Macro

Oil prices surged in early July 2026 despite reaching four-month lows, influenced by geopolitical tensions including Iran's leader assassination and tanker attacks. OPEC+ approved an additional quota increase of 188,000 bpd, helping to stabilize shipping through the Strait of Hormuz and mitigate price hikes.

US and Israeli strikes on Iran in February 2026 escalated into a shipping crisis in the Strait of Hormuz, threatening global oil supplies. A June truce memorandum aimed to facilitate talks but was undermined by tanker attacks and renewed US military action in early July.

The rocket and Starlink company priced at $135 and closed its debut around $161, reaching about $2.1 trillion in value and instantly ranking among the largest US companies. The record listing, dual-listed on Nasdaq and its new Texas exchange, headlined a booming 2026 IPO wave.

China's new regulations implementing the Mineral Resources Law took effect on June 15, 2026, establishing a comprehensive legal framework that transforms mineral governance from a resource-development to a resource-security model. Signed by Premier Li Qiang as State Council Order No. 839, the framework creates a three-layer strategic reserve system—physical stockpiles, production-capacity reserves, and in-ground strategic areas—giving Beijing unprecedented control over critical minerals like rare earths, gallium, and germanium. The Ministry of Natural Resources (MNR) described the regulations as a systematic safeguard for mineral resources, refining a reserve system built around 'products, capacity and origin' and introducing provisions on import-export management and countermeasures against threats to supply chain stability. Article 76 authorizes countermeasures against nations restricting China's mineral supply chains, while Article 59 permits direct government mobilization of mining, processing, and distribution during emergencies. The framework, overseen by agencies including the NDRC and MIIT, institutionalizes China's dominance over global critical mineral processing, estimated at 85–90% of rare earth capacity. The MNR announced plans to advance the 15th Five-Year Plan (2026-30) for mineral resources, boost domestic exploration and output of strategic minerals, and designate several strategic mineral reserve zones. The regulations support the revised Mineral Resources Law, amended on November 8, 2024, and effective July 1, 2025—the first major revision since 1986. During the 14th Five-Year Plan (2021-25), China discovered 398 new medium-sized and large strategic mineral deposits and oil and gas fields, with historic breakthroughs in copper, gold, potash, lithium, helium, and high-purity quartz. Experts emphasized the framework aims to improve governance and regulatory transparency, not tighten controls, providing long-term certainty for mining investment.

The United States plans to build up to 250 new nuclear reactors over coming decades to meet surging electricity demand from AI, data centers, and manufacturing. The push revives nuclear power as a low-carbon alternative, focusing on advanced reactors and small modular reactors with passive safety systems. Federal programs like the DOE's Launch Pad support development, with companies such as TerraPower, Kairos Power, and X-energy building demonstration reactors backed by the Advanced Reactor Demonstration Program. Tech giants Google and Meta have signed power purchase agreements. Critics cite unresolved safety, cost, and waste challenges, while experts stress the need for extensive testing and regulatory review of new designs.

On June 11, 2026, China enacted its most comprehensive technology transfer controls in a decade, granting the government explicit legal authority to retaliate against nations that restrict Chinese technology investments. The regulations extend controls over overseas transfer of Chinese-developed technology—covering software, algorithms, and manufacturing processes—and codify a retaliation clause with no direct precedent in Chinese law. This allows Beijing to impose counter-restrictions based on domestic legislation rather than ad hoc decisions. The cleantech manufacturing sector is specifically named, reflecting tensions over EU tariffs on Chinese electric vehicles, solar panels, and batteries. The rules complete a three-part legislative package on inbound investment, algorithmic assets, and outbound technology transfer, structurally lowering the threshold for escalation in tech decoupling disputes with the US, EU, and Japan.

Beijing's export restrictions on critical minerals like gallium, germanium, and antimony are forcing Japan's industrial rebirth, not crippling it. The consensus view that Japan is a passive victim is wrong; these curbs are catalyzing a state-subsidized operational revival. Japan's Mitsubishi Chemical and Sumitomo Chemical hold patents for advanced purification, and higher prices make domestic processing profitable. Japan can retaliate by cutting off specialized chemicals and components vital to China's chip factories. Past experience with rare earth curbs in 2010 shows Japan adapts: Sojitz partnered with Lynas, Toshiba and Honda eliminated heavy rare earths, and METI established stockpiles, reducing China's rare earth import share from over 90% to under 60%. Now, trillions of yen in subsidies are fueling domestic semiconductor ventures like Rapidus, turning geopolitical risk into a financial golden age for firms like Sony and Denso.

A ceasefire between the U.S. and Iran in late June briefly allowed the International Maritime Organization to begin evacuating trapped ships and over 11,000 seafarers from the Strait of Hormuz, which Iran had effectively closed since late February after U.S. and Israeli attacks. The operation routed vessels along Oman's southern coastline, but halted days later when the Singapore-flagged Ever Lovely was attacked; no one claimed responsibility, but Iran's Revolutionary Guard criticized the evacuation as lacking Iranian involvement. Iran continues to assert control over the strait, demanding ships coordinate and obtain clearance, setting a dangerous precedent for other global waterways like the Strait of Gibraltar or Malacca. The strait normally carries about 20 million barrels of oil daily—20% of global consumption—and its closure has driven oil prices up, with Brent crude at $76 and WTI above $71, threatening inflation, corporate profits, and consumer spending. International maritime law, including the U.N. Convention on the Law of the Sea, offers little recourse as neither Iran nor the U.S. have ratified it, and President Trump's suggestion that the U.S. could control the strait and collect tolls further undermined confidence in the independence of international waterways.

China escalated rare earth and critical mineral export controls twice in five weeks during summer 2026, targeting 10 U.S. companies on June 22 and 14 EU firms on July 24. The International Energy Agency warned on July 16 that full enforcement could jeopardize $6.5 trillion in downstream production globally. While rare earths like neodymium and dysprosium are used in magnets for hard drives and cooling fans, and gallium and germanium are critical for compound semiconductors and wafer polishing, the controls primarily threaten hardware supply chains rather than directly impacting GPU prices yet. This marks a return to escalation after a November 2025 truce, widening restrictions beyond gallium and germanium to broader rare earths and EU targets.

South Korea's KOSPI has now fallen for three consecutive sessions, losing about $2.18 trillion in market value and putting the index on track for its steepest monthly drop on record. The benchmark plunged as much as 12.6% intraday on Tuesday before closing down 6%, extending Monday's near-11% rout and erasing almost 40% of its value from a peak reached just over a month ago. The cumulative decline from the June 19 all-time high of 9,385.59 now exceeds 3,722 points in six weeks, wiping out approximately ₩2.5 quadrillion and dropping the KOSPI from the world's sixth-largest stock market to 11th place. Under parliamentary pressure, Finance Minister Koo Yun-cheol apologized for the introduction of single-stock leveraged ETFs, saying they had not been considered carefully enough. After an emergency meeting late Wednesday with the Bank of Korea governor and financial regulators, the Ministry of Finance announced immediate further curbs on single-stock leveraged products, including individual investment limits (capped at up to 20% of an investor's total investment amount), higher trading costs, simulated trading requirements, and preparation of a legal basis for emergency market-stabilization steps. The Blue House, with President Lee Jae-myung in Brazil, has refused a bailout, characterizing the crash as a 'reassessment process' and citing external triggers including Chinese memory chip expansion and AI investment doubts, along with structural factors: excessive retail trading, derivative proliferation, and heavy concentration in Samsung Electronics and SK Hynix. Retail investors have erupted in fury, accusing the government of encouraging market entry with 'KOSPI 5000' or '9000' targets and now deflecting blame. Despite the tumble, the KOSPI is up 41.5% in US dollar terms year-to-date, making it the best-performing major market this year. The crash remains less severe than the 57% drop during the 2008 financial crisis, which unfolded over roughly a year.

Treasury Secretary Scott Bessent faces a $40 trillion refinancing challenge as the 10-year Treasury yield hit 4.705%, its highest since a brief spike in January 2025 and levels not seen since before the 2007 financial crisis. The 30-year yield reached 5.182%, driven by Brent crude topping $100 a barrel and jobless claims falling to 187,000, well below expectations. About half of Federal Reserve officials now anticipate a rate hike this year. Total federal debt stood at $39.065 trillion as of January 1, 2026, with much of it issued when 10-year yields were under 2%. As that debt matures, refinancing at current rates raises carrying costs, while the Fed's funds rate remains at 3.75% and core PCE inflation hit a 12-month high.

Oil surged to $100 per barrel, its highest since May, after Iran-backed Houthi rebels attacked two Saudi oil tankers in the Red Sea and threatened to blockade the Bab el-Mandeb Strait, escalating Middle East conflict. The House approved a non-binding resolution to remove U.S. forces from the Iran war, while a Senate version failed. Separately, the Trump administration imposed new tariffs on 59 countries and the EU, with rates of 10% and 12.5%, covering over 99% of U.S. imports, citing forced labor concerns. The tariffs took effect as a previous global tariff expired. In Madison, Wisconsin, a vigil was held for Corey Ruiz, a 38-year-old man shot and killed by police after allegedly producing a knife; four officers were placed on leave.

The US-China trade war has escalated beyond tariffs into targeted restrictions on semiconductors, drones, and critical minerals like gallium and germanium, weaponizing supply chain dependencies. China dominates rare mineral refining, while the US controls advanced chip fabrication, creating a strategic standoff. These measures aim to starve rival sectors and accelerate domestic production, but decoupling is costly and slow, forcing corporations to duplicate supply chains. The conflict reflects a deeper technological arms race, pushing global tech toward parallel, incompatible systems with no compromise in sight.

Chinese President Xi Jinping warned in April that the international order is 'crumbling into disarray,' criticizing a U.S. naval blockade of the Strait of Hormuz as 'dangerous and irresponsible' for threatening a key oil route. His comments came amid ongoing Iran conflict impacts on global markets, despite a fragile ceasefire. Xi's warning also addressed rising U.S. tariffs and protectionism, adding uncertainty to the world economy. Oil prices have fluctuated wildly, from nearly $113 to $68 per barrel. While China's exports grew 27% in July, driven by AI demand and U.S. holiday purchasing, its Q2 GDP saw the slowest growth in three years, raising concerns about dependency on global demand. Xi's remarks signal potential fragmentation of market systems as U.S.-China tensions persist over trade, tariffs, and security.

China's monopoly over critical minerals—controlling 90% of rare earth processing, 80% of tungsten refining, and 60% of antimony production—poses a systemic risk to Western industry and security. Since 2023, Beijing has imposed escalating export controls on gallium, germanium, graphite, antimony, tungsten, tellurium, bismuth, molybdenum, indium, and seven heavy rare earths, with an extraterritorial expansion in October 2025 that was suspended for one year after a Trump-Xi agreement. Prices have surged: dysprosium from $150 to $900/kg, tungsten tripled, antimony quadrupled. In response, the EU passed the Critical Raw Materials Act, partnered with Australia in May 2024, and negotiated a free trade agreement in March 2026. The U.S. and Japan pursue diversification in Africa and Latin America, while India explores a minerals deal with Russia for the Tomtor deposit, signaling new geopolitical resource axes.

Indian stock markets crashed on Monday, with the Sensex tumbling 2,345 points and the Nifty 50 plunging 704 points below 24,000, as escalating US-Iran war fears drove crude oil to a 52-week high above $110 a barrel. The Indian rupee hit a record low of 92.3350 against the dollar, falling 0.6%, amid a broader sell-off across Asian currencies. The conflict, now in its second week following US-Israeli air strikes on Iran, has severely restricted shipping through the Strait of Hormuz. Over the weekend, Iranian drone strikes hit Saudi Arabia, Kuwait, and the UAE, heightening supply concerns. Global markets also slumped, with Dow futures sliding nearly 1,000 points and Asian indices dropping up to 8%.

Oil prices surged past $90 per barrel on Monday after the U.S. struck two Iranian missile launchers on Larak Island near the Strait of Hormuz, and Iran retaliated by firing ballistic missiles and drones at two U.S. military installations in Jordan, where Jordanian forces intercepted eight missiles. Brent crude rose 3.5% to $91.30, and West Texas Intermediate climbed 3.7% to $86.49, extending gains from a prior U.S. strike on August 30 that CENTCOM said aimed to prevent sea mines in the Strait. The IRGC reported casualties and vowed a response, while the White House had warned last week that any ship laying mines would be 'immediately and systematically destroyed.' The escalation, breaking a month-long lull, threatens about a fifth of global oil transiting the Strait, with traffic falling to roughly five ships per day over the weekend. Markets viewed the strikes as a contained tit-for-tat within a known pattern, but the absence of diplomatic talks—after a June agreement for negotiations expired—raises stakes. The U.S. Treasury launched 'Operation Economic Outcast' to sever Iran's financial lifelines, though economic pressure does not eliminate Iran's ability to threaten the waterway. In financial markets, bond yields hit multi-year highs (10-year at 4.75%, 2-year at 4.32%, 30-year at 5.25%), and pre-market futures fell (Dow -235, S&P 500 -37, Nasdaq -107), while the Energy Select Sector SPDR ETF gained 2%, with Chevron and Exxon Mobil each rising about 2-3% to $207.80 and $161.31 respectively, though both stocks have run up 33-36% year to date. This week's labor data—including JOLTS, ADP, jobless claims, and Friday's non-farm payrolls expected to show +50,000 jobs and unemployment at 4.1%—will further test the Fed's policy path under Chair Kevin Warsh.

The Federal Reserve raised interest rates by a quarter percentage point to 3.75%-4%, the first hike in over three years, aiming to combat inflation amid the war in Iran and rising gas prices. Fed Chair Kevin Warsh faced pressure from President Trump but stressed independence. Separately, the European Commission proposed making Canada its first 'associate member,' a move Canadian PM Mark Carney endorsed as strengthening ties. Trump dismissed the idea as laughable. Additionally, the Clarity Act, a crypto regulation bill backed by Trump and industry executives, failed a Senate vote, facing uncertain prospects ahead of midterm elections.

Diesel prices in the U.S. hit a record $6.05 per gallon, up over 60% from a year ago, as the Iran war drives energy costs higher. Yemen's Houthi rebels seized the Red Sea port of Mokha and the strategic islands of Perim, Greater Hanish, and Lesser Hanish in the Bab el-Mandeb Strait, threatening a key shipping route for Saudi oil. Iran called for an end to Saudi Arabia's blockade of Yemen and resumption of talks, while also planning discussions with Gulf states on managing the Strait of Hormuz, where it now requires vessel permission and imposes service fees. Saudi Crown Prince Mohammed bin Salman pressed President Trump to strike the Houthis, but the U.S. has only offered intelligence support. Analysts warn the war, launched in February, is likely protracted with no clear victor, as oil prices surged above $105 per barrel and low-level fighting persists.

A global diesel shortage, driven by conflicts in Iran and Ukraine, is expected to persist into 2027, with U.S. retail prices topping $6 a gallon in September 2025. U.S. diesel stockpiles hit a record low for this time of year at 107.9 million barrels, and the EIA projects they will stay below the five-year low through most of 2027, with retail prices averaging $5.55 in late 2026 and $4.40 in 2027. Supply disruptions stem from Middle East conflict restricting Strait of Hormuz tanker traffic and Ukrainian strikes on Russian refineries, with the EIA estimating Russian refinery outages will impact global distillate markets through early 2027. European and Asian inventories are also strained, with ARA hub stocks 16% below average and Singapore holdings trailing. The shortage is raising costs for freight, agriculture, and home heating, with potential 31% higher heating bills for Northeast U.S. households.

The Federal Reserve raised its benchmark interest rate by a quarter point to 3.75%-4% in a unanimous 12-0 vote, the first hike since 2023, with most policymakers forecasting at least one more increase this year. Inflation remains at 3.4%, well above the 2% target, which the Fed now expects to reach no earlier than 2029. The 10-year Treasury yield hit 5.04%, its highest since 2007, while diesel prices surged to a record above $6.30 a gallon after a drone strike on Saudi Arabia's East-West pipeline. J.B. Hunt Transport warned third-quarter profit would fall 5%-10% due to fuel costs, and its stock dropped 13.2%. CrowdStrike rose 16.1% as the S&P 500's top gainer, and Generac gained 9.8% on an $8 billion Amazon data-center deal.

Supertanker rates on the Baltic Exchange's benchmark Middle East-to-China route have surged to $800,000 a day amid heightened Gulf tensions, following US destruction of five Iranian-linked tankers and Tehran's threats. The surge signals costly crude transport from the Gulf, with US Gulf-to-Asia VLCC voyages averaging $29.5 million per trip, equivalent to $15 a barrel. Kpler expects VLCC earnings above $100,000 daily into early next year, while Morgan Stanley projects two-year leasing rates could rise 20-30%. Ship-to-ship transfers in the Gulf of Oman help maintain flows through the Hormuz chokepoint, with Vitol estimating 10 million barrels daily and Goldman 15 million. The Baltic's Gulf of Oman-to-East Asia benchmark has jumped 85% since inception to nearly $386,000 a day, adding inflation pressure on global central banks through higher gasoline, diesel, and consumer goods costs.