Fed Holds Rates; Oil Shock Threatens Inflation Fight

This geopolitical event has led to Iranian leadership restricting access to the Strait of Hormuz, a critical chokepoint for a fifth of the world's oil supply. Core inflation remains elevated at 3.1%, exceeding the Fed's 2% target, suggesting a prolonged battle against rising prices.

Oil prices have surged nearly 50% since the conflict began, translating to an average 90-cent increase in U.S. gas prices per gallon over the past month. While Vice President JD Vance characterized the energy price hike as a "temporary blip," the Trump administration has eased sanctions on Venezuelan and Russian oil to bolster global supply.

This move, however, is expected to benefit the Russian and Iranian treasuries significantly. Markets currently anticipate that higher oil prices will be limited to 2026 or early 2027.