The Israel-Iran conflict and rising oil prices are increasing market uncertainty and inflation risks this week. However, I believe a turnaround is near. The rise in oil prices has made the Fed's job even harder. Although Powell continues to play politics, some developments are buttering his bread.

Over the weekend, Israel claimed to have struck military targets in Tehran. Iran also launched more missiles at Israel. These seem to be more like random missiles.

In addition, Trump stated in an interview with ABC News that there could be a situation where we get involved in the conflict. He also invited Putin to mediate.

Now let's discuss the impact of the rise in oil prices on inflation. According to the U.S. economic model, a permanent increase of $10 in oil triggers inflation by 0.4%. Since there are no changes in the items there, it is different from us. We can calculate it easily. The estimate is straightforward and realistic.

But as I said, I do not expect permanence. I am just writing about what could happen if it does.

The FED interest rate decision meeting will take place on June 18. The expectation is that it will keep rates unchanged. #interest #fed #tehran