Brent crude tests $110 as Iran standoff deepens; fed rate outlook shifts

Iran's Kharg Island tanker facilities have sat empty for over 10 days as the naval blockade persists, pushing Brent crude to test $110 per barrel. The supply shock is layering inflationThe rate at which prices rise across an economy. pressure across energy importers, shipping, and aviation sectors; energy stocks rally on margin expansion, but broader equity breadth falters as 30-year US Treasury yields breach 5.11% on sticky inflation fears tied to the conflict. Trump's decision to defer fresh military strikes in favor of diplomacy offers some relief, with oil prices slipping modestly in early Asia trading on ceasefire hopes, though upside risk to $115 remains if hostilities reignite.

Outside energy, crypto markets are digesting a $527 million liquidation cascadeSelf-reinforcing chain of forced liquidations: each liquidation moves price further, triggering more liquidations. The structural cause of crypto's flash crashes. that drove Bitcoin from $82,000 to $76,000 this week. A Verus-Ethereum bridge exploit triggered panic sellingMass selling driven by fear, often at the worst possible time., and macro headwinds (inflationThe rate at which prices rise across an economy., yields, carryIncome earned from holding a position over time.-trade unwind risk) are keeping support at the $70-72,000 zone under pressure. Offsetting that weakness, the Senate's passage of the Digital Asset Market Clarity Act by 15-9 has unlocked $60.5 million in XRP ETFExchange-Traded Fund - a basket of securities trading like a single stock. inflows last week, signaling regulatory tailwind for digital assets integrating into US banking infrastructure.

The Fed leadership transition looms largest for overnight Asia trading. Kevin Warsh's May 22 swearing-in as Fed Chair is reshaping rate-cut expectations; his pro-crypto stance and signals favoring rate stability over aggressive easing are shifting the pivot narrative markets have priced in. Bitcoin and risk assets are recalibrating to a higher terminal rate regime, while yield-sensitive tech and semiconductors face valuation headwinds. Meanwhile, UBS models forecast Broadcom to ship 6.76 million TPUs in 2027 (up from 3.68 million in 2026), validating the AI capex boom but deepening semiconductor concentration risk as AVGO, NVDA, and AMD absorb valuation pressure from rising bond yields.

The NextEra-Dominion $67 billion utility mega-deal underscores the urgency to lock down generation capacity for AI data-center infrastructure. This M&A signal reinforces the secular tailwind for energy and power assets, though near-term margin compression from inflationThe rate at which prices rise across an economy. and geopolitical risk offsets gains. Asia desks at open will monitor USDJPY, which is under pressure from yield divergence, and track whether energy importers (Singapore, South Korea, Japan) signal relief or escalation in their inflation forecasts. Crypto volatility remains front-and-center ahead of Warsh's confirmation testimony and any fresh Iran war headlines.