The dominant macro driver overnight is the US reimposition of a naval blockade on Iranian shipping through the Strait of Hormuz, compounded by missile attacks on two UAE tankers, which drove Brent crude to a four-week high of $85.44/bbl (+2.57%) and WTI to $79.88/bbl (+2.23%) at Tuesday's close — levels that re-price the inflation outlook materially. US Treasury yields responded accordingly: the 2-year climbed 5bp to 4.26% and the 10-year rose 6bp to 4.62%, with the 30-year pushing through 5.10%, a configuration that signals the market is treating the oil shock as a stagflationary event rather than a transitory supply blip. Tanker traffic through Hormuz falling to a two-month low adds a supply continuity premium that does not dissipate quickly, and Fed Chair Warsh's congressional testimony today — alongside June PPI data (forecast 0.0% m/m vs. prior 1.1%) — will be closely parsed for any signal on how the Fed frames the energy-driven inflation pulse against its existing rate trajectory.
For Asia-Pacific, the cross-asset implications are concentrated in several fault lines simultaneously. Japan is the most acutely exposed energy importer in the region: LNG JKM at $16.52/MMBtu and elevated crude directly compress the current account, while USD/JPY holding at 162.24 — pinned near multi-decade lows — amplifies the yen-denominated import cost shock; the Nikkei 225 fell 1.92% with banks, energy resources and transport all in the red via TOPIX sector data. The CNY's modest strengthening to 6.7624 (dn 0.25% for USD/CNY) reflects China's stronger-than-expected trade data providing a partial offset, but the SSE Composite fell 2.06% and CSI 300 dropped 1.96%, suggesting domestic equity markets are more sensitive to global risk-off than the FX move implies. Korea's KOSPI was the session's standout stress point, collapsing 8.95% with semiconductor names leading losses, concentrating the AI/chip deleveraging and geopolitical energy risk into one market simultaneously.