Macro

Iran closes Strait of Hormuz, oil spikes hit spending

Iran's closure of the Strait of Hormuz sent oil soaring, reigniting inflation and keeping mortgage and cap rates high; the energy-driven rate pressure hit the leveraged property owner even as real assets offered a partial inflation hedge.

PJM Interconnection CEO David Mills warns that the US's largest power grid must be redesigned to handle surging electricity demand from AI and data centers, or face power shortages and rising consumer costs. With utilities like American Electric Power at risk of leaving and data centers potentially relocating, delayed action could undermine investor confidence and regional competitiveness. PJM must balance higher power prices needed for new investment against protecting consumers, a challenge threatening grid reliability and market stability.

The energy sector faces mounting pressure from surging power demand driven by AI infrastructure, exposing strain on aging grid systems. A recent warning from a US grid operator highlights the urgent need for modernization and expanded generation capacity to meet evolving load requirements. This growing realization of infrastructure inadequacy weighs on the sector, contributing to a slightly bearish sentiment despite the underlying demand tailwinds.

Treasury yields have hit multiyear highs, with the 30-year yield closing above 5% for 14 consecutive sessions through July 24, the longest such streak since 2007. This rise, driven by persistent inflation, Middle East conflict, a growing government deficit, and potential Fed rate hikes, impacts markets broadly: it reduces existing bond values, pressures stocks by making risk-free returns more attractive, and raises borrowing costs for the government and households, including mortgage rates. On the positive side, it can boost savings returns. The 10-year yield influences long-term debt like mortgages, while the Fed's short-term rates affect consumer debt. Investors are advised to review portfolio duration, consider dividend stocks, and explore higher-yielding savings options.

An oil shock from Iran's closure of the Strait of Hormuz revived inflation and rate-hike fears, and an AI-stock tumble delivered the market's worst day of the year, pressuring asset managers and brokers. Rising rate-hike odds were a mixed blessing for bank NIM;

I entered the year still under policy pressure (MFN pricing implementation, tariffs, FDA/RFK uncertainty) and washed-out managed-care and biotech valuations, but as the mid-year Strait-of-Hormuz oil shock drove markets risk-off…

Digital-ad giants stayed resilient while linear cable eroded (Charter underperforming the S&P), but Iran's closure of the Strait of Hormuz and soaring oil stoked inflation and consumer strain mid-year, pressuring ad demand. Neutral, dipping on the oil shock.

Iran's closure of the Strait of Hormuz sent oil soaring mid-year, spiking fuel and input costs and hitting transports, but the structural reshoring/electrification buildout, strong defense demand and aerospace optimism (SpaceX's record IPO) restored momentum by year-end.

The data-center load growth and grid capex supercycle sustained buoyant owner sentiment, tempered mid-year when Iran's closure of the Strait of Hormuz spiked oil and stoked fuel-cost and inflation worries, partly offset by the high power prices our generators captured.

An 'AI supercycle' melt-up with an AI-driven memory-chip shortage that is a pricing windfall for chipmakers; China's gallium curbs and a Strait-of-Hormuz oil shock are frictions but AI demand keeps a tech owner near-euphoric.

Iran's closure of the Strait of Hormuz kept oil and commodity prices elevated and inflationary, sustaining strong revenue and lofty gold prices for materials owners, though 2025's mania plateaued into a high but steadier range.

Sustained euphoria with a US defense budget near $1 trillion, Europe ramping toward NATO's 5% target, and a mid-year Iran/Strait of Hormuz crisis and oil spike (per the ledger) driving further military escalation and demand.