The government is about to find out you can’t please the people and the bond markets
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A severe physical supply shock is rippling through the global economy due to disruption in the Strait of Hormuz, triggering a cascading shortage across energy, industrial inputs, and transport. This supply-side cascade is expected to lead to higher inflation, with producer price pressures already emerging in countries like China.
A global economic crisis is unfolding due to a supply shock in the Strait of Hormuz. The disruption has triggered a shortage of energy, industrial inputs, and transport, affecting over 800 ships in the Persian Gulf. Japan is rerouting its oil imports, but this will tighten conditions elsewhere. The damage to key energy infrastructure will take years to restore. The shortage is feeding through global supply chains, impacting semiconductor manufacturing and fertiliser inputs. This supply-side cascade is leading to higher inflation, with China recording positive PPI after a three and a half year period of deflation.
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