The U.S. military launched its fourth round of airstrikes against Iran, and international oil prices surged by more than 3%. This week’s U.S. CPI data and Federal Reserve officials’ testimony before Congress will directly shape the direction of global markets.

Geopolitical tensions in the Middle East have escalated again. Over the weekend, the U.S. military carried out its fourth round of military strikes, and Iran immediately announced an indefinite blockade of the Strait of Hormuz. The two sides’ statements are completely at odds. The U.S. claims that the shipping lanes are operating normally, while Iran insists on maintaining the blockade until the U.S. stops its military intervention. The U.S. Central Command has also stepped in to deny that Iran controls the strait. This shipping route carries one-fifth of the world’s oil transport, and as the conflict intensifies, it directly pushes up crude oil prices.

In early trading, U.S. crude oil rose by more than 3%, quoted at $73.64. Brent crude surged to $78.36. The sharp jump in oil prices has intensified concerns about inflation. The market is betting that the Federal Reserve will maintain its tightening policy. The yield on the 10-year U.S. Treasury climbed by 2 basis points to 4.59%, and interest-rate futures indicate there is still room for 34 basis points of additional rate hikes by year-end. Under pressure, gold fell below the 4,100 level, down 1.2% for the day. U.S. stock index futures for the three major indexes moved lower in tandem, with Nasdaq futures down 0.52%.

This week’s market focus is concentrated in the latter half: on Tuesday at 20:30, the U.S. will release its June CPI. The market expects overall inflation to ease from 4.2% to 3.8%, and core inflation to edge down slightly to 2.8%. After that, the Federal Reserve Chair will attend congressional hearings for two consecutive days. This will be his first public testimony since taking office, and the market will focus on his remarks about inflation and the pace of rate hikes.

The current market logic is clear: Middle East tensions lift oil prices → inflation expectations rebound → expectations for Fed rate cuts are pushed back, weighing on risk assets. Fluctuations in oil prices will directly affect the intensity of the Federal Reserve’s tightening policy. If the CPI data comes in above expectations, the probability of another rate hike in September will increase significantly.

Market volatility this week will be significantly amplified. Be sure to manage risk on your positions to avoid losses caused by back-and-forth swings in the market driven by data releases.

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