Frank Curzio
Founder & CEO of Curzio Research, Wall Street Unplugged Host
Emerging markets get squeezed when the dollar spikes, and the safe-haven dollar surge after US-Iran peace talks collapsed shows markets now pricing a longer conflict. A flight to safety reprices the odds of the conflict dragging on, which is bad for risk assets broadly, including growth stocks and emerging markets. Hard assets such as energy, commodities and gold catch a bid when diplomacy breaks down. This is not a time to chase moves. x.comÂ
Long-dated Treasury yields face more upward pressure than in the 1990s, a common comparison. Then, yields were high but falling from the early-1980s Volcker peak, and the US was the sole superpower. Now yields are turning up from their 2020 low, while the Iran war has driven oil-led inflation and exposed weaker US military dominance, denting confidence in Treasuries. Foreigners bought over $940 billion of US stocks in a year while selling Treasuries. Pressure persists until macro tensions ease. … Show more
The US dollar is losing hegemony after a costly, self-defeating fight over the Strait of Hormuz, hardly a bullish setup for it. As @eliant_capital lays it out, Hormuz was open, the US started a war that brought traffic to a standstill, spent billions fighting it, paid Iran billions to reopen the strait and declared victory. x.comÂ
Emerging markets look good for a short-term long because the US dollar is unlikely to break out without a catalyst. In-line PCE pulled down 2-year and 10-year Treasury yields, and the dollar index sits at a major resistance level, the May 2025 high. USDJPY is at 162, a critical level for the Bank of Japan to defend, and currencies move much more slowly than bonds. x.comÂ
The pause in attacks until the November 3 midterms is the catalyst for the next leg up in risk assets, including bitcoin, US small caps and long-dated Treasuries. x.comÂ
The Iran war, rising oil prices and inflationary pressure do not yet look severe enough to trigger a major economic crisis. Despite some deterioration in the macro picture and short-term volatility, the broader picture remains relatively healthy and the long-term outlook for US large-cap and Nasdaq 100 stocks is very positive. x.comÂ
Iran selling oil in yuan while running the US blockade is bad for the US dollar. An Iranian military spokesman said 34 Iran-linked crude tankers have moved past the blockade, and sources cited by @DeFiTracer report the oil continues to be sold in yuan. x.comÂ
The prospect of renewed US attacks on Iran sends long-dated Treasuries up this time. HormuzLetter relays Drop Site's report that US forces are positioning for an expected green light to resume attacks. x.comÂ
The US dollar looks set for a multi-year bear cycle because a multipolar world needs fewer dollars. Reserve managers are diversifying, trade settles in more currencies and central banks accumulate gold instead. Against an equally weighted basket, the dollar's half-century sequence of lower secular highs is topping again on its 7-to-10-year cycle. Every major commodity bull of the past century ran alongside a falling dollar, which could also bring a second inflation wave. x.comÂ
The dollar's longer-term prospects are very negative: 2008 showed the dollar-based system was built on quicksand, and 2026 showed the US has lost its leadership of the Western-oriented world. Both are very positive for gold. First, though, the dollar might rise on a flight to liquidity. x.com x.com x.comÂ
US large caps, small caps and bitcoin face a sharp risk-off event if crude oil makes one more push to a new high, dragging the dollar and yields higher. Despite the ceasefire extension, the oil market remains pessimistic about the Strait of Hormuz reopening. x.comÂ
