Bitunix Analyst:Fed Hawkish Signals and Middle East Energy Risk Resonate—Global Cost of Capital Still Faces Upside Pressure
July 17—The US-Iran conflict continues to escalate. US forces have further struck Iran's transport and military resupply facilities, while Iran has warned that the Strait of Hormuz will not return to normal transit and has instructed the Houthis to prepare a blockade of the Bab-el-Mandeb Strait—putting simultaneous pressure on the world's two most critical energy-shipping chokepoints. Although the White House states that Iran still wants to reach a deal with the US, battlefield escalation and diplomatic talks are running in parallel—meaning both sides are using military pressure to leverage negotiations rather than genuinely lowering conflict risk.
What truly deserves market attention is no longer short-term oil price volatility—it is that the global energy supply chain is accelerating into a restructuring phase. Chevron's investment in Iraqi oil fields, Gulf states' plans for new oil pipelines, and multiple countries' rapid build-out of alternative transport routes all reflect that the energy market has begun to treat "Hormuz risk normalization" as its long-term operating assumption. This suggests that future energy costs may stay elevated—and even as some routes recover, the supply-security premium will be difficult to fully unwind.
On another front, US June retail sales came in slightly below expectations, but core consumption excluding energy remains steady, and initial jobless claims fell to a near two-month low—indicating that US domestic demand and employment retain their resilience. The economy is showing no signs strong enough to force the Fed toward easing.
More critically, multiple Fed officials have again emphasized that one month of inflation cooling is not enough to prove that price pressure has been resolved. Dallas Fed President Logan publicly voiced support for a moderate rate hike, while Schmid and Vice Chair Jefferson both warned that if energy prices reaccelerate inflation, policy may need to tighten further. Markets have recently reduced hike expectations on the back of cooler CPI and PPI prints, but the Fed is trading future quarters' inflation risk—not a single month's data.
From a market lens, the biggest contradiction now is that financial markets are still betting on policy remaining unchanged—while energy supply risk, AI-driven capital demand, and still-stable US consumption jointly constitute the conditions for inflation to reheat. If energy risk continues to expand, the expectations gap between the Fed and the market on the rate path could widen again—and global risk assets will continue to face a pricing environment where high cost of capital coexists with elevated volatility.
