The dollar index (DXY00) rose 0.35% on Thursday as oil prices climbed more than 6% and geopolitical tensions in the Middle East intensified. The 10-year T-note yield also climbed, posting a new 1.5-year high.

The Houthis launched a missile and drone attack on two oil tankers in the Red Sea, prompting President Donald Trump to say he will hold Iran responsible for the attacks. Trump is considering a "massive attack" against the Houthis and is "close to making a decision on it." The Houthis vowed to blockade shipping linked to Saudi Arabia and warned shipowners against calling at the nation's ports. The US and Iran exchanged attacks for the 12th straight day.

The US unemployment claims report showed a slightly stronger labor market than expected, while markets are now discounting a 36% probability of a 25 basis point rate hike at the Federal Reserve's July 28-29 meeting. In Europe, the euro fell 0.33% against the dollar, and the 10-year German bund yield hit a new 15-year high after the European Central Bank left its key deposit rate unchanged at 2.25%.

Markets now see a 92% chance of a 25 bp ECB rate hike at its next meeting on September 10. The yen fell to a new 39-year low against the dollar, with USD/JPY up 0.41% on the day.

Precious metals declined sharply: August COMEX gold closed down $101.70 (-2.45%), and September COMEX silver fell $2.244 (-3.72%). Long holdings in gold and silver ETFs dropped to multi-month lows. In contrast, China’s gold reserves rose for the twentieth consecutive month, gaining 480,000 ounces to 75.44 million troy ounces in June.

Natural Gas and Energy Markets

Natural gas futures closed down 0.31% on Thursday. US inventories rose more than the five-year average for the week ended July 17. However, concerns about a powerful weather system disrupting LNG export facilities on the Gulf Coast, combined with hotter near-term weather forecasts and speculation of a warmer-than-normal autumn and winter, provided some support. US dry gas production stood at 110.7 bcf/day, up 1.5% year over year, while demand at 77.8 bcf/day was down 1.2%. LNG net flows reached 18.2 bcf/day, up 4.8% week over week.

The EIA raised its 2026 US dry natural gas production forecast to 111.2 bcf/day. Weekly natural gas inventories rose by 32 bcf, below expectations but above the five-year average. European gas storage was 54% full, well below the seasonal average of 70%.

Equities and Earnings

Intel stock dropped 4% in Friday trading despite reporting strong Q2 results. The company posted pro forma earnings of $0.42 per share on sales of $16.1 billion, beating estimates, and grew sales 25% year over year — its best in nearly 15 years. On a GAAP basis, Intel reported a loss of $2.16 per share. CEO Lip-Bu Tan said AI is driving unprecedented demand for compute and improving margins. Gross profit margin surged nearly 13 points to 40.4%, and the company guided for 41% gross margins in Q3.

Central Pacific Bank reported Q2 net income of $20.8 million ($0.80 per diluted share), up 19% year over year. The bank increased its net interest margin to 3.57% and reaffirmed 4-6% net interest income growth for the full year. CEO Arnold Martines said the company maintained profitability with balance sheet discipline. CPB also increased its quarterly dividend by 3.4% to $0.30 per share.