MacroShed Daily: Hormuz strike, Russia drone barrage, and a new US sanctions law

1. Projectile strikes tanker entering the Strait of Hormuz

A tanker was hit while entering the Strait of Hormuz amid the expanding Iran conflict, according to the Associated Press. The corridor carries roughly one-fifth of global petroleum consumption, creating immediate exposure for energy supplies and inflation. Attribution, the extent of damage, and the strike’s broader effect on shipping operations remain unclear.

2. Ukraine launches its largest reported drone barrage against Russia

Ukraine fired more than 1,000 drones at Russia, including its largest reported attack on Moscow, and damaged the capital’s oil refinery as Russia held parliamentary elections. The operation indicates substantial long-range strike capacity and raises pressure on Russian energy infrastructure. Russian interception figures and damage assessments cannot yet be independently confirmed.

3. United States enacts sweeping Russia and Iran sanctions law

President Trump signed legislation expanding sanctions and authorizing tariffs of up to 100% against major buyers of Russian energy. The law also extends sanctions authorities against Iran. Aggressive implementation could reshape Russian energy trade and affect major buyers including China and India. Presidential discretion means the maximum measures may not be imposed.

4. Federal Reserve raises rates as Treasury yields reach 5%

The Federal Reserve delivered its first rate increase in three years amid persistent inflation, faster growth, and an energy shock, while the 10-year Treasury yield reached about 5%. Higher policy and long-term rates affect mortgages, government borrowing, equities, corporate investment, and global capital flows. The decision occurred several days ago; current coverage chiefly clarifies its consequences.

5. Germany’s AfD wins another state election

The AfD finished first in Mecklenburg-Western Pomerania, while Chancellor Friedrich Merz’s CDU failed to enter a state parliament for the first time in its history. The Left led in Berlin. The regional results deepen Germany’s party-system realignment and could weaken the government of the EU’s largest economy. Coalition barriers may still keep the AfD from governing.

6. Houthi missile targets Riyadh

Saudi Arabia confirmed that Houthi forces attempted a ballistic-missile strike on Riyadh, the first such attack since the regional escalation opened a new front in the Iran war. Renewed Saudi-Houthi conflict could threaten Gulf infrastructure, Red Sea shipping, and energy systems. The missile was intercepted and no major damage was reported.

7. US proposes an AI-incident warning channel with China

US officials proposed a bilateral notification mechanism for AI incidents affecting national security during preparations for talks between Presidents Trump and Xi. A functioning channel could provide a framework for managing AI-related security incidents between the two leading AI powers. The mechanism remains a proposal and has not been agreed or tested.

8. Bank of Japan raises interest rate to a 31-year high

The Bank of Japan raised its benchmark rate to 1.25%, continuing its exit from decades of near-zero or negative rates. Japanese monetary normalization can affect carry trades, exchange rates, and international financing costs. The move was broadly anticipated, and its global effects may emerge gradually.