U.S. Resumes Strikes on Iran, Cooling CPI Fails to Ease Energy and Rate Pressures

Daily News

Summary:

The U.S. Central Command confirmed a new round of strikes against Iran; U.S. inflation slowed more than expected in June, but escalating tensions in the Middle East kept markets pricing in the possibility of another rate hike this year...

Highlights

1. Trump says the U.S. will soon announce a major oil deal with Iraq

2. Trump abandons 20% protection fee on shipping through the Strait of Hormuz, replacing it with trade agreements

3. U.S. June inflation slowed more than expected, but Middle East tensions keep markets pricing in a rate hike this year

4. U.S. Central Command confirms new strikes against Iran

5. Trump threatens strikes on Iranian bridges and power plants to pressure Tehran back to negotiations

Details

Trump says the U.S. will soon reach a major oil deal with Iraq

U.S. President Donald Trump said during a meeting with Iraqi Prime Minister Ali Zaidi at the White House that the two countries would soon announce a major new oil agreement. He also highlighted the prospects for expanded operations by U.S. companies in Iraq.

Trump said there would be many agreements, and related announcements could come as early as this week or next week. He did not provide specific details, describing the deals only as massive and among the largest in scale. Trump avoided directly answering whether he supported Iraq pressuring OPEC, saying he supported the Iraqi prime minister and that decisions regarding OPEC were ultimately Iraq’s own choice.

Trump abandons 20% protection fee on Strait of Hormuz shipping, replacing it with trade agreements

Just one day after his proposal to impose a 20% compensation fee on cargo passing through the Strait of Hormuz was widely criticized as unrealistic, U.S. President Donald Trump abandoned the idea.

Trump said in a social media post on Tuesday that he had decided to replace the proposed 20% fee with trade and investment agreements between the United States and Gulf countries. He said these investments would be extremely large in scale and would bring significant benefits to Gulf countries and the region in the future.

Trump said that after he previously proposed charging a 20% fee on shipping through the Strait of Hormuz, several Gulf countries contacted him. He held discussions with Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and Kuwait, and they suggested that Gulf nations invest in the United States instead of paying transit fees.

Trump emphasized that he did not believe anyone should charge fees for passage through the strait, adding that investment from Gulf countries would be far more beneficial than collecting fees. He also stated that the Strait of Hormuz remains open to all vessels except those from Iran.

U.S. June inflation slowed more than expected, but Middle East tensions keep markets pricing in rate hikes

U.S. consumer inflation eased more than expected in June, mainly due to a sharp decline in energy prices. However, as tensions between the United States and Iran escalated again and oil prices rebounded, markets have not ruled out the possibility of further Federal Reserve rate hikes this year.

The Consumer Price Index (CPI) rose 3.5% year over year in June, down from 4.2% in May and below the 3.8% forecast in a Reuters poll. On a monthly basis, CPI fell 0.4%, marking the first decline since April 2020, compared with expectations for a 0.1% decline. CPI increased 0.5% in May.

Federal Reserve Governor Waller said the Fed has zero tolerance for persistent inflation and does not believe that a single weak CPI report means the inflation problem has been resolved. After the data release, traders expected the Federal Reserve to keep interest rates unchanged in July.

U.S. Central Command confirms new strikes against Iran

On July 14 local time, the U.S. Central Command announced that U.S. forces began a new round of strikes against Iran at 15:00 Eastern Time that day (22:30 Tehran time).

The U.S. military is also preparing to restore a maritime blockade targeting Iranian ports and coastal areas. The blockade officially took effect at 16:00 Eastern Time (23:30 Tehran time).

Previously, the U.S. military announced on July 13 that it had launched strikes against Iran for the third consecutive night and would resume the maritime blockade against Iran on July 14 Eastern Time. According to U.S. officials, President Trump formally notified Congress on July 13 that hostilities with Iran had resumed.

Trump threatens strikes on Iranian bridges and power plants, pressuring Tehran to resume negotiations

U.S. President Donald Trump said in an interview with Fox News on July 14 that unless Iran returns to the negotiating table, the U.S. military will target Iranian bridges and power plants next week.

Trump said, “We will launch heavy strikes against them over the next couple of nights, and by next week, things will become very bad for them. The targets next week will be bridges and power plants. Unless they sit down and negotiate, we will destroy all of their bridges and power plants.”

Trump said U.S. negotiators spoke with Iranian officials on July 14 and told them they must reach an agreement, otherwise “you will cease to exist.” He added that Iran’s capabilities had been severely weakened but that the country still had the ability to resist. Trump did not rule out the possibility of sending ground forces to Iran, though he provided no further details.

Today’s Focus

20:30 (UTC+8) U.S. June Producer Price Index (PPI) YoY

20:45 (UTC+8) New York Fed President Williams delivers a speech

21:45 (UTC+8) Bank of Canada July interest rate decision

22:00 (UTC+8) Fed Chair Waugh testifies before the Senate

22:30 (UTC+8) Bank of Canada Governor Macklem holds press conference

00:00 (UTC+8) ECB Governing Council member Nagel delivers a speech

01:00 (UTC+8) Fed Governor Cook delivers a speech

02:00 (UTC+8) Federal Reserve releases the Beige Book on economic conditions

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