BlockBeats News, July 22nd, the Middle East risks escalate further. Trump said he is "not interested in meeting" with Iran and threatened a fierce strike against the Gachsaran region, where underground nuclear facilities are allegedly hidden; Iran retaliated, stating that if the nuclear facilities are attacked, all U.S. and its allies' interests in the region will become targets. Although Pakistan continues to play a mediating role, the U.S. signaling Iran to "pay the price" indicates that military pressure will remain in the short term.

What is truly noteworthy is the energy transport data. The commercial traffic in the Strait of Hormuz has dropped to about 15% of pre-war levels, with many international shippers withdrawing; two oil tankers loaded with Saudi crude even turned around in the Red Sea to redirect towards the Suez Canal. The Red Sea route, originally considered an alternative, is now facing uncertainty due to Houthi threats. Meanwhile, Kazakhstan has announced a halt in oil shipments through the Black Sea, indicating that the global energy supply risk has evolved from a "single strait issue" to a "pressure on two routes simultaneously" scenario.

This supply shock is changing the Federal Reserve's policy backdrop. The latest ADP data shows that U.S. private sector hiring momentum has cooled, but market bets on a fall interest rate hike have not diminished, as rising oil prices could reignite inflation. In other words, the Fed is facing a combination of "slowing job growth and rising energy inflation," rather than just economic downturn. This is also why U.S. $8 trillion money market funds continue to shorten duration and increase overnight and floating-rate asset allocations—large funds are willing to sacrifice some returns to maintain repricing flexibility.

The forex market also reflects rising funding costs. The USD/JPY briefly rose above 163, hitting a new low since 1986. Despite the Japanese government's previous intervention of over 11 trillion yen, it still struggles to resist the triple pressure of rising oil prices, higher U.S. bond yields, and carry trades. The market now sees 165 as the next key level to watch, with some institutions even forecasting a challenge to 170 in the next year.

On the trade policy front, the Trump administration is paving the way for new measures after the expiration of the 10% temporary tariffs, planning to implement new tariffs on dozens of countries as early as this week. It has also announced that generic drug manufacturers who do not relocate production capacity back to the U.S. within two years will face 100% tariffs in 2028, escalating to 200% in 2029. This "deadline-first, then escalating tax" design fundamentally forces a premature restructuring of the global supply chain, with the Indian generic drug industry at the forefront.

There are also new cost signals in the tech supply chain. TSMC is reportedly set to raise wafer fabrication prices starting in 2027, with the highest increase of 10%; OpenAI has acknowledged a security breach incident at Hugging Face, indicating that the security costs of AI models and the open-source ecosystem are on the rise. The AI industry is no longer just a race for computing power but has entered into an era of comprehensive costs involving "wafers, power, cybersecurity, and supply chain resilience."

I believe the most crucial observation point now is not whether the oil price can temporarily break through $100, but the duration of the energy transportation disruption. If the low-flow status in the Hormuz and Red Sea continues for several weeks, global inventory buffers will be rapidly depleted, strengthening the Fed's hawkish pricing further, and the period during which the dollar and short-term interest rates remain high will be prolonged. In this environment, asset correlation will increase, and the importance of liquidity and cash management will be significantly higher than chasing a high-volatility narrative.