Bitunix analyst: Fed hawkish signals and Middle East energy risks resonate together, and global capital costs are still facing upside pressure

BlockBeats message. On July 17, the escalation of the Iran-U.S. conflict continued. The U.S. military further struck Iranian transportation and military supply facilities, while Iran vowed that navigation in the Strait of Hormuz would not return to normal and demanded that the Houthis prepare to blockade the Strait of Mandeb. This creates a situation where two of the world’s major energy shipping chokepoints are simultaneously under pressure. Although the White House said Iran still hopes to reach an agreement with the U.S., the escalation on the battlefield and diplomatic negotiations moving in parallel means both sides are seeking negotiation leverage through military pressure, rather than truly reducing conflict risk.

What is truly worth the market’s attention is no longer just the short-term fluctuation in oil prices, but the fact that the global energy supply chain is accelerating into a restructuring phase. Chevron’s investment in Iraqi oil fields, Gulf states planning new oil pipelines for transportation, and countries stepping up efforts to build alternative transport routes all reflect that energy markets have started to treat “normalizing Hormuz risk” as a long-term premise. This means future energy costs may remain at elevated levels, and even if some routes resume, it will be difficult to completely eliminate a supply-security premium.

On the other hand, U.S. retail sales in June were slightly below expectations, but core consumption excluding energy factors remains solid. Initial jobless claims fell to a nearly two-month low, showing that U.S. domestic demand and employment still have resilience. This suggests there are still no signs of an economic downturn in the U.S. significant enough to force the Federal Reserve to pivot toward easing.

More importantly, multiple Federal Reserve officials once again emphasized that cooling inflation over a single month is not enough to prove that price pressures have been fully resolved. Logan publicly supported a modest rate hike, and both Schmid and Vice Chair Jefferson also issued warnings in parallel that if energy prices push inflation back up, policy could still tighten again. The market has currently lowered its expectations for rate hikes due to recent CPI and PPI cooling, but what the Federal Reserve is focused on is the inflation risk over the coming several quarters, not a single month’s data.

From the market perspective, the biggest contradiction right now is that financial markets are still pricing in a policy hold, but energy supply risks, capital demand driven by AI investment, and still-resilient U.S. consumption together form conditions for inflation to heat up again. If energy risks continue to expand, the divergence between the Federal Reserve and the market regarding the interest-rate path may further widen, and global risk assets will continue to be priced in an environment marked by high funding costs and high volatility at the same time.