What's Next After the Initial Fallout from US Strikes on Iran

What's next? The unprecedented US airstrikes on Iran have set traders and governments worldwide on edge, as the Islamic Republic warns of retaliation and Israel shows no sign of letting up in its assault. Asian currencies and stocks fell, European stock futures declined while oil advanced, then erased gains, after Washington struck Iran's nuclear sites over the weekend. China and Pakistan were quick to condemn — even though China hasn't yet offered substantial assistance to Tehran besides rhetorical support and Pakistan is at the same time taking steps to build stronger ties with the White House. The US State Department issued a ' Worldwide Caution ' alert for Americans.
More critically, President Donald Trump's decision to deploy bunker-busting bombs — in Washington's first direct military action against Iran after decades of hostility — has pushed the Middle East into uncharted territory. Did the end justify the means? While the US attacks have set back Iran's nuclear ambitions and dealt its clerical regime a humiliating blow, the program hasn't been completely destroyed. The move may ultimately lead Tehran to end international monitoring of its nuclear program and consider going ahead to develop a bomb. Supreme Leader Ayatollah Ali Khamenei hasn't been seen in public in 11 days but remains in control. Even as diplomatic allies Russia and China have stayed on the sidelines and its network of armed proxies in the region remains weakened, Tehran still has ways to inflict pain on the US as it plans its retaliation.
Two supertankers, each capable of hauling about 2 million barrels of crude, U-turned in the Strait of Hormuz after the US airstrikes on Iran raised the risk of a response that would ensnare commercial shipping in the region, according to vessel tracking data compiled by Bloomberg. The two empty freighters then sailed south, away from the mouth of the Persian Gulf. The turning oil carriers offer the first signs of re-routing, something that oil traders will scrutinize. Any disruption to traffic through the strait, a major artery for global crude and natural gas, raises the specter of a spike in energy prices. That's bad news for Asia, which buys more than four-fifths of all the crude produced in the Middle East, 90% of which goes through the Strait of Hormuz.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Yahoo

30 minutes ago

• Yahoo

Investors Rush to Pour Cash Into $7.4 Trillion US Money-Market Fund Industry

(Bloomberg) -- The rush of cash into the US money-market funds is showing few signs of slowing as it secured a record $7.4 trillion in assets. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice One Architect's Quest to Save Mumbai's Heritage From Disappearing NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Investors have poured more than $320 billion into the funds so far this year, according to Crane Data LLC, making it one of the biggest benefactors of the Federal Reserve's current monetary policy. That's something of a surprise for those on Wall Street who'd gone into 2025 assuming officials would lower interest rates and sap the attractive returns offered by the industry. '$7 trillion can easily be $7.5 trillion in 2025,' said Deborah Cunningham, chief investment officer for global liquidity markets at Federated Hermes. 'Five-percent-plus rates were nirvana, four-percent-plus is still very good — and if we dip down into the high threes, that's quite acceptable as well.' The average simple seven-day yield is now 3.95% for government funds and 4.03% for prime, an 8 basis point spread, according to Bank of America Corp. It's a compelling backdrop as some 600 participants gather at the annual Crane's Money Fund Symposium, which kicks off Monday in Boston. Money funds have seen their coffers swell in recent years, notably in early 2020 for their haven appeal and again as the Fed's rate-hiking cycle boosted yields. Even as the Fed pivoted to cutting rates last year, assets continued to rise, with these funds typically slower to pass along the effects of lower rates when compared to banks. Households have been a key driver of the inflows. Since the Fed started raising rates in March 2022, total assets under management in US money funds have swelled by roughly $2.5 trillion, and retail investors have accounted for about 60% of that, Investment Company Institute data show. Data from ICI exclude firms' own internal money funds, unlike Crane Data, which tracks the money market industry. Inflows have continued even as the industry sees some investors embrace alternatives, such as ultra-short funds in the fixed income or equities, Cunningham said. Overall, though, it's a far cry from the exodus of cash from money-market funds that some on Wall Street had forecast. 'It's not surprising asset levels have held on and grown,' said Michael Bird, senior fund manager at Allspring Global Investments. 'Even if the Fed picks up its easing campaign this year, rates will still be relatively high.' The Fed last week laid out forecasts for two quarter-point rate cuts this year, aligning with market pricing. Although the risk that conflict in the Middle East drives up oil prices and causes a resurgence in inflation remains an uncertatinty, traders see a quarter-point reduction as likely in September and all but guaranteed by October. Given that interest-rate backdrop, money-market funds are trying to extend the weighted-average maturity — known as WAM — of their holdings as long as possible to capture elevated yields. Fund managers have also adjusted holdings to compensate for the effects of debt-ceiling drama. While Wall Street strategists largely expect the government to raise the debt limit as part of the reconciliation process by late of July or early August, some funds have put more cash toward repurchase agreements — loans collateralized by Treasuries or agency debt — as an alternative. Still, 'the expectation is when the debt ceiling gets resolved, there will be a significant increase in bill issuance, which helps yields,' Bird said. 'Uncertainty is helping our product.' Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P.

Bloomberg

32 minutes ago

• Bloomberg

The Budget Bill Is Creating a Republican Existential Crisis

The Republican budget bill, a $3.7 trillion tax cut packaged with $1.2 trillion in spending cuts, is deeply problematic legislation from almost any perspective — including those of its authors. The Congressional Budget Office has the details about how it will be expensive and ineffectual. But for Republicans, President Donald Trump's 'big, beautiful bill' is creating what amounts to an existential crisis. For half a century, Republicans have been committed to the policy of lower taxes to aid the economy — impervious to any evidence that tax cuts are inefficient and prohibitively expensive. At this point, to walk away from the bill is to abandon their economic raison d'etre.

Bloomberg

32 minutes ago

• Bloomberg

Bloomberg Surveillance TV: June 23, 2025

- Norman Roule, Senior Adviser at the Center for Strategic & International Studies - Daan Struyven, Head: Commodity Research at Goldman Sachs - Mark Esper, former US Secretary of Defense - Danny Danon, Israel's Ambassador to the United Nations Norman Roule, Senior Adviser at the Center for Strategic & International Studies, discusses the US strikes on Iran and what's next for conflict in the Middle East. Daan Struyven, Head: Commodity Research at Goldman Sachs, offers his outlook for oil and global commodities in the wake of the US' attack on Iran. Mark Esper, former US Secretary of Defense, talks about the strategy aimed at weakening Iran's nuclear capabilities and whether early indications show the US achieved its objectives. Danny Danon, Israel's Ambassador to the United Nations, talks about Israel's position in the Middle East after the US' strike on Iran.