US futures flat as 10-year yield near 4.1% on Iran risk

US stock futures were little changed Sunday as new Iranian demands cast doubt on the Strait of Hormuz reopening and investors awaited inflation data due this week.

"Overall, volatility is expected to remain elevated in the coming week. The combination of US economic data, Federal Reserve expectations, and ongoing geopolitical uncertainty is likely to keep gold highly reactive," Jateen Trivedi, vice president of research at LKP Securities, said.

The 10-year Treasury yield hovered near 4.1 percent, while gold futures jumped 7 percent to $4,399.7 an ounce and silver climbed almost 10 percent to $63.50 an ounce last week. Crude oil traded near $75 a barrel, with the Strait of Hormuz disruption threatening to push prices higher.

The inflation report, due midweek, will be a key input for the Federal Reserve as it weighs the timing of its first rate cut since the pandemic era. The central bank has held its benchmark rate in the 5.25 percent to 5.50 percent range since July 2025, and any easing would mark a shift in policy that could ripple through borrowing costs and risk assets.

Iran's Demands Keep Oil, Bullion on Edge

Iran has said the Strait of Hormuz will remain closed until Washington meets a series of demands, raising the prospect of a prolonged disruption in one of the world's most important oil shipping routes. Any further deterioration in the US-Iran situation could push crude prices higher and revive inflation concerns for oil-importing economies.

For India, which imports a large share of its crude requirement, the stakes are high. A sustained increase in global crude prices would raise the import bill and pressure the rupee. The European Central Bank has also flagged the possibility that oil prices could remain elevated if the reopening of the strait proceeds only gradually.

Inflation Data to Test Rate-Cut Expectations

The US inflation report will be watched not simply as a measure of price pressures but for what it says about the room available to policymakers to support growth through monetary easing. The annual headline CPI rate stood at 3.1 percent as of the June reading, down from a peak of 9.1 percent in June 2022, while core CPI remained sticky around 3.4 percent.

India's July retail inflation data is due Aug. 12, and any renewed pressure from food or energy could complicate the outlook for interest rates there. Chinese economic data due this week could also influence industrial metals and broader risk appetite.

What Investors Should Watch

The market enters the week with no single trigger likely to determine its direction. Corporate earnings will test valuations, the inflation reading will shape expectations around monetary policy, and crude prices will indicate how much geopolitical risk is priced into the macro outlook.

The biggest swing factor remains the US-Iran confrontation. If tensions ease and the Hormuz route begins returning to normal, pressure on crude could decline and allow investors to refocus on earnings and growth. A further escalation, however, could shift attention from company-specific performance to the broader inflation and energy shock.

This article is for informational purposes only and does not constitute investment advice.