Bonds edged higher on Tuesday as traders turned their attention to the Federal Reserve's upcoming policy decision, while a decline in oil prices to a three-month low helped alleviate concerns over a renewed inflation spike.
The slide in crude, driven by expectations that shipping through the Strait of Hormuz could soon resume, provided a tailwind for risk assets in Asia. Jeffrey Currie of Carlyle Group noted that flows through the key waterway may not fully normalize until the end of the year, but the prospect of a partial reopening has already eased supply worries.
In currency markets, the dollar held steady as investors awaited the Fed's rate announcement. Asian equities traded mixed, with Japanese stocks gaining on weaker oil but Chinese shares slipping on regulatory concerns.
Meanwhile, shipping industry leaders are cautiously optimistic about the Hormuz reopening, though they warn that insurance premiums and transit costs may remain elevated for months. The resumption could lower global energy prices and reduce inflationary pressure, but risks of further disruptions persist.
As the trading week progresses, all eyes will be on the Fed's forward guidance and any updates on the Iran nuclear deal, which could accelerate the normalization of Gulf shipping lanes.