I just reviewed what happened in the markets this week, and there’s quite a bit of interesting movement. It turns out that after the breakdown of peace negotiations in the Middle East over the weekend, Trump ordered a blockade on Iranian maritime transport, and that triggered a chain reaction we’re still processing.

The first thing that jumped was the price of oil. Brent futures went to 107 dollars per barrel, rising 7.3% in a single session. Since this geopolitical tension began, the price of crude oil has built up a rise of more than 40%. That’s quite significant considering we’re blocking around 2 million barrels per day related to Iran in the Strait of Hormuz.

Stock markets felt the impact immediately. From Hong Kong to Sydney, the main indices fell by approximately 1%. S&P 500 futures dropped 0.7% during the Asian session, while in Europe the decline was more pronounced, around 1.4%. Bonds also moved, especially in Asia, where the yield on the 10-year Japanese bond rose to 2.49%, its highest level in almost three decades.

But what grabs my attention most is how the dollar is reacting. The US currency strengthened notably while the euro fell by about 0.3% to 1.1687 dollars. This makes sense because during times of geopolitical uncertainty, the dollar typically appreciates as a safe-haven asset.

Now, there’s something deeper behind all of this. Analysts are starting to worry about inflation. If oil prices stay elevated for an extended period, that will put pressure on inflation indices worldwide. Russell Chesler from VanEck says that while the market doesn’t believe Trump will escalate militarily further, inflation concerns are increasing.

And this is where it gets interesting for central banks. Investors are now betting that the European Central Bank and the Bank of England could keep interest rates unchanged or even raise them, a radical shift from previous expectations of cuts. For Japan, the situation is more delicate, with traders expecting medium-term hikes but moderating expectations for immediate moves due to the current volatility.

In emerging currencies, the Hungarian forint surged, reaching multi-year highs against the dollar and the euro, likely due to internal political changes in Hungary.

What’s curious is that overall market volatility has been relatively contained. Many prices simply returned to where they were before the ceasefire. The general sentiment remains that eventually there will be some kind of solution, even though no one knows when. What’s clear is that as long as this situation is being resolved, the price of oil will continue to be a key factor in global monetary policy decisions, and the dollar will likely keep upward pressure if tensions persist.