After 13 consecutive nights of US strikes, and widespread Iranian retaliation, there were no exchanges of strikes over the weekend. Iran’s army confirmed it had suspended its own operations for as long as the American pause holds. Brent crude fell from above USD 100 on Friday to USD 90 by Monday morning, its sharpest move since the June Memorandum of Understanding was announced. Oman is mediating on the Strait of Hormuz impasse, and regional sources describe the talks as heading in a positive direction. US President Donald Trump has repeated that his preference is diplomacy.

The sequencing of events over the past week again showed that the oil price remains an independent variable in this conflict rather than a dependent one, shaping the evolution of decisions as much as being shaped by them. But over the weekend, important additional context came from Michael Waltz, the US ambassador to the United Nations, who acknowledged that US missile stockpiles, particularly in the region, are depleted. Given the pace of missile production, experts estimate the US’s pre-war inventory levels may not be rebuilt before 2029-30, even if no more missiles are fired. Beyond political and market pressures, this practical consideration is another reason for the US to search for off-ramps in this conflict.

With a heavy week for central bank meetings ahead, Monday’s oil price fall is a welcome development. The US Federal Reserve meets on Wednesday, with markets pricing roughly a one-third chance of a hike, given the Federal Open Market Committee (FOMC) appears openly divided. The 30-year US Treasury yield at 5.2%, the highest since June 2007, with the real 30-year yield at 3.0% will likely be raising concerns in the FOMC about the risk of long-term inflation expectations rising. US labour markets also remain relatively robust, with unemployment low (4.3%), meaning the Fed can fully focus on the inflation side of its mandate, with core inflation running stubbornly above the 2% target at 2.6%. Despite the higher core inflation rate, the second-round inflation effects from higher energy prices remain limited, and the elevated long end of the Treasury curve is already doing much of the financial tightening itself. All things considered, we agree with the market’s pricing of a c. 30% probability of one hike of 25 basis points. After the FOMC, the Bank of England meets on Thursday with Gilts above 5.0% for their longest run since 2008, while the Bank of Japan meets on Friday. Japanese officials are highly unlikely to hike for a second consecutive meeting, but have said they are open to shifting to a faster hiking pace than every six months, with the Yen still at very weak levels.

The US tariff wall went back up on Friday. The United States Trade Representative USTR published a 431-page filing imposing 10-12.5% duties on around 60 economies under Section 301, as the Section 122 surcharge (10% blanket tariff) hit its 150-day statutory limit. The legal hook is a failure of these economies to prevent forced labour in supply chains, and the action follows 60 country-specific investigations and public hearings. The tariffs are already being challenged, with plaintiffs arguing the investigation was engineered to preserve a predetermined policy by moving between statutes.

The specifics of this regime will keep evolving, but the signalling matters. Trump is serious about rebuilding the US tariff base, and the fiscal position likely explains the urgency. Monthly customs receipts peaked at USD 31.4bn in October 2025 before declining to USD 26.6bn by February 2026. Refunds from the USD 166bn collected under the International Emergency Economic Powers Act (IEEPA) subsequently pushed net receipts into negative territory, reaching USD -25.6bn in June. This contributed to a USD 120bn federal deficit that month, compared with a USD 27bn surplus a year earlier. The Committee for a Responsible Federal Budget (CRFB) thinktank estimates the new tariff wall will raise around USD 105bn annually, about 60% of the revenue generated by the reciprocal tariff regime and roughly 3% of the USD 3.44trn of goods imported in 2025. This comes on top of the Section 232 sectoral tariffs, pre-existing duties on China and the Section 338 action against Canada. Based on the Congressional Budget Office (CBO)’s estimate that IEEPA tariffs accounted for around half of collections, annual tariff revenue could settle at USD270-290bn compared with the pre-ruling run-rate of more than USD 320bn, if the proposed tariff regime is upheld in court.

Samsung and SK Hynix signed USD 950bn of supply agreements with US technology companies in San Francisco, with Nvidia alone locking down USD 500bn from SK Hynix. Alphabet raised its 2026 capex guidance to USD 195-205bn and said 2027 capex would be significantly higher. It also suspended share buybacks for the first time since 2017. Against that, Chinese memory chip producer CXMT listed in Shanghai and closed up around 500% to around 3.3 trillion yuan; making it the most valuable listed company in mainland China. In our view, the immediate threat to the memory oligopoly (SK Hynix, Samsung, Micron) is conventional DDR5 memory rather than high-bandwidth memory (HBM), which matters because the scarcity margins currently sit in conventional memory precisely because incumbents diverted wafers to HBM. CXMT’s HBM 3 target is end-2026, at which point other memory-chip manufacturers will already be rolling out HBM 4, which is two generations ahead of HBM 3.

China’s Politburo meets this week. After the weak Q2 GDP print, some market participants have been expecting renewed fiscal stimulus to boost weak domestic demand. In our view, broad demand-side measures are unlikely, with supplyoriented policy set to keep topping the agenda. Broad public spending fell 11.9% yoy in June, the sharpest drop since October, and industrial profits rose 15.1%, the weakest this year and down from 21.1% in May, with most of the growth coming from the semiconductor complex. The tech and AI race with the US is very much on, and with the domestic political situation stable, no real signs of unrest, and deflation still supporting affordability despite a weak labour market, we expect Beijing to double-down on high-tech manufacturing investment rather than consumption. The People’s Bank of China held rates again last week, with banking sector profitability still a constraint, though it injected CNY 500bn via its medium-term lending facility, its largest addition in five months. Support has also come through the equity market in recent weeks. China Reform and China Chengtong (both part of so-called national team of state-controlled investors) deployed around CNY 60bn into stocks and ETFs to steady prices after the tech-led selloff, both pledging further purchases concentrated in central state-owned enterprises (SOEs) and technology names.

Indonesia: On Monday, State Secretary Prasetyo Hadi announced that President Prabowo Subianto had accepted a resignation letter tendered by Bank Indonesia Governor Perry Warjiyo on 25 July, citing personal reasons. Warjiyo had led the central bank since 2018 and was reappointed in 2023 for a term running to 2028. Senior Deputy Governor Destry Damayanti takes over on an interim basis, with a permanent successor appointed by the President subject to approval by the House of Representatives. The resignation followed the 22 July meeting, at which Bank Indonesia held the benchmark rate at 5.75% after 100 basis points (bps) of rate increases this year. The Rupiah has been Asia's worst performing currency, down around 7% since the US/Iran conflict began and hit a record low in June.

The departure follows two developments that had already placed the central bank's independence under scrutiny. Parliament passed legislation last month reinforcing its growth mandate while empowering lawmakers to make binding recommendations to it and to other independent regulators. In February, Thomas Djiwandono, Subianto nephew and a former Gerindra treasurer and deputy finance minister, was appointed Deputy Governor for 2026–2031, ahead of two career central bankers. 

South Korea: Samsung Electronics and SK Hynix signed supply deals and manufacturing contracts worth a combined USD 950bn with US technology companies at the San Francisco AI Summit, attended by President Lee Jae-myung. Presidential policy chief Kim Yong-beom described them as advance orders at scale, with the US buyers committing to purchase if the chips are produced. Nvidia locked down USD 500bn from SK Hynix, which signed a further USD 250bn with unnamed buyers presumed to include Anthropic and Microsoft, while Samsung agreed USD 200bn with Broadcom across memory and logic through 2030. Korean and global technology groups separately agreed domestic data centre partnerships totalling 5GW and roughly two million GPUs, with Anthropic accounting for 1GW and SK Telecom and Nvidia planning up to 2GW.

The government also launched a roadmap to internationalise the Won, framed as a shift from crisis prevention toward capturing the benefits of wider global use. The Won is roughly 1.8% of global FX turnover, 12th worldwide. From August, designated offshore clearing institutions may offer Won accounts to overseas clients and permit unrestricted Won-Won transactions between non-residents, supported by a Bank of Korea settlement network piloting in September. The official reference rate moves to a 4pm time-weighted average price in January.

Brazil: Brazil’s monetary policy committee (Copom) next meets on 4–5 August with the Selic rate at 14.25%. Longer-term inflation expectations remain de-anchored. Analysts polled in the central bank’s Focus survey raised their 2028 inflation forecast to 3.78% from 3.70% a week earlier, against the central bank's own projection of 3.10% by end-Q1 2028. The Copom identified renewed demand-driven inflationary pressure as an additional upside risk in its most recent minutes. The Middle East conflict, El Niño effects on food prices and the additional 25% US tariff add further uncertainty to the outlook. Services inflation has moderated through 2026 but remains at a level inconsistent with returning headline inflation to the 3.00% target.

In politics, Flávio and Michelle Bolsonaro reconciled after a family feud that became public in late June, brokered by Liberal Party leader Valdemar da Costa Neto, days before the convention at which Flávio is expected to be confirmed as presidential candidate for October. The episode had weakened him among evangelical voters and women, where Michelle holds influence, though how actively she will campaign for him remains unclear.

Chile: Codelco will postpone a large part of its USD 34bn five-year investment plan, chairman Bernardo Fontaine told T13, because its financial position makes the programme impossible to execute without continuing to increase debt. Fontaine estimated the mining company can finance around USD 2bn a year, or USD 10bn over five years, forcing stricter ranking of projects by profitability. Fontaine repeated plans to assess sales of non-core assets and minority stakes and to pursue private partnerships, citing the Novandino lithium venture with SQM as a model. Government and central bank forecasts assume high metal prices will underpin a strong investment cycle over the next half decade.

Mexico: US Trade Representative Jamieson Greer said ratification of the United States–Mexico–Canada Agreement (USMCA) may depend on Mexican cooperation in matters beyond trade, naming the need to strengthen border security and for Mexico to collaborate on bilateral water issues. Greer said the aim is to advance negotiations before year-end, particularly on rules of origin. Mexico had previously proposed a security agreement that was not taken up by the US.

Kazakhstan: Kazakh oil production has fallen following drone attacks on tankers loading at the Caspian Pipeline Consortium (CPC) terminal. Reuters sources put Tengiz output at 406,000 barrels per day (bpd) against an average 925,000 bpd before the attacks, with national oil and condensate output down to 1.63mbpd from over 2mbpd. The figures are consistent with earlier reports that CPC storage was already full. Infrastructure is undamaged, but loading is suspended amid reluctance by tanker operators to send vessels.

Morocco: The African Development Bank (AfDB) approved a EUR 100m loan for Africa's first battery gigafactory, led by China's Gotion High-Tech, on an initial investment of around USD 1.3bn. The plant will produce lithium iron phosphate cells, cathodes and anodes, mostly for European markets, and the AfDB plans to mobilise up to EUR 141m more from partner institutions as mandated lead arranger. Output starts at 20GWh, rising to 100GWh on total investment of MAD 65bn, with 17,000 jobs expected.

Nigeria: Central bank (CBN) Governor Olayemi Cardoso said the decision to hold the policy rate at 26.5% after the 21 July monetary policy committee (MPC) meeting reflects a cautious approach amid heightened global uncertainty. Cardoso acknowledged that disinflation was delayed this year by shocks that drove energy and commodity prices higher and disrupted supply chains, against a prior expectation of single-digit inflation by early 2027, but said the long-term objective remains intact. Headline inflation eased to 15.91% yoy in June from 15.93%, ending three consecutive increases, and core slowed to 15.4% from 15.8%, while food inflation accelerated to 17.5% from 17.0% on supply constraints and transport costs. The next MPC meeting is in September.

Saudi Arabia: Houthi pressure on Saudi shipping escalated through the week. The Iran-backed group said on 20 July it would impose a maritime blockade on the Kingdom in response to what it called an “unjust siege of Yemen”, drawing no immediate Saudi response. Its missiles and drones can reach Red Sea oil infrastructure and export terminals and could disrupt traffic through the Bab el Mandeb strait – although to what extent reains unclear.

By 22 July, two supertankers carrying Saudi crude had turned back in the Red Sea for the Suez Canal, while a third turned around off Oman before entering. On 23 July, the group said it had struck the Encelia and the Layla for violating the blockade, while five other tankers had by then changed course. The Houthis also reportedly fired missiles at two Aramco oil refineries along the Red Sea, causing a fire at the Jizan refinery. Shipping data shows that passage through the strait by oil tankers and other vessels remains active as of Monday, however.

Türkiye: Fitch affirmed Türkiye’s long-term credit rating at BB- with a stable outlook. The country’s credit remains constrained by very high inflation, weak external liquidity relative to sizeable financing needs, governance shortcomings and a history of political interference in monetary policy, offset by a low public debt burden, a large and diversified economy, and continued access to external financing. Inflation is projected to ease from 32.0% yoy in June to 29.5% by end-2026 and 18.0% by end-2028, still the highest among the sovereigns it rates.

Central bank tightening, including a 300bps increase in the effective funding cost, supported a partial reserve recovery after heavy intervention early in the conflict, though gross FX reserves are seen reaching only USD 167bn by end-2026, almost USD 45bn below pre-war. The current account deficit widens 1.1pp to 3.0% of GDP in 2026, with USD 242bn of debt maturing over the next 12 months. The general government deficit is forecast at 3.3% of GDP in 2026 and 4.0% in 2027 on pre-election spending, with public debt still only 25% of GDP by 2028 against a ‘BB’ peer median of 51%. Growth is expected to slow to 2.8% in 2026 before recovering to 4.4%.

Source and notations for all tables in this document:

Source: Bloomberg, JP Morgan, Barclays, Merrill Lynch, Chicago Board Options Exchange, Thomson Reuters, MSCI. As at latest data available on publication date.

*EMBI GD and EMBI GD HY Yield/Spread ex-default yields and spreads calculated by Ashmore. Defaulted EMBI securities includes: Ethiopia, Ghana, Lebanon, Sri Lanka, and Venezuela. **Price only. Does not include carry. ***Global Indices from Bloomberg. Price to Earnings: 12 months blended-forward.

Index Definitions:

VIX Index = Chicago Board Options Exchange SPX Volatility Index. DXY Index = The Dollar Index. CRY Index = Thomson Reuters/CoreCommodity CRM Commodity Index.

Figures for more than one year are annualised other than in the case of currencies, commodities and the VIX, DXY and CRY which are shown as percentage change.