The return of the armchair generals

Daily update

Iran struck tankers attempting to traverse the Strait of Hormuz, potentially undermining shipowners’ confidence in US protection. The Houthi struck at tankers in the Red Sea—this has always been a key area of vulnerability. Investors are likely to look for US conciliation as a de-escalation signal, and absent that have pushed oil prices higher.
US war costs extend beyond transferring household savings to oil companies. The House of Representatives passed a defense budget to cover the cost of fighting in the Gulf (and potentially gender affirming care). This is a deficit financed fiscal stimulus, but one that will be implemented quite slowly and which will partially leak to the rest of the world (to the extent that imports are required to meet US military needs).
The ECB meets. No rate cut is expected. No apology for the recent policy error is expected. Hawks on the ECB seemingly believe that central bankers could influence the course of war, reopen the Strait of Hormuz, and bring down the oil price with the hint of a rate hike. In the real world, there is nothing central banks can do to influence this market.
There are some sentiment data releases today, but military matters and armchair generals are likely to dominate markets.