a new equilibrium
In tech, the picture this week was outright erratic. SK Hynix, celebrated for its Nasdaq debut only last week, lost more than fifteen percent in Seoul on Monday and dragged the Kospi down almost nine percent, only to jump 27 percent in New York on Tuesday. TSMC reported earnings growth of 77 percent and raised its investment plans, yet saw its shares fall. ASML lifted its revenue guidance substantially and was barely rewarded either. Strong results that no longer buy upside: that is usually a sign that a great deal of good news is already in the price.
The money did not leave the market, it moved. Apple set a new record, while Amazon, Alphabet and Microsoft gained firmly. The AI trade is not narrowing, it is rotating. For anyone managing risk, that is a meaningful distinction.
Banks profit from the turbulence
Corporate earnings, meanwhile, gave little reason for gloom. Goldman Sachs beat expectations by a wide margin on record trading results, Morgan Stanley benefited from reviving M&A activity, and BlackRock saw assets under management grow beyond fifteen trillion dollars. For these houses, volatility is not a risk but a business model. The earnings season is on track for a second consecutive quarter of profit growth above twenty percent. As long as earnings keep this pace, this market has a foundation beneath it.
Where this leaves the markets
This week showed a market absorbing headwinds without breaking. A ten percent oil spike, a reignited conflict, a Fed that stays deliberately vague: the indices closed barely lower on balance. But the resilience is not evenly spread. The chip sector is being priced more critically, rate expectations shift with every data point, and any tanker in Hormuz can undo June's inflation story. We remain positioned for volatility, with discipline as our starting point. It is not the news that determines the outcome, but the response to it.
