Different Spins on the War in Iran, Now in its 21st Week
July 20, 2026
(130) If one listens to the revelations of diplomatic sources, a breakthrough to secure peace is just around the corner. This low chatter has been around since the war began in late February, and it’s intent seemingly has been to contain upward pressure on oil prices and to maintain hope in world financial markets. As has been often the case, ascribed expressions of diplomatic progress such as this weekend’s reports that both the U.S. and Iran want to restart talks have come from third party mediators. If one instead just watches what’s happening on the battlefronts, the painted picture is much more grim. Another U.S. serviceman has died. The U.S. is pounding Iran. Iran is targeting U.S. allies in the gulf region, and shipping traffic through the Strait of Hormuz is again minimal.
One-way market pressure in financial markets has been avoided to a large extend. The weighted DXY dollar index has opened the new week in a steady fashion, edging up 0.1% against the euro, remaining flat relative to the Canadian dollar, Swiss franc and Japanese yen but giving up 0.2% to 0.5% versus the kiwi, Aussie dollar, sterling, won and peso.
Like many Mondays, today’s economic data menu is comparatively thin. Japan’s Marine Day holiday meant no trading in that stock market.
Ten-year sovereign debt yields rose six basis points in Australia, four bps in Switzerland and three bps in the U.K. but are unchanged or a mere single basis point higher elsewhere. The week’s major central bank event will the the policy review at the European Central Bank. Last month’s rate hike by it is not expected to be followed by a second move this time, but a couple of increases are priced in by next spring.
U.S. stock futures have not extended last week’s sell-off, as investors wait for this week’s earning reports from some key tech companies. In Asia, Hong Kong’s Hang Seng index rebounded 2.4%, and the Chinese and Indonesian stock exchanges rose 0.9%. At the same time, the South Korean Kospi’s drop of 4.5% led the list of declines that also included Taiwan, Singapore, and India. In major European stock markets, changes include a 0.5% decline in the British FTSE and smaller changes elsewhere.
The price West Texas Intermediate crude oil touched a high overnight of $85.39 per barrel, around 24% above this month’s low, but has retreated back to $85.45 currently, which is 2.5% below Friday’s close. Silver has rebounded 2%, while gold is only 0.3% firmer. Bitcoin is higher too and now about 10% above its level on the first day of July.
Construction output in the euro area advanced 0.4% in May to post the largest 12-month rate of increase (1.2%) in seven months.
German producer prices in June reversed the 0.3% monthly increase in May, resulting in a third straight year-on-year increase, this time of +1.8%. Producer price inflation had previously been sub-zero for 29 of 33 months. including readings of -3.3% as recently as February and -9.2% in September 2023.
Producer price inflation in Georgia slowed to a 4-month low of 5.9% in June from May’s 16-month high of 7.1%. Portuguese producer price inflation edged 0.1 percentage point lower to a 2-month low of 5.0%, and in Poland, such decelerated by 0.7 percentage points to a 3-month low of 1.7%. Estonian PPI figures for June were also reported today, showing a 5-month high of 3.8%.
June trade figures were released in both Malaysia and New Zealand. The Malaysian first half surplus of MYR 147 billion 2.7% wider than a year earlier, while New Zealand’s NZD 1.62 billion surplus in the first half of 2026 was 48.6% narrower than in January-June of 2025.
As widely anticipated, officials at the People’s Bank of China again left their 1-year and 5-year loan prime rates unchanged after this month’s review. Such have been at 3.0% and 3.5% since cuts of ten basis points in May of 2025. Chinese consumer price inflation has been 1.0% or a bit high for the past five reported months, and the outcome and economic fallout from the war in Iran remains unclear.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: German PPI, Peoples Bank of China
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