On Tuesday (August 18), tensions continued in the Hormuz region of the Middle East, crude oil prices remained high, and Brent crude held steady above $91. Global bond sell-offs deepened, with long-term US Treasury yields rising to multi-year highs, putting downward pressure on gold. The US dollar remained largely stable, and risk appetite was subdued. The core market focus shifted from data to the convergence of geopolitical and interest rate factors. Traders are facing not a single event, but a combination of geopolitical risks and bond sell-offs. The Strait of Hormuz passage is nearly at a standstill, oil prices and shipping costs are rising in tandem; long-term bond yields in major economies are increasing, suppressing non-interest-bearing assets and risk appetite. This article translates publicly available information into language that traders care about most: sentiment, transmission paths, and potential risks. This allows for a quick assessment of which fluctuations are likely to continue and which are merely noise.

Core Analysis

Crude oil: Sentiment premium exceeds actual lockdown

Ship attacks and extremely low traffic volume in the Strait of Hormuz have kept Brent crude above $91. US comments regarding the Strait of Hormuz have drawn a response from Iran, eroding hopes for a ceasefire agreement. Short-term supply concerns are real, but similar rhetoric has appeared repeatedly before, making a substantial blockade unlikely. Traders should focus on shipping data and official statements, distinguishing between sentiment-driven market movements and policy implementation.

US Treasuries: Selling is repricing inflation and fiscal risks

Japanese government bonds led a global sell-off, with the 10-year US Treasury yield rising above 4.7% and the 30-year yield approaching 5.3%. Rising real yields and relatively stable inflation expectations indicate that the market is pricing in fiscal supply and the central bank's passive stance. High oil prices reinforce concerns about "higher and longer-lasting" inflation. Increased pressure comes from competition between long-term supply and technology bonds. Bond volatility directly suppresses risk assets.

Gold: Caught between safe-haven demand and holding costs

Geopolitical safe-haven buying persists, but rising real interest rates are increasing holding costs, causing gold prices to retreat to around $4450. Central bank gold purchases and potential ETF inflows provide medium-term support, while gold is more susceptible to volatility in the bond market in the short term. If safe-haven demand intensifies, gold may regain buying interest; if yields continue to rise, it will face downward pressure.

Foreign Exchange: Asymmetric Pressure from High Oil Prices

The US dollar index remained largely stable, while high oil prices put pressure on the currencies of importing countries, with emerging market currencies being more sensitive. The Japanese yen weakened, increasing the risk of policy intervention. The direction of the US dollar depends on the relative strength of yields and risk sentiment, rather than a single direction.

Sentiment and Today's Data: Increased Volatility Risk

Market sentiment was cautious, putting pressure on Nasdaq futures and causing the volatility index to rise slightly. Today's data releases are plentiful, with housing starts, industrial output, import and export prices, and pending home sales potentially amplifying volatility. With no Federal Reserve officials scheduled to speak, the marginal impact of the data on yields is amplified.

Trend Outlook

In the short term, if no ceasefire is reached in the Middle East, oil prices and shipping premiums will remain or rise, US Treasury yields will fluctuate at high levels, and gold will be under pressure, but the downside may be limited. In the medium term, the progress of reconciliation efforts in Qatar and other countries, as well as the supply of US Treasury bonds and the direction of real interest rates, are more crucial. If the geopolitical stalemate continues, stagflation trading may intensify; if the situation eases, oil prices and yields may fall, and gold will recover. Sentiment is fragile; avoid linear extrapolation.

Frequently Asked Questions

Q: How long will the impact of the Hormuz tensions on oil prices last? A: It depends on negotiations and the resumption of shipping. Short-term risk premiums are high, but if it's just rhetoric without a substantial blockade, a pullback could be rapid. Q: Why are rising US Treasury yields suppressing gold? A: Gold doesn't generate interest, and rising real interest rates increase holding costs, offsetting some safe-haven buying and putting short-term pressure on gold prices. Q: Will high oil prices push the dollar stronger? A: The dollar may receive support from safe-haven demand and yields, but high oil prices could also exacerbate stagflation concerns, limiting policy space and resulting in a non-linear trend. Q: Are today's data important? A: Data-heavy data releases can amplify volatility, but geopolitics remains the primary driver. Strong industrial production and price data will strengthen upward pressure on yields. Q: What should traders be most wary of right now? A: The combined effect of disorderly bond selling and escalating geopolitical tensions, as well as the amplification of unilateral volatility when liquidity is insufficient.