Friday: Oil up 5% After Trump Threatens Iran

Oil surged 5% on Friday, pushing Brent above $102 a barrel and WTI past $94, after former President Donald Trump warned Iran could face intensified strikes. The heightened geopolitical risk lifted the U.S. dollar index and pushed the 10‑year Treasury yield to 4.40%, while equity indices slipped 0.8‑1.5% across the S&P 500, Nasdaq and Dow. Energy‑driven inflation expectations spurred a modest rally in bond yields and forced investors to reassess risk, underscoring how quickly Middle‑East tensions can reverberate through global commodity and financial markets.

The Reserve Bank of Australia, citing the same conflict, warned that rising energy costs could embed higher inflation expectations, threatening to erode real‑interest‑rate gains. ANZ economists responded by trimming the Australian GDP outlook to roughly 1% growth in 2026 and 1% in 2027, citing weaker business investment, softer housing demand and a stronger Aussie dollar. In New Zealand, the housing market faces a double hit: declining consumer confidence and climbing wholesale interest rates, as swap spreads have widened sharply. Together, these dynamics illustrate how geopolitical shocks amplify monetary‑tightening pressures in both economies.

Gold has underperformed, falling 15‑20% since the conflict began, as investors priced in a shift from anticipated Federal Reserve rate cuts to possible hikes. Higher yields and a stronger dollar have squeezed the precious metal, while forced liquidations in ETFs and margin calls have drained liquidity. Supply‑chain disruptions in Middle‑East refineries add a modest premium risk, but the primary driver remains macro‑policy. Strategist Sunny Kamari expects short‑term volatility to persist, yet notes that a de‑escalation could restore rate‑easing expectations, providing a supportive backdrop for gold over the medium to long term.