Iran war: Look beyond stocks to understand state of economy, experts say
Summary
Experts say the impact of the US-Israel war on Iran is seen more clearly in rising oil prices and bond yields than in stock indexes. The conflict has caused oil supply problems and pushed inflation expectations higher, making borrowing more expensive and slowing the economy.Key Facts
- The war on Iran began in late February and has caused oil prices to go up again.
- Yields on 10-year US Treasury bonds increased to 4.6%, the highest in a year, signaling higher expected inflation.
- The Strait of Hormuz, a key route for 20% of the world’s oil, remains mostly closed, affecting supply.
- After a brief decrease in oil prices following a ceasefire agreement, oil prices rose again when the deal faltered.
- The US national average price for gasoline rose to $4 per gallon, up from $3.87 the prior week.
- Traders expect a 55% chance of a US interest rate increase in September due to inflation concerns.
- Oil product supplies like gasoline and diesel are lower than crude oil supplies, which affects consumers more directly.
- Damage caused by Iranian attacks and Ukrainian drones has reduced refinery production in the Middle East and Russia.
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