US Inflation Data Looms Large as Oil Prices Soar

Oil prices have surged in recent days due to the ongoing US-Iran tensions and the effective shutdown of the Strait of Hormuz. The latest development is that Pakistan's defense minister has announced that the two countries are close to a deal, but this news was quickly overshadowed by reports of another missile strike on an Iranian cargo ship.

The rising oil prices have put pressure on traders to expect the US Federal Reserve to tighten interest rates sooner rather than later. Analysts point out that there will be one more Consumer Price Index (CPI) release and another jobs report before the Fed's next meeting in September, which could guide their decision.

The current inflation rate above 2% for over five years has led some board members to call for an interest rate hike. While investors are betting on a rate increase before the end of the year, some are even predicting two hikes.