WS #12099

The US-Iran conflict continues to escalate, with IRGC claiming attacks on US facilities in Kuwait and Bahrain, and US CENTCOM conducting additional strikes near the Strait of Hormuz. Trump threatened strikes on Iranian power plants and bridges, and a naval blockade is in effect. However, Trump backed away from the 20% Hormuz transit fee, replacing it with trade/investment deals with Gulf states, which dampens the oil supply crisis narrative. Oil prices remain elevated (Brent ~$85) but pared gains after the toll reversal. Separately, US June CPI came in cooler than expected (headline -0.4% MoM, core flat), sharply reducing rate hike expectations and boosting risk assets. Fed Chair Warsh cautioned against overreading the data, but markets rallied. China Q2 GDP slowed to 4.3% YoY, missing the 4.5-5% target, with continued property weakness. The PBOC announced a 1.4 trillion yuan reverse repo operation to maintain liquidity. DeepSeek is exploring a $71 billion funding round and China IPO, signaling AI sector momentum. IBM shares plummeted 25% on weak preliminary earnings, citing AI-related spending pauses. The dominant narrative is ESCALATING for Iran conflict, but with a de-escalation counter-signal on Hormuz tolls. The CPI data is a high-significance positive for risk assets, but oil price resurgence and Fed caution are key risks.