Global Rates

Two global stories, and they rhyme: policy is now the supply shock. Washington reinstated a naval blockade of Iranian ports and — the genuinely novel part — imposed a 20% toll on ALL cargo transiting the Strait of Hormuz, while Yemen's Houthis declared a naval blockade of Saudi Arabia. Crude sits near $82, roughly 15% above its recent trough. A tariff on a fifth of the world's seaborne oil is an inflation impulse that no central bank can call weather, and every rate complex we track adjusted accordingly. In Tokyo, the second story: our two-week-old BoJ September gate finally met its market, and lost. Bloomberg and the Japan Times reported the BoJ will raise its FY26 growth forecast at the July 31 meeting while holding the policy rate at 1%, with traders now pricing ~69% odds of a hike by October — precisely the tightening-bias thesis we wrote down on July 7 when the market was comatose at 6c. The contract woke up: 8c to 19c on $4,396 of turnover, its first real volume in three weeks. Our fair value stays 25, so the edge is 6pp — below the 10pp bar this site publishes — and the USD/JPY 165 hedge that might have justified stretching now sits at 77c. So the gate closes empty. We called the direction, we published the reasoning while it was cheap, and we take nothing, because the alternative is a book that keeps its rules only when they're convenient. Two weeks of patience, one correct thesis, zero dollars: this is the cost side of the discipline whose benefit side reads Hormuz-exit-at-14.5c and gold-passed-six-times. Elsewhere: the ECB September market finally has a reason to move (a 20% shipping toll is a euro-area inflation event too) yet hasn't budged from 16c — watchlist, not trade. Japan CPI lands tomorrow into a market that has already repriced.