Viewpoint: Three macro pressures weigh on risk assets, leaving Trump in an insoluble dilemma.

Market analyst qinbafrank noted that tonight’s Brent crude contract touched $100, the 10-year U.S. Treasury yield broke through 4.7%, and the U.S. Dollar Index climbed back above 101. The deteriorating macro environment will subject markets to three simultaneous pressures in the short term: rising oil prices lifting inflation expectations; higher U.S. bond yields dragging down stock valuations; and a stronger U.S. dollar tightening global liquidity. In his view, the recent market outlook is not optimistic, as deleveraging of risk assets has not yet fully cleared while macro headwinds are approaching. If Brent crude breaks above $100, WTI crude holds at $90, the 10-year U.S. Treasury yield stays above 4.7%, and the U.S. dollar remains above 101, large tech stocks represented by the Nasdaq will face the greatest pressure, and gold will also be forced to continue under pressure. The failed attempt to open a new shipping route through the Strait of Hormuz and the death of U.S. service members mean Trump is unlikely to pivot immediately in the short term; he may need to feel extreme market pessimism and pressure before backing down. “Trump may not have accepted a harsh reality: he can no longer restore the Strait of Hormuz to its pre-war state, yet he still has to show toughness from time to time to appease domestic opposition voices and sentiments, and to boost his approval rating and election prospects.” For Trump, the options are either to indirectly repurchase international navigation rights in the strait, paying Iran huge sums to cede control, or to completely destroy Iran’s regime and military capabilities—but for now, it appears Trump has no intention of taking that step.