According to BlockBeats on July 23, market analyst qinbafrank said Brent crude touched $100 on Wednesday night, the 10-year U.S. Treasury yield moved above 4.7%, and the U.S. dollar index climbed back above 101.
He said a worsening macro backdrop is putting the market under three pressures at once in the near term: higher oil prices lifting inflation expectations, rising Treasury yields weighing on stock valuations, and a stronger dollar tightening global liquidity.
Three macro forces are hitting risk assets
qinbafrank said he is not optimistic about the market in the near term. In his view, deleveraging in risk assets has not fully cleared, while macro pressure is arriving at the same time.
He added that if Brent breaks above $100, WTI holds above $90, the 10-year Treasury yield stays at 4.7% or higher, and the dollar remains above 101, large-cap technology shares represented by the Nasdaq would face the greatest pressure. Gold, he said, would also remain under pressure.
His view on Trump's dilemma
On geopolitics, qinbafrank said failed efforts to open a new route in the Strait of Hormuz, along with the deaths of U.S. soldiers, make it difficult for Trump to change course immediately in the short term. He said Trump may need to see extreme market pessimism and pressure before backing down.
He said, "Trump may still not have accepted a harsh reality: it is no longer possible to restore the Strait of Hormuz to its prewar state, and he still has to show toughness from time to time to calm domestic opposition and public sentiment for approval ratings and the election."
qinbafrank added that Trump is left with two options: either indirectly buy back international navigation rights in the strait by paying Iran a huge amount of money to give up control, or completely destroy Iran's regime and military capability. For now, he said, Trump does not appear willing to go that far.