Investors Again Look Past Middle East Follies
July 9, 2026
The United States and Iran for a second straight day exchanged military strikes. Unlike Wednesday, investors this time took to heart the time-tested axiom that spikes in geopolitical uncertainty exert only a short-term sway over world financial trends. Today’s mood was one of bottom-fishing. Ten-year sovereign debt yields backtracked four basis points in France and Italy, three bps in the U.K. and Spain, and a basis point in the United States and Australia. Equity bottom-fishing saw stock markets rebound 1.4% in Japan, 1.7% in China, 0.7% in Indonesia, and 0.6% in South Korea. Share price gains among Euroland’s big-four range from 0.2% in Germany to 1.0% in Spain, and a 0.6% rise in Nasdaq futures leads the U.S. response. Amid ongoing domestic political uncertain, the British FTSE has slid somewhat further, in contrast.
The dollar has lost marginal ground against the euro, yen, sterling, Swissy and peso. A larger 0.7% extended slide versus New Zealand’s currency follows the that country’s interest rate hike announced yesterday. Bitcoin‘s price rebounded 1.1%, and gold climbed 0.9%.
There’s been scant net change in the price of oil since Wednesday’s close.
Today, the interest rates at central banks in Malaysia and Serbia were left unchanged at 2.75% and 5.75%. Both decisions to retain the status quo had been correctly expected. Malaysia’s rate has been the same since a 25-basis point cut exactly one year ago today. Officials at Bank Negara Malaysia assert that “headline and core inflation in the first five months of the year averaged 1.7% and 2.1% respectively, broadly within expectations, amid some initial pass-through of higher global cost pressures. Developments surrounding the Middle East conflict remain fluid. Domestic policy measures and stable demand conditions will mitigate the pass-through of external cost pressures to domestic prices.” Serbian CPI inflation picked up from 2.4% in the first month of 2026 to 3.5% in May, still just a half percentage point above the targeted 3.0%. The last changes in the National Bank of Serbia’s policy interest rate were a trio of 25 basis point cuts enacted between June and September of 2024.
FOMC minutes released yesterday afternoon reflected a split among U.S. central bank policymakers over the likely direction and timing of future interest rate changes, which will depend on future information. For now, keeping the federal funds target at 3.5-3.75% seems most appropriate, and money markets are set up for an increase in the second half of this year.
Chinese consumer price inflation slowed in June marginally further than forecast to a 3-month low of 1.0%. Core CPI, also at 1.0%, was its lowest in five months. Producer price inflation rose 0.2 percentage points to a 47-month high of 4.1%.
Greek CPI inflation of 4.4% last month represents a 3-month low and was down from the 38-month peak of 5.4% touched in June but also well above the cyclical low of 3.6% in September 2023.
Lithuanian consumer price inflation continued to crest last month, reaching a 33-month high of 5.7% and well above the 0.3% low in October 2024.
Irish CPI inflation of 3.4% was at a 4-month low.
Egyptian consumer price inflation has been in double digits since March 2022, including a 4-month low of 14.3% in June.
Germany’s year-to-date trade surplus total of EUR 88.4 billion in May was a mere 0.6% wider than the accrued total in Jan-May of last year.
Romanian GDP flat-lined in 1Q 2026, thus failing to move upward for a third straight time and resulting in the first and worst negative year-on-year growth comparison (-1.2%) in 21 quarters.
Chinese motor vehicle sales dropped year-on-year by 3.2% in June and 4.1% in the first half of this year, which was quite a turnaround from the advance of 9.4% scored in full-2025.
A 52.8% year-on-year leap in Japanese machine tool orders last month was the most in over a decade and well more than predicted.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Chinese CPI and PPI, German trade surplus, Japanese machine tool orderes
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