Geopolitical standoff weighs on oil prices, bond market waits for cracks to widen, and Federal Reserve’s silence hints at underlying volatility

智通财经2026/07/28 17:21

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US Treasury bonds rose for the third consecutive day, following the decline in crude oil. The benchmark 10-year yield fell to around 4.61%, retreating about 2 basis points intraday, with the overall curve moving down in sync.
Crude oil continued to fall by 2% to 3%, briefly dropping below $80 during trading. The main reasons are market concerns about demand triggered by Trump’s tariff remarks, combined with Iran’s non-participation in negotiations, making diplomatic solutions nearly unworkable and resulting in a short-term reversal of the geopolitical premium.
Institutions suggest looking for crude oil buying opportunities in the $75 to $78 range, viewing the current pullback as a correction rather than a trend reversal. Risks associated with navigation through the Strait of Hormuz and Bab-el-Mandeb have not been substantially alleviated, and prices may resume their climb toward $90 in the future.
The tightness in the diesel and distillate markets far exceeds the level reflected by crude oil prices. This divergence implies that upward pressure on transportation and input costs will persist, and there remains a risk of core inflation accelerating again.
Fed Chair Walsh continues with a “less talk, more action” approach, deliberately downplaying forward guidance. Internal policy divisions have become public and the outcome of this week’s meeting is highly uncertain. The market remains alert to the possibility of a surprise rate hike.
Tuesday sees a raft of economic data, including June leading economic indicators, the May house price index, July consumer confidence, and regional Fed surveys. The trade deficit is expected to narrow from May’s $105.9 billion, with inventory growth likely slowing.
The consumer confidence index is expected to edge up from 91.2 to 91.3, still hovering at historic lows. Weaker inflation expectations are being partly offset by a short-term boost from the World Cup, but there is unlikely to be any significant change in perceptions of the job market. The bond market remains neutral for now, with attention on selling opportunities in the 4.57% to 4.54% range on rallies.

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Geopolitical standoff weighs on oil prices, bond market waits for cracks to widen, and Federal Reserve’s silence hints at underlying volatility

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