🔍 Market Watch:
Today, oil prices are climbing, the dollar is gaining strength, and U.S. stocks, bonds, gold, and silver are all showing a downward trend. Two major news items are influencing the performance of big asset classes today:
First, at 8:30 PM Beijing time, the U.S. announced that the CPI for April, not seasonally adjusted, rose by 3.8% year-on-year, beating the market expectation of 3.7%, marking the highest level in three years; the core CPI year-on-year is at 2.8%, also above the forecast of 2.7%. The risk of stagflation is rising due to increasing oil prices, and market expectations for a Fed rate cut this year have further decreased. The dollar index has strengthened, putting pressure on various risk assets. According to the Chicago Mercantile Exchange's (CME) FedWatch Tool, the market currently sees nearly a 0% probability for a rate cut this year, while the likelihood of a rate hike has exceeded 30%.
Second, the situation in Iran is deteriorating. Today, Ibrahim Rezaei, spokesperson for the National Security and Foreign Policy Committee of the Iranian Parliament, stated that "one of Iran's options in the face of a new round of attacks may be to enrich uranium to 90%. We will deliberate on this in Parliament." A 90% enrichment level is typically viewed by the international community as reaching weapon-grade standards. Meanwhile, the Islamic Revolutionary Guard Corps (IRGC) has signaled a tougher military stance, stating that Iran has redefined the scope of the Strait of Hormuz and now considers it a larger "combat zone." Previously, the Strait of Hormuz was generally regarded as a body of water about 20 to 30 miles wide. However, under Iran's new definition, its strategic range has expanded to approximately 200 to 300 miles. This new statement is seen as a signal of Iran's intention to extend its control. Just a day earlier, President Trump escalated the conflict again after rejecting a proposal from Iran. This change has further pushed up oil prices and caused renewed panic and liquidity issues in the market, also contributing to the strengthening of the dollar index and pressuring risk assets. The NACHO (Not A Chance Hormuz Opens) trade has become the market's mainstream today.
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