YESTERDAY I WARNED ABOUT WHAT COULD HAPPEN AFTER THE US MIDTERMS. NOW LOOK WHAT'S HAPPENING IN THE MIDDLE EAST. Saudi Arabia has come under attack. The US is pulling diplomatic personnel out. And oil has just surged above $111 a barrel. I think something VERY significant is developing here. Let me explain. We've got 12 days until the US midterm elections. Brent crude: $111.64. WTI crude: $99.39. US inflation: 3.7%. And now Reuters is reporting that Iran-aligned Houthi forces have struck targets in Saudi Arabia, including an airport and an oilfield. People have been killed. Washington has ordered non-essential diplomatic personnel and their families to leave Saudi Arabia. Think about what's happening here. For weeks, markets have been trading on the possibility of a US-Iran peace deal. Every positive headline has brought hopes of lower oil prices. Every setback has pushed energy prices back up. But something has changed. WE'RE NO LONGER JUST TALKING ABOUT THE STRAIT OF HORMUZ. We're talking about attacks on infrastructure inside one of the world's largest oil-producing countries. And that's a potentially MUCH bigger problem for energy markets. Because even if Washington and Tehran eventually reach an agreement, what happens if attacks on infrastructure and shipping continue elsewhere in the region? A peace agreement doesn't automatically remove every risk to global energy supplies. Now, here's where this gets interesting. Donald Trump has an election in 12 days. Iran knows the political pressure he's under. Reuters has already reported that Iranian officials see prolonging negotiations as a way of weakening Trump politically. And now we've got another escalation involving Saudi Arabia. The political clock is ticking. But I want to take this one step further. Because I think the BOND MARKET could be where the next major signal comes from. Remember what happened recently? US inflation came in at 3.7%. Treasury yields initially surged. The dollar rallied. Then something fascinating happened. Investors started buying US government bonds. Treasury yields reversed lower. Why.... Because inflation wasn't the only concern anymore. Investors were becoming increasingly worried about economic growth and what sustained high interest rates could do to the wider economy. Now throw another potential energy shock into that equation. If oil keeps climbing, inflation expectations could rise again. That creates more pressure on the Federal Reserve to keep monetary policy restrictive. Potentially supporting Treasury yields and the dollar. But there's another scenario. What if the escalation becomes so serious that investors start worrying MORE about economic damage than inflation? Equities come under pressure. Capital moves towards safer assets. Treasury demand increases. Bond prices rise. Yields FALL. And suddenly the market reaction looks completely different. That's what I think traders need to understand. THE SAME OIL SHOCK CAN PRODUCE VERY DIFFERENT MOVES IN THE DOLLAR, GOLD AND TREASURY YIELDS. It depends on what investors are most concerned about. I've spent 18 years following these markets, and I can tell you that understanding this distinction is incredibly important. Now here's my bigger concern. We're approaching November the 3rd. And instead of seeing a clear path towards de-escalation, we're now seeing attacks involving Saudi Arabia and the withdrawal of US diplomatic personnel. What happens if we reach the midterms without a peace deal? And what happens if the political calculations change AFTER the election? I'm watching three things very closely. OIL. TREASURY YIELDS. THE US DOLLAR. If oil continues higher and yields start climbing aggressively, renewed inflation fears could be taking control. If oil rises but yields keep falling, the market may be telling us something much more concerning about economic growth. And if negotiations suddenly produce a credible agreement, we could see a very sharp reversal in some of these moves. But here's my biggest thought. THE MARKET ISN'T JUST PRICING THE POSSIBILITY OF PEACE ANYMORE. IT'S HAVING TO PRICE THE RISK OF A WIDER REGIONAL ENERGY CRISIS. And with the US midterms just 12 days away, the timing could hardly be more significant. I don't think traders should underestimate what's developing here. Bookmark this. Because the next major move in oil, bonds and the dollar could tell us far more than the political headlines. And I want to ask you something.... Can Trump realistically deliver lower oil prices before November the 3rd while the conflict continues spreading across the region?

TRUMP HAS 13 DAYS UNTIL THE US MIDTERMS. IRAN KNOWS IT. And I think something VERY important is happening in financial markets right now. US inflation: 3.7%. Brent oil: $110 a barrel. US 10-year Treasury yields: around 5.1%. And this morning, US Secretary of State Marco Rubio says reaching a peace deal with Iran is EXTREMELY DIFFICULT. Iran is refusing to reopen the Strait of Hormuz without Washington accepting its conditions. Think about the timing of all this. On 3 November, Americans head to the polls. Trump needs lower energy prices. He needs inflation coming under control. And he certainly doesn't need another surge in petrol prices just before an election. Iran knows this. In fact, Reuters has reported that Iranian officials see prolonging negotiations as a way of increasing political pressure on Washington. Now look at this from a market perspective. Every rumour of a peace deal sends oil lower. Every denial, threat or escalation sends it back up. But here's what I think traders really need to understand. THIS IS BIGGER THAN OIL. If energy prices remain elevated, inflation expectations could rise again. That makes the Federal Reserve's job considerably harder. Higher inflation expectations could push Treasury yields back up, support the dollar and put renewed pressure on equities. Particularly highly valued technology stocks. But there's another possibility. We've already seen Treasury yields fall despite HOT inflation. Why? Because investors are also worried about growth, borrowing costs and what prolonged higher interest rates could do to the economy. That's what makes this environment so fascinating. We're potentially dealing with TWO competing forces. INFLATION FEARS pushing yields higher. ECONOMIC FEARS pulling yields lower. And geopolitical developments could determine which one dominates. I've spent 18 years watching markets, and one thing I've learnt is that the biggest moves often happen when the market suddenly changes what it's most worried about. My concern now is what happens AFTER the midterms. If there's no meaningful agreement by 3 November, does the pressure to avoid further escalation disappear? Could we see another aggressive repricing in oil, inflation expectations, the dollar and bonds? Quite possibly. I'm watching oil, Treasury yields and the dollar together. Because a temporary dollar correction doesn't necessarily mean the dollar's bigger rally is finished. And here's my bigger thought. THE US MIDTERMS ARE NO LONGER JUST A POLITICAL EVENT. THEY'VE BECOME A MAJOR VARIABLE IN THE GLOBAL ENERGY MARKET. And I think the real danger is traders becoming too comfortable with peace headlines before anything has actually been agreed. Bookmark this. I want to revisit it after 3 November.

BRENT CRUDE: $110+ A BARREL. At least 18 vessels reportedly attacked in the Gulf over the past two weeks. And I think people are seriously underestimating the economic consequences if oil stays this expensive. Think about the chain reaction. Higher oil prices push up petrol, transport and production costs. Businesses either absorb those costs or pass them on to consumers. Inflation stays elevated. Households have less disposable income. Economic growth comes under pressure. Now imagine being a central banker. You're trying to control inflation with higher interest rates, but those same borrowing costs are already putting pressure on businesses and households. And the oil shock is making both problems worse. Here's where it gets particularly interesting for currency traders. Countries importing large amounts of energy face a very different economic shock from countries exporting it. That matters for the euro, yen, Canadian dollar, Norwegian krone and the wider FX market. I've spent 18 years analysing these relationships, and oil is one of the most important markets I'm watching heading into 2027. Because if crude stays above $100, we're going to have to seriously reconsider the outlook for inflation, interest rates and global growth. And I don't think financial markets have finished pricing that possibility.