【US Stock Market Update】US Long-term Treasury Yields Hit 4.3% Six-Month High, Probability of Rate Hikes This Year Increases to 40% | Axios: Trump May Deploy Military to Take Over Iran's "Kharg Island" (Continuously Updated)

Oil price fluctuations. Axios citing four sources reports that the Trump administration is considering occupying or blocking Iran’s Kharg Island to pressure Iran to reopen the Strait of Hormuz. The island handles 90% of Iran’s oil exports. Taking control of the island could expose U.S. troops to greater risk of attack.

If successful, this could ease oil prices; if it fails, it could escalate conflict. Markets are betting on the latter. Brent crude initially rose 2%, then fluctuated.

The report indicates such actions would only occur after U.S. forces further weaken Iran’s military capabilities around the Strait of Hormuz. “We need about a month to strike and further weaken Iran, take this island, and hold their critical points as leverage for negotiations,” a White House source said.

If approved, more troops will be needed. Currently, three different Marine units are heading to the region. A U.S. official said the White House and Pentagon are considering deploying additional forces as soon as possible.

However, inflation pressures remain high. The U.S. 10-year Treasury yield rose to 4.33%, a six-month high. The dollar index increased 0.3% to 99.52.

CME FedWatch expects the probability of the Fed raising interest rates this year to increase from about 20% on Thursday (19th) to nearly 40%.

But Fed officials continue to advocate for easing. Fed Governor Michelle Bowman said she still supports three rate cuts by the end of the year to support employment, though she is watching the Iran war’s impact. She believes it’s too early to judge the effects.

Another Fed official, Christopher Waller, said that a closure of the Strait of Hormuz would signal greater inflationary pressures. While the situation’s development is uncertain, it doesn’t mean the Fed will remain on hold for the rest of the year. He acknowledged that if U.S. employment weakens later this year, he would again advocate for rate cuts, emphasizing that he does not see a need to raise rates.

U.S. stock markets opened lower. Dow down 260 points to 45,760; S&P 500 fell 0.8% to 6,550; Nasdaq Composite declined 1.2% to 21,831.

In stocks, Super Micro Computer (SMCI) co-founder was indicted in New York for allegedly conspiring to illegally export AI technology worth billions to China. The news caused SMCI shares to plunge 27%, to $22.38.

Gold prices fell 0.8% to $4,568. Silver dropped 5.4% to $68.96.

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