WS #13940

The dominant narrative remains the US-Iran conflict and its stranglehold on the Strait of Hormuz, which is ESCALATING. President Trump reiterated on Truth Social that the US has 'total control' of the strait and intends to 'keep it', describing the naval blockade as a 'Wall of Steel'. This is corroborated by multiple sources (Jerusalem Post, IANS, Antiwar.com, GDELT). Critically, Iran's IRGC senior advisor General Naqdi stated Iran will prolong the war until Trump leaves office (2029), directly contradicting any near-term ceasefire hopes. This is a high-significance escalation that keeps a geopolitical risk premium on oil prices, which remain elevated with WTI holding firm despite a large US inventory build. The oil spill from the grounded tanker Caroline Bezengi off Oman has reached the mainland, adding to regional environmental and shipping disruption. A counter-signal exists: OPEC lowered its 2026 global oil demand growth forecast for the fourth straight month, which could dampen the oil price rally, but the supply-side disruption from Hormuz dominates. The July CPI report (3.4% YoY, core 2.5%) was in line and benign, pushing September Fed hike odds down to ~40%, which supports equities and bonds. The AI infrastructure theme remains robust, with CoreWeave and Super Micro's strong results and guidance (carried forward) continuing to lift the sector, and new signals from Anthropic's $9.1B deal with Riot Platforms and Microsoft's aggressive pricing on its new coding model. The US budget deficit surged to $432.3B in July, the highest since March 2021, a fiscal signal that could weigh on long-term rates. The Lakers sale to Iger and Kushner for $12.5B is a notable M&A/private equity signal but has limited direct public market impact.