Speaking at the company’s annual global leveraged-finance conference, Dimon warned inflation may prove to be the “skunk in the room.” The proverbial economic mephitidae is unlikely to be triggered by a conflict in the Middle East alone, said the Wall Street veteran, though the threat it poses increases the longer the military action drags on.
If oil manages to make it through the strait, there’s another issue: Following the strikes on Iran, the Yemen-based Houthi military threatened to launch attacks on ships passing through the Red Sea. The Red Sea is a vital trading route between the East and West, sitting between the continents of Africa and Asia. It funnels into the Suez Canal, which leads to the Mediterranean Sea, meaning if ships cannot pass through the Red Sea in the south, where it borders Yemen, boats would instead have to divert around the African continent.
Speculators were already on the fence about whether the Fed would deliver another rate cut at its meeting this month. The latest jobs report has come back stronger than expected, and President Trump is continuing his tariff agenda at pace—despite a setback from the recent Supreme Court ruling.
Even writing ahead of the weekend’s update, Nguyen wrote: “This is no recipe for rate cuts in the short term, barring an unexpected shock. In our opinion, July would likely be the earliest date to revisit rate-cut conditions. From now to July, we see more tailwinds for spending than headwinds and, as a result, more reasons for inflation to pick up than to fall.”
