The Iran-backed Houthis captured more islands around the Bab el-Mandeb Strait this week, putting even more pressure on the shipping route Saudi Arabia has increasingly relied on to bypass the Strait of Hormuz.

The Houthis say their offensive in the Red Sea (see previous briefing) is in retaliation for hundreds of Saudi Arabian airstrikes in Yemen. The attacks have forced the kingdom to scale back:

That’s bad news for oil prices: The pipeline, which can normally transport roughly 4 million barrels per day toward the Red Sea, is expected to remain out of service for several weeks. Reuters reported that the outage could threaten as much as 4% of global oil supply if repairs take too long… and that’s on top of the 20% the Strait of Hormuz typically transported before the Iran war.

Meanwhile… China is privately urging Iran to rein in the Houthis (before President Xi Jinping suffered a reported stroke), President Trump insisted that Iran wants to make a deal to end the war, and the UN found “reasonable grounds” to believe the US committed war crimes.

/ Why is this important? The Houthis’ takeover of the waterway could make oil and global shipping even more expensive by threatening one of the few major trade routes still available around the Middle East conflict.

Back at home, that means higher gas and diesel prices along with rising costs for groceries, deliveries, clothing, electronics, and other goods that filter through international shipping.

On the Watchlist: US-Iran Conflict · ↗ Escalating

The war has sent fuel prices sharply higher as the US and Iran battle over access to the Strait of Hormuz. Houthi gains in the Red Sea could give Tehran even more leverage by putting a second major oil-shipping route at risk.

See the full outlook →

And just like that, borrowing is more expensive… yet again. The Federal Reserve unanimously voted to raise interest rates by a quarter point Wednesday, bringing its benchmark rate to a range of 3.75% to 4%.

It’s the first time the Fed has hiked rates since July 2023.

The hike is Kevin Warsh’s first major step as Fed chair to tackle stubborn inflation, which has remained above the central bank’s 2% target for more than five years. But that’s not the only reason for the decision:

The hike came despite Trump’s wishes: President Trump has repeatedly pushed for lower interest rates, recently threatening to cut off trade with dozens of countries where the US runs trade deficits if the Fed refused to cut rates. That includes China, Mexico, Vietnam, and EU members (see map).

Looking forward: Most Fed officials expect to raise rates at least one more time before the end of this year, since inflation still sits well above the central bank’s target. See how the decision can affect your money here.

Half of potential homeowners are waiting for mortgage rates below 5% (they’re currently almost 7%). They may have to wait a while; the chart below shows how mortgage rates moved after previous hiking cycles.

/ Why does this matter? The hike will make credit-card debt, lines of credit, and adjustable-rate loans slightly more expensive. It’s less clear for debt like auto loans and mortgages since they are based on longer-term interest rates, and those may actually come down (like 2004 and 2015) if the market thinks the Fed is serious about fighting inflation.

See what's changed, live data, what we're watching next, and related topics on our Watchlist.

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🏚 Homebuilders are cutting prices… frequently. Builder confidence fell to its lowest level in a year this month, while the average 30-year mortgage rate climbed to 6.76%, its highest in more than a year. Builders are increasingly trying to lure buyers back, with 38% cutting prices and 66% offering some form of sales incentive. For those looking to buy, the plentiful discounts could create opportunities on new homes. Track this topic ->

📦 Imported goods suddenly became more expensive. The next wave of inflation might be sitting at US ports. Import prices jumped 0.7% last month and 7% over the past year, the biggest yearly increase since 2022. Tech is driving much of the increase as prices for computers, peripherals, and semiconductors are now up 19.1% from the same time last year amid the AI investment boom. Higher import costs could eventually raise the price of everyday purchases while simultaneously making it harder for inflation (and interest rates) to come back down. Track this topic ->

💸 America’s income just hit a record high as poverty hits historic lows. Newly released Census data shows median household income rose 2.6% to a record $87,460 in 2025. At the same time, the official poverty rate fell to its lowest recorded level ever, with 34.5 million Americans remaining in poverty. The child poverty rate also hit a record low. Track this topic ->

Home furniture brand Blu Dot blew up on CTV with help from Roku Ads Manager. Here’s how:

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The Environmental Protection Agency announced it is repealing limits on greenhouse gas emissions from coal- and natural-gas power plants, which generate roughly 25% of all US climate pollution.

The Trump administration claims the move will increase flexibility to help meet the massive electricity demand brought on by the AI boom, with the EPA saying it could save the power industry more than $300 billion.

It could also help revive America’s shrinking coal fleet. The EPA’s old regulations required coal plants to capture and store carbon underground, which became too costly for many. According to the Sierra Club:

It also provides a concrete benefit for many Americans: Keeping existing plants running will increase the available electricity supply, which could help keep utility bills from climbing as quickly and reduce the chances of shortages when demand spikes. Average household electricity costs have risen by about 5% in the US over the past year. Check how much they’ve climbed in your state here.

While seeing a smaller number on your utility bill every month probably sounds nice to many, experts argue the rollback could come with a health tradeoff:

The US power industry is massive: If it were its own country, the US power sector would be the world’s sixth-largest greenhouse gas emitter, according to an NYU analysis of 2022 emissions data. See the world’s worst polluters here (scroll for interactive chart).

Will the regulations really be repealed? It’s possible, but the proposal is likely to face heavy legal challenges. If upheld in court, the rule could also prevent future administrations from regulating power plants’ greenhouse gas emissions. 

/ Why should you care? In the short term, the repeal would provide cheaper and more reliable power, helping lower electricity prices at a time when they’ve only increased. However, communities near those plants could be exposed to more air pollution.

Track new developments on household energy costs, the electric grid, climate risk, and more with our Environment index.

European Commission President Ursula von der Leyen proposed making Canada the EU’s first associate member on Wednesday as both navigate increasingly strained relations with the US.

The “associate member” status would be entirely new for the EU, giving Canada a way to deepen ties with the bloc without becoming a full member (because, you know, Canada isn’t in Europe).

While the exact privileges are still being negotiated:

Their relationship is already going well: Canada recently became the first non-European country to join the EU’s roughly $173 billion defense initiative as both sides work to deepen their security ties. Meanwhile, new polling shows roughly 80% of Canadians support closer integration with the EU.

Canada mainly just wants to get away from America: Almost 70% of all Canadian goods go to the US, making it by far Canada’s largest export market. That means tariffs or political disputes in Washington can quickly hit Canadian businesses and workers (like it did last month).

/ How does this affect you? Canada’s push to deepen ties with Europe could eventually redirect trade, investment, energy, and other resources away from the US, making some goods more expensive.

If the move triggers another round of tariffs between the US, Canada, and Europe, Americans could also face higher prices as US manufacturers and exporters lose access to key markets.

Track the latest updates on trade wars, supply chains, and more on the Watchlist.

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