14.07.2026 - “War” Comeback

The United States has officially re-entered military conflict with Iran. Overnight, US President Donald Trump formally notified Congress that the US is again at war with Iran, triggering a new 60-day authorization window for military operations.

At the same time, the US reinstated its blockade against Iran, aiming to prevent commercial shipping from accessing Iranian ports.

President Trump also threatened to impose a 20% toll on vessels transiting the Strait of Hormuz, arguing that the United States should be compensated for its role as the waterway's security guarantor. The proposal marks a sharp shift from his previous stance, when he repeatedly argued that no country should charge tolls or fees on an international waterway.

Iran responded by stating that it "always has been and forever will be the guardian of Hormuz."

Meanwhile, military exchanges between the United States and Iran continued overnight, with both sides launching additional strikes.

Markets:

• Equities: Investors remain surprisingly calm despite the renewed escalation

• Bonds: Most government bond yields continue to move higher; US 10y yield around 4.62%; while Japan shows signs of stabilization with the 10-year yield easing to 2.70%

• Commodities: Oil prices extended yesterday's nearly 10% surge, with WTI above USD 80/barrel and Brent towards USD 86/barrel

  Precious metals: Gold stabilized after briefly falling below USD 4’000 yesterday, recovering to USD 4’020/oz. Silver trades near USD 58/oz

• Currencies: USD broadly unchanged

• Cryptos: stable - Bitcoin moving towards USD 63k

• Volatility: The VIX index edged slightly higher above 17

My View: I remained relatively isolated with my view that this conflict was far from over while many investors celebrated the Memorandum of Understanding as if the geopolitical risk had been fully resolved.

For that reason, I maintained my oil exposure. Although I took profits on roughly half of the position after the initial rally, I reinvested those proceeds at the beginning of last week as signs increasingly pointed toward renewed escalation.

Markets should not dismiss the current wave of rhetoric and threats. While headlines are often noisy, they reflect a geopolitical environment that remains highly fragile. My assessment has not changed.

I expect the conflict to remain elevated throughout this new 60-day window, with the risk of further escalation remaining significant.

At the same time, pressure on the United States and President Trump continues to build. The administration faces approaching midterm elections, while any prolonged disruption to energy markets could quickly translate into higher inflation, slower global growth, and renewed economic stress.

The proposed "guardian" role for the Strait of Hormuz also raises practical questions. Securing one of the world's busiest shipping lanes is extraordinarily difficult. Even with a naval presence, commercial tankers remain vulnerable to asymmetric attacks, including drones, missiles, and small fast boats. Preventing such incidents on a sustained basis would be extremely challenging.

For now, financial markets continue to price a relatively benign outcome. Whether that optimism proves justified will largely depend on developments in the Strait of Hormuz over the coming days and weeks.

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