[Kwangsoo's Take] The U.S.'s Second Strike on Iran—The Shock of an Attack Button Pressed Mid-Session
CEO Lee Kwang-soo identified the U.S.'s renewed strike on Iran as the key backdrop for today's market moves. U.S. forces conducted an additional strike on Iranian targets around the Strait of Hormuz, with U.S. Central Command stating the goal was to block the reconstitution of Iran's radar and missile capabilities. At the same time, news emerged that two tankers carrying 4 million barrels of Saudi crude were struck in succession in the Strait of Hormuz, delivering a direct shock to oil prices. WTI surged back above $90.
He noted that what concerns the market is the signal that this attack goes beyond a simple localized response. Earlier, the U.S. had declared that all mine threats in the Strait of Hormuz had been cleared, positioning itself as the new guardian of safety there; shortly after, reports suggested Iranian hardliners may have re-laid mines, and the market's initial expectation was that the U.S. had carried out a surgical strike in response. However, concerns about escalation grew as the U.S. launched a second strike—without much justification, during U.S. trading hours, and against a different target. He assessed this as unusual, noting that past U.S. strikes had typically occurred over weekends, unlike this one carried out in the middle of the trading session.
As a result, U.S. Treasury yields surged, with the 2-year at 4.4%, the 10-year at 4.8%, the 20-year at 5.28%, and the 30-year at 5.27%. Bloomberg assessed that the 30-year yield has stayed above 5% for 55 straight days, the worst stretch since 2006. He pointed out that this rate turmoil is not confined to the U.S.—Japan (highest since 1996), Germany, France (highest in 18-19 years), and Australia (highest since 2010) are all seeing similar spikes simultaneously worldwide.
He noted that Treasury Secretary Bessent is attempting to calm oil prices by mentioning sanctions and blockades against Iran and the development of routes bypassing Hormuz, but without effect. He expressed suspicion that President Trump might be deliberately escalating the situation, noting it is hard to rationally explain why Trump would rattle markets with a single attack button rather than the Treasury's more nuanced tools for controlling long-term rates. Still, he offered a paradoxical interpretation: a Fed rate hike could ultimately serve as the trigger that quiets market noise. Given that U.S. growth, inflation, and rate levels remain within a manageable range, he suggested it may be better to confront the situation head-on now by raising rates and absorbing the controversy.
On Trump's mention of the possibility of unconditional talks with North Korean leader Kim Jong-un, and reports of a possible Trump-Xi-Putin trilateral summit, he interpreted these as attempts to divert attention from pressing issues like Iran and Gaza. However, given that North Korea has already enshrined nuclear-state status in its constitution and rejected talks premised on denuclearization, he read the U.S. stepping back to unconditional talks as an attempt to seize some form of negotiating opportunity.