Iran flexes grip on Hormuz as Trump holds housing bill hostage to voting restrictions

(Originally published June 26 in “What in the World“) Iran demonstrated Thursday that it still controls the Strait of Hormuz by attacking a cargo ship.

Iran’s Islamic Revolutionary Guard Corps struck a Singapore-flagged cargo ship with an attack drone off the coast of Oman. Since Trump agreed last week to a 60-day ceasefire with Iran, traffic through the Strait had recovered to roughly half its pre-war level. Iran declared over the weekend that it had re-closed the Strait, though the U.S. military denied the claim. On Wednesday, however, the IRGC warned ships against trying to traverse the Strait without Iranian permission (and presumably payment of its “fee”). In response to Thursday’s attack, the International Maritime Organization said it was suspending efforts to shepherd the hundreds of ships stranded in the Gulf through the Strait.

Higher oil prices are pushing most prices up for U.S. consumers. The Personal Consumption Expenditures price index rose 4.1% in May from the same month a year ago, according to new data from the Bureau of Economic Analysis, the fastest increase in more than three years. Leading the increase, unsurprisingly, was a 24.3% year-over-year jump in spending on energy products such as gasoline.

But even with energy and food excluded, the PCE index climbed 3.5% YoY. That’s likely to increase concerns that the Fed will raise interest rates to try to slow inflation. Investors still expect the Fed to raise rates in September. While the U.S. economy grew 2.1% in the first quarter from the fourth quarter of 2025, according to the Bureau’s latest estimate, consumer spending grew by a meager 0.5%.

The prospect of higher interest rates is also intensifying fears that markets are in an AI-induced bubble. Ludovic Subran, chief investment officer at Germany insurer Allianz, which manages €800 billion ($909 billion) in assets, said this week that SpaceX’s sale of $25 billion in bonds less than a fortnight after raising $86 billion selling new shares was the latest evidence. “The guy just got $70bn of funny money to play with to get us to space,” Subran told a conference organized by the Financial Times. “Of course, bond investors are not the same as equity investors. Equity investors, you can take them to Mars. Bond investors are, like, ‘where is my coupon?’”

Many analysts have questioned the heady valuations of stocks, as well as the concentration of the market’s rising value into just a handful of technology stocks. But a similar bubble may have also afflicted the market for corporate bonds, where top-rated U.S. companies can borrow money for less than 0.8 percentage points more than the U.S. government. That’s the narrowest spread investors have accepted on corporate bonds since 1998. Put differently, it’s the narrowest risk discount they’ve offered the U.S. government since Bill Clinton was President. By comparison, SpaceX’s bonds offered investors a relative bounty of yield: its bonds were priced to yield at least 1.1 percentage points over Treasuries of equivalent maturities.

Trump may have surrendered to Iran, but his war against America’s democracy rages on. The Supreme Court on Thursday expanded Trump’s power to further restrict immigration to the United States. In a 6-3 decision, the Court allowed Trump to rescind for Haitians and Syrians Temporary Protected Status, a program created by Congress in 1990 that allows people from 17 crisis-afflicted countries to live and work in the U.S. until it is safe to return home.

The decision could lead to deportation for 350,000 Haitians and 6,100 Syrians. Trump’s former Homeland Security Secretary Kristi Noem rescinded TPS for Yemenis earlier this year, though a lawsuit challenging the move has kept the U.S. from deporting the roughly 2,800 Yemenis in the U.S. under TPS.

Critics argue the program has effectively become a form of permanent asylum for citizens of perennially war-torn nations. But asylum is not something Trump envisions the U.S. granting refugees from countries other than South Africa. The court also ruled 6 to 3 that Trump could turn back asylum seekers trying to cross into the U.S. at the border with Mexico. At the same time, the U.S. fertility rate dropped last year to a record low. At its current rate of decline, the U.S. population will begin shrinking in seven years without immigration to prop up growth.

Trump, meanwhile, is trying to hold housing legislation hostage to his demand to reshape U.S. elections. Trump on Wednesday refused to sign a bipartisan housing bill, saying he wouldn’t until Congress passes a separate bill that would give the federal government oversight over state elections, requiring states to verify voters’ U.S. citizenship and share their voter rolls with the federal government.

Trump now has nine days to sign the 21st Century ROAD to Housing Act or it becomes law automatically. Even if he vetoes it, the bill has enough support for Congress to override his veto. The SAVE America Act, by contrast, faces unified Democratic opposition, and Republicans admit they lack the votes to pass it.