Gulf hostilities revive stagflation fears

Renewed hostilities in the Gulf have revived stagflation talk, dimming hopes that the interim deal between the United States and Iran would prevent elevated inflation alongside stagnant economic growth. Oil prices surged back to $100 per barrel after Yemen's Houthis reportedly struck two Saudi Arabia oil tankers in the Red Sea, widening disruption beyond the Strait of Hormuz. Natural gas prices are set for their biggest monthly jump since March. The United States imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including the European Union and China, further raising prices. Central banks face pressure to hike rates: the European Union — European Central Bank left rates steady but signaled further tightening, while markets price two United States — Federal Reserve hikes by January. The World Bank Group warned global growth could fall to 1.3%. Asia is vulnerable, with Japan's yen at four-decade lows and import costs at record highs. U.S. gasoline prices exceeded $4 per gallon, and mortgage rates hit highs since last August.