Futures Rise, Oil Drops As Market Prices In Iran Deal For Yet Another Day

Summary

Futures Rise, Oil Drops As Market Prices In Iran Deal For Yet Another Day Futures rebounded from the post-FOMC selloff, and oil prices fell as Trump signed the Iran MOU two days early to end the war in the Middle East (in the symbolic Palace of Versailles of all place) and some energy shipments began to transit the Strait of Hormuz. As usual, tech led the parade higher. As of 8:00am ET, S&P futures were up 0.6%, but off overnight session highs, partly unwinding a more than 1% decline after Kevin Warsh signaled the Fed may have to raise interest rates this year to contain inflation; Nasdaq gained 1.3%; pre-market all Mag 7 are higher led by AMZN (+1.2%), META (+1.1%) and NVDA (+1.1%), reversing some of yesterday’s losses. Intel shares jumped more than 8% in premarket trading after Trump said the firm struck a chipmaking deal with Apple (a rehash of previous news but to this Pavolvian market, everything seems to be brand new). Overnight, the biggest headline was that the US/Iran MOU was officially in effect (final deal within 60 days, waiver for Iran to export oil, a $300bn reconstruction fund, terminating all types of sanction, per Axios). Bond yields are lower led by the long-end of the curve as 2y is still anchored by Fed commentary yesterday; 2y and 10y are -1bp and -4bp lower, respectively, the 10Y trading at 4.46%. The USD continues to climb with the DXY adding 53bp this morning. Brent slid 1.4% to around $78.50 a barrel and touched its lowest level since the start of the war while WTI fell -2.6% to $74.78; precious metals are largely flat this morning. US economic data calendar includes weekly jobless claims, June Philadelphia Fed business outlook (8:30am), May Leading Index (10am) and April TIC flows (4pm) In premarket trading Mag 7 stocks are mostly higher (Nvidia +1%, Meta +0.5%, Tesla +0.3%, Amazon +0.2%, Microsoft -0.2%, Alphabet -0.5%). Apple Inc. (AAPL) is up 0.6% after CEO Tim Cook told the Wall Street Journal that the iPhone maker plans to raise prices on its products to offset the increasing costs of memory and storage chips. SpaceX (SPCX) falls 1.7%, set to extend the previous session’s drop, as it wraps up its first week as a public company following a record-breaking listing. Accenture (ACN) tumbles 11% after the IT services company gave a revenue forecast for the fourth quarter that fell short of Wall Street’s expectations. Albemarle Corp. (ALB) is up 1.8% after Citi raised its recommendation to buy from neutral on expected higher lithium prices. Enphase Energy (ENPH) rises 4.1% after Barclays raised the recommendation on the company to equal-weight from underweight, citing its push into selling solid-state transformers to data centers. Hive (HIVE) is up 15% after its subsidiary BUZZ High Performance Computing announced a partnership with Bell Canada, Cohere and Hypertec to build AI infrastructure in Canada. Iren Ltd. (IREN) gains 3.3% as Jefferies initiated coverage of the Bitcoin miner and data center operator with a recommendation of buy on artificial intelligence data center demand. Pfizer (PFE) is down 1.6% after the drugmaker said Chief Financial Officer Dave Denton will step down and leave the company on Aug. 15 for a professional opportunity in consumer goods outside the pharmaceutical industry. Rumble (RUM) jumps 15% after the online video network platform said it plans to operate two core business units: video platform Rumble and cloud and AI-infrastructure business Quake AI, formerly Northern Data. Four big June events are now in the rear view mirror — the first FOMC of the Warsh era, an Iran deal, the SpaceX’s IPO, and the first CPI print over 4% in 3 years. And yet, nothing appears able to dent the ongoing market meltup which is driven entirely by massive debt-funded capex spending into a handful of chip stocks. Ahead of the last trading day of the week for US markets, the peace deal is reducing the risk of further energy-supply disruptions. Stocks have largely shrugged off the turmoil and continued to notch record highs on the back of relentless enthusiasm for AI. Equity markets have come through the tests posed by the debut of SpaceX, Kevin Warsh’s first meeting as Fed chair and the US-Iran peace deal fairly unscathed, said Raphael Thuin, head of capital market strategies at Tikehau. “With the MOU now signed, there’s reason to believe that we may be close to or past peak inflation,” Thuin said. “The market will be able to concentrate on earnings again, like for Micron next week.” Bond investors, however, face the prospect of lingering risks that may keep the higher-for-longer rates narrative intact. Even though US gasoline prices have dipped below $4 a gallon for the first time since March, energy costs have only been one factor in keeping inflation stubbornly above the Fed’s target. US gasoline prices dipped below $4 a gallon for the first time since March, providing relief to consumers after global supply disruption sent fuel costs soaring. In contrast, inflation pressures are likely to hit people in the pocket if they want to buy a new iPhone later this year, with Apple’s Tim Cook telling the Wall Street Journal that the company plans to raise prices to offset surging memory and storage chip costs Despite lower oil prices, front-end Treasury yields remained at their highest level since February 2025, with traders cementing bets for a September US rate hike. In the UK, the yield on two-year gilts jumped six basis points to 4.2%, while the Bank of England kept guidance that it “stands ready to act” on inflation and left its key rate unchanged. The dollar extended gains. A quick look back at the Fed decision: Wednesday’s Fed decision marked the fourth consecutive meeting in which policymakers left rates unchanged. Officials described economic growth as “solid” and highlighted strong productivity gains and capital investment, while making clear that inflation has become a greater concern than labor-market weakness. Warsh has been critical of over-communication and poor forecasting by the Fed, and the new regime is moving away from explicit forward guidance - investors can no longer rely on central bank signals and will have to price in policy uncertainty. The S&P 500 has historically faced challenges following changes in leadership at the Fed. “Half the committee is expecting rate hikes this year, which is a real shot across the bow at the market,” said Bob Michele, chief investment officer and global head of fixed income at JPMorgan Asset Management. “I think they’re getting ready for rate hikes.” As for SpaceX, the company is seemingly sucking retail investors back into equities, flows into US equity ETFs have risen rapidly, notching the second highest-ever monthly flow, Bloomberg notes. Based on the price target of an initiation of coverage by Arete analyst Andrew Beale, SpaceX gets an implied $5.3 trillion valuation by end of 2027. European stocks are missing out on the rally, with the Stoxx 600 down by 0.4%, dragged lower by the mining and autos sectors. Here are the biggest movers Thursday: Edenred shares soar as much 18%, hitting their highest level since early November, after the payment solutions firm confirmed it has been approached by investment funds in the wake of a report of takeover interest from BC Partners Generali shares rose as much as 3.3%, the most in 14 months, after newspaper Il Sole 24 Ore reported that UniCredit has informally proposed exchanging a 10% stake held by the Del Vecchio family holding Delfin in the insurer with its own shares Oxford Instruments rises as much as 4.4% as Peel Hunt upgrades to buy from add and installs a new Street-high price target, based on durability of growth and scope for further operating leverage Man Group shares rise as much as 3.4% to the highest since 2011 as BNP Paribas analysts upgrade their rating on the hedge fund manager to outperform from neutral and raise their target price Informa shares rise as much as 3% as Morgan Stanley said the company has navigated the first five months of its financial year well, with strong results from its Live B2B Events and Academic Markets units SSP advances as much as 5.1%, to the highest in eight weeks, after Davy initiates on the airport-focused food and beverage outlet operator with an outperform recommendation and 225p price target Skistar climbs as much as 11%, the most since March 2025, after reporting third-quarter results which DNB Carnegie says show good cost mitigation and decent future pre-bookings Tesco shares fall as much as 3.7% to their lowest level in two weeks after the UK’s biggest supermarket reported earnings which missed analyst expectations for like-for-like sales Carrefour drops as much as 6.6% as JPMorgan places the French supermarket operator on a negative catalyst watch, saying first-half results on July 23 “might turn out to be a downgrade event” Earlier in the session, Asian stocks rose as oil prices eased after President Donald Trump signed an interim peace deal with Iran to reopen the Strait of Hormuz. The MSCI Asia Pacific Index climbed as much as 0.8% to set an intraday record, boosted by gains in tech names including SK Hynix and Samsung Electronics. South Korea led advances in the region, with shares also rising in Taiwan and Japan. Crude prices continued to fall after Trump said a memorandum of understanding with Iran has taken effect, helping to ease inflation concerns for energy importing countries and offsetting hawkish signals from the Federal Reserve. A gauge of tech shares in Asia rose to a new high.Elsewhere in Asia, central banks in Indonesia and the Philippines — two economies hit hard by the sharp increase in global oil prices following the Iran war — both hiked their policy rates on Thursday. Indonesian stocks held losses, while Philippine shares pared gains. In FX, the Bloomberg Dollar Spot Index reverses an earlier decline, sending the euro below $1.15. The BOE, Switzerland, and Norway’s central banks all held rates. In rates, treasuries curve-flattening sparked by Wednesday’s hawkish Fed meeting extends as 2-year rises back toward highest levels since February 2025 — and within 25bp of the 10-year — while 30-year is more than 6bp lower on the day. Treasury 2-year is more than 2bps cheaper on the day while 10-year is nearly 3bp richer near 4.46% after touching 4.44% during London morning. US 2s10s and 5s30s spreads are 5bp and 6bp tighter respectively, after narrowing 8bp and 11bp to multi-month lows Wednesday. UK front-end underperforms, holding losses after Bank of England held interest rates at 3.75% as it said the recent fall in oil prices was “encouraging.” UK 2-year, 6bp cheaper on the day, had muted reaction to Bank of England policy announcement decided by 7-2 vote. In commodities, WTI crude oil futures are down 2%, off session lows after Iranian President Masoud Pezeshkian released details on the text of the memorandum of understanding ending US attacks. Brent slid 1.4% to around $78.50 a barrel and touched its lowest level since the start of the war as three laden oil vessels controlled by Saudi Arabia’s state tanker giant switched on their signals in the Gulf of Oman after being stuck inside the Persian Gulf since the conflict began. US economic data calendar includes weekly jobless claims, June Philadelphia Fed business outlook (8:30am), May Leading Index (10am) and April TIC flows (4pm) Market Snapshot Top Overnight News An impending wave of oil that’s been trapped inside the Strait of Hormuz is set to be unleashed on Asia, suddenly swamping a region that had managed to make up for lost supply in recent weeks. BBG The average price of U.S. gasoline fell below $4 a gallon on Thursday for the first time in months, after Iran and the United States signed a preliminary agreement to cease hostilities for 60 days and reopen the Strait of Hormuz. The national average for a gallon of regular gasoline fell to a fraction of a penny below $4, down from $4.03 the day before, according to the AAA motor club. NYT The MSCI China Index is on the cusp of a bear market, pressured by weakness in tech and consumer stocks. Alibaba and Tencent were the biggest drags on the day. BBG The Bank of England held interest rates at 3.75% as it said the recent fall in oil prices was “encouraging.” Two of the nine policymakers voted for an immediate quarter-point hike over concerns of persistent inflation: BBG The SNB left its key rate at zero as expected and said it retained its heightened readiness to sell the franc. Separately, the Swiss government trimmed its growth predictions for 2026 and next year, while slightly raising its inflation outlook. BBG Brussels has opened communication channels with the Kremlin in recent weeks to scope out the potential for talks to end the war in Ukraine, as European capitals debate whether to engage directly with Russian President Vladimir Putin. FT Norges Bank left its policy rate unchanged at 4.25%, as expected, but said it would likely be necessary to hike at one of the forthcoming meetings. Norges Bank The U.K.’s unemployment rate inched down in the three months through April while wage growth remained flat, with continued weakness in the labor market reinforcing expectations that the Bank of England will keep interest rates on hold. WSJ Microsoft Corp. has built a big business selling AI models to Chinese companies despite the growing rivalry between the US and China over artificial intelligence. ByteDance Ltd. has generally been Microsoft’s biggest AI customer in recent years, largely using OpenAI models, and is on track to spend more than $1 billion a year on Microsoft AI and cloud services. BBG U.S. President Donald Trump said in a Truth Social post on Thursday that Apple has agreed to work with Intel to design and manufacture its ‌chips in the United States. RTRS Iran Headlines Technical talks between the US and Iran will be held in Zurich on Friday, Al Hadath reported citing sources. Talks will include the legal aspects related to lifting Iranian sanctions, the issue of frozen funds and the Iranian nuclear file. Qatar, Pakistan, Turkey, and Saudi Arabia will also attend the talks. An unannounced negotiation session will discuss issues related to Lebanon and Hezbollah. The fifth round of US-Iran negotiations will discuss Israel's withdrawal along with a timetable for the experimental zone, Al Hadath reported citing a Lebanese source. The source added that the US-Iranian agreement will intensify pressure on Israel to gradually withdraw and that there will be no retreat from restricting weapons to the state and deploying the army in the south. Lebanon is proceeding with direct negotiations with Israel. Swiss Foreign Ministry confirmed that the US and Iran will meet on Friday for initial talks on MoU execution. The Swiss government, following the Iranian commentary, said the plan as it stands is still for the US, Iran, Pakistan and Qatar to meet on Friday in Switzerland to commence talks. US War Secretary Hegseth said they are to review where the right place for basing is, when the Strait of Hormuz opens and are prepared to resume strikes and blockade if Iran does not comply with MoU. US official said the Iran MoU was signed digitally on Sunday by US VP Vance and Iranian Speaker Ghalibaf, which was witnessed by US President Trump, while the US official said Iran MoU was signed on Wednesday by US President Trump and Iranian President Pezeshkian. US official says that Iran is to arrange safe, no-charge passage through Strait of Hormuz for 60 days, according to CNBC. Iranian Foreign Ministry spokesperson Baghaei said the MoU between the US and Iran was decided to be signed digitally, while the plan for negotiating teams in Geneva remains in place, but there will be no signing ceremony in Switzerland. Baghaei stated that the 60-day period had started and that Israel's continued attacks on Lebanon would be regarded as a breach of commitments, while he also commented that the US has begun lifting the blockade on Iranian ships and that no enriched nuclear material will be sent abroad, and the dilution of nuclear material remains an option. Furthermore, he said Iran will reciprocate if the US fails to honour commitments, and that Iran is to charge fees for Strait of Hormuz safety services, as well as stated that Iran and Oman are to manage the Strait of Hormuz security, and noted that Switzerland talks with the US are not yet certain. Iranian Foreign Ministry spokesman said Israel's continued attacks on Lebanon would be regarded as a breach of commitments. The spokesman also said that the 60-day period starts today, according to the text. Iranian Parliament Speaker and top negotiator Ghalibaf said the Strait of Hormuz will not return to pre-war conditions, but this does not mean acting against international laws or maritime navigation, while he added that payment for services through the Strait of Hormuz has been established in the MoU and that USD 300bln has been allocated to be invested in Iran, part of which will be spent on reconstruction. Furthermore, he said Iran's action is contingent on US compliance, with Iran to pursue action-for-action policy, as well as separately commented that Tehran can target ships entering Hormuz if needed, and that Tehran has sovereign rights to charge Hormuz tolls. Source on Telegram posted that several IRGC boats were engaged in unspecified activity in the Strait of Hormuz, and that a US ship broadcast a warning message in Persian to tell them to cease operations and return to port, or else the US Navy would attack them. An Israeli official said Israel has no intention of backing down on its positions and are holding stubborn negotiations with the US over its presence in southern Lebanon. Israeli military operations reportedly continue in Lebanon despite the MoU, while Israel opposes Lebanon ceasefire terms in the US-Iran agreement, according to Al Jazeera. A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed as the region reflected on recent key events, including the hawkish FOMC and Fed chair Warsh's first presser, in which the Fed kept rates unchanged, removed forward guidance, emphasised price stability, and provided hawkish dot plots. This triggered selling in stocks, treasuries and gold, while it boosted the dollar and yields, with money markets now fully pricing in an October hike. Nonetheless, some of the moves have since been pared, to varying degrees, as oil prices gradually declined following the announcement that the US and Iran have signed the MoU for ending the war, which is now in effect, but with the planned talks on Friday in Switzerland, said to not yet be certain. ASX 200 was subdued with most sectors in the red and the declines were led by tech and miners. Nikkei 225 extended on record highs to surpass the 71,000 level as manufacturers benefited from lower oil prices and optimism of the reopening of shipping in the Strait of Hormuz. KOSPI rallied and breached the 9,000 level for the first time amid strength in Samsung and SK Hynix. Hang Seng and Shanghai Comp were lower with underperformance in Hong Kong as the hawkish FOMC and increased prospects of a rate hike this year, pressured the local benchmark, given that any rate hike in the US would force the HKMA to move in lockstep with the Fed to defend the USD/HKD peg. Top Asian News Japan's chief cabinet secretary Kihara said the Japanese government is monitoring FX markets closely and will respond to FX moves as needed. European bourses (STOXX 600 -0.5%) start Thursday's session on a mixed footing despite the US and Iranian presidents digitally signing the MoU. Germany's DAX 40 (+0.1%) is the clear outperformer, while the FTSE 100 (-0.8%) is the laggard as multiple companies trade ex-dividends. European sectors highlight a negative bias. Technology (+0.3%), Industrial Goods & Services (+0.6%) and Telecoms (+0.1%) are the only sectors in the green. To the bottom lies Optimised Personal Care (-1.8%), Basic Resources (-1.9%), and Autos (-1.3%). Top European News Germany's Ifo cut its German economic growth forecast for 2027 to 0.8% (prev. exp. 1.2%). Inflation expected at 2.9% this year and 2.7% in 2027. Swiss Government cuts its 2026 GDP growth forecast to 0.9% (prev. 1.0%) and 2027 GDP growth forecast to 1.6% (prev. 1.7%, long-term avg. 1.8%). FX G10s were initially mixed against a lacklustre USD. However, as the morning progressed, the Dollar found some strength and surpassed the highs made post-FOMC; today’s peak is at 100.63. USD/JPY aggressively sold off earlier in the session from 160.80 to 160.48 but has since pared entirely. GBP was initially flat, but now posts modest losses against the USD. The BoE announcement is due today, where the MPC is widely expected to keep rates on hold in a 7-2/8-1 vote split as recent data and energy moderation support the narrative that bank rate is restrictive. With markets assigning a 95% probability of no-change today, attention will be on the vote split. While consensus is for 7-2/8-1, hawkish dissent from Chief Economist Pill and potentially one or two more policymakers remains possible, and would likely spur a hawkish reaction. In addition to the BoE, GBP will also digest results of the Makerfield by-election which will likely see Labour candidate Burnham emerge as the winner, and challenge incumbent Starmer. Norges Bank was broadly as expected with a fleeting kneejerk lower in NOK, the unwinding of tightening bets by c. 15% of market participants. The 2026 core CPI view was maintained and the 2027 one was trimmed modestly, as expected, while forecasts and commentary still show that inflation is “too high” and the Governor outlined that new information shows “inflation pressures are slightly stronger than we had anticipated earlier”. As such, the Norges Bank points to tightening ahead, roughly in line with market expectations. EUR/NOK +0.3%. SNB kept rates unchanged in a mostly as-expected meeting. EUR/CHF is firmer today, potentially surrounding the fact that commentary around energy/raw materials suggests that the new forecasts do not account for the moderation in energy seen recently; over the medium term, sparking a return to concerns around inflation being too low in Switzerland. As such, EUR/CHF -0.2%. Fixed Income Global fixed benchmarks are trading on either side of the unchanged mark, with price action lacklustre since the European cash open. It appears that fixed benchmarks are taking a breather following this week’s hefty declines in yields, which comes amidst sustained pressure in the energy complex. On the geopolitical front, US-Iran have signed the MoU, which means the Strait of Hormuz is theoretically open for ships to pass through, whilst the US blockade will also be lifted. USTs (-2 ticks) trades within a 109-09+ to 109-20+ range, and well off the lows seen overnight, which stemmed from a hawkish Fed on Wednesday. A full recap can be found on the headline feed, but in brief, the unchanged policy was accompanied by hawkish dot plots and the removal of the easing bias. From a yield perspective, the US 2s10s curve is flatter post-Fed, and currently holding around 27.5bps, a level not seen since Liberation Day (2nd Apr 2025). This has unsurprisingly been led by the short-end, following the hawkish Fed. However, should inflation begin to ease later this year, there is some chance that the spread begins to widen once again, with short-end yields reflecting a less hawkish Fed. The long end may also be affected, with focus on Chair Warsh announcing a dedicated task force to review the Bank’s balance sheet. Any hints of an acceleration of the roll-off would undoubtedly lead to a considerably steeper curve. Bunds (-9 ticks) and Gilts (U/C) trade in line with peers. Focusing on UK paper, traders will await the BoE this afternoon and then the start of the Makerfield by-election. In brief, the BoE is expected to keep rates on hold at 3.75%, with a mixed vote split. Some see in a range of 8-1 to 6-3. Thereafter, attention shifts to domestic politics, whereby a Burnham victory could see him launch a leadership challenge; for reference, he is viewed as the worst candidate for Gilts. There is a full preview in the Research Suite for those interested. France sells EUR 13.999bln vs exp. EUR 12-14bln 2.40% 2029, 3.25% 2032, 2.00% 2032 and 3.00% 2034 OAT. Spain sells EUR 5.83bln vs exp. EUR 5-6bln 3.00% 2033, 3.40% 2036 and 4.90% 2040 Bono. Commodities Crude futures are softer, with WTI Aug'26 slipping below the USD 75/bbl mark (USD 73.42-75.75/bbl range) while Brent Aug'26 oscillates around a USD 78/bbl handle (USD 77.10-79.06/bbl band). US and Iranian leaders signed the MoU digitally, which has weighed on the energy complex. The deal allows for the immediate resumption of Iranian oil exports and possible access to a USD 300bln development programme, backed by sanctions waivers and unfreezing overseas funds. In exchange, Iran will never produce nuclear weapons. The MoU also confirmed earlier reporting that Iran's nuclear file will be deferred to talks for 60 days. More recently, reporting by Al Hadath noted technical talks between the US and Iran will begin in Zurich on Friday, in which the legal aspects related to lifting Iranian sanctions, the issue of frozen funds and the Iranian nuclear file will be discussed. Attention remains on whether Israel will back away from fighting Hezbollah in southern Lebanon. An Israeli official said that Israel has no intention of backing down on its positions and is holding stubborn negotiations with the US over its presence in southern Lebanon. However, energy benchmarks were unreactive following those comments. Spot gold has slightly pared back Wednesday's losses which were driven by a hawkish Fed meeting. After dipping to a trough of USD 4219/oz yesterday, the yellow metal ventured higher throughout the Asia-Pac session and reached USD 4330/oz at best this morning. 3M LME Copper gapped lower and fell to a trough of USD 13.67k/t post-FOMC. In brief, the Fed held rates unchanged at 3.50-3.75%, however, the SEP highlighted a hawkish bias. 3M LME Copper has since traded rangebound, holding in a USD 13.67k-13.78k/t band. Persian Gulf Petrochemical Industries CEO said 89% of damaged petrochemical units returned to production, and the process of redesigning and strengthening production capacity is underway, ISNA reported. Three Saudi Arabian-flagged supertankers laden with a combined 6mln barrels of crude sailed through the Strait of Hormuz on Thursday, according to shipping data. China's State Planner said effective at midnight June 18th, domestic gasoline and diesel prices will be cut by CNY 515/t and CNY 495/t, respectively. Central Banks The Bank of England held interest rates at 3.75%, as expected, as it said the recent fall in oil prices was “encouraging,” Two of the nine policymakers voted for an immediate quarter-point hike over concerns of persistent inflation. The committee lowered its estimate of peak inflation to 3.25% in the fourth quarter of this year, below the 3.6% it had projected in April. The SNB held rates unchanged at 0.00%, as expected. The Bank stated that the readiness to intervene in FX is higher and that monetary policy is appropriate to keep inflation within the range consistent with price stability. On inflation, the Bank stated that medium-term inflationary pressure, however, is virtually unchanged compared with the last monetary policy assessment. SNB Chairman Schlegel said that monetary policy continues to have an expansionary effect. Geopolitical uncertainty remains, risks of strong upward pressure on the CHF remains. "If necessary, we therefore have an increased willingness to intervene..." in FX. The Norges Bank held rates unchanged at 4.25%, as expected. The Bank stated that it will likely be necessary to raise the policy rate further at one of the forthcoming monetary policy meetings. Governor Bache stated in the release that inflation is too high and that new information indicates that inflation pressures are slightly stronger than we had anticipated earlier. The Bank's MPR was also revised higher, forecasting just above 4.5% at the end of 2026. Ukraine geopol Russia's Defence Ministry said 555 Ukrainian drones were shot down over Russian areas overnight, according to IFX. Russia attacked Kyiv with missiles and explosions heard in the capital, while it was separately reported that several Moscow airports have halted flights and Moscow's mayor announced that drones hit an oil refinery in a massive attack, according to TASS. US Event Calendar 8:30 am: Jun 13 Initial Jobless Claims, est. 225k, prior 229k 8:30 am: Jun Philadelphia Fed Business Outlook, est. 10, prior -0.4 8:30 am: Jun 6 Continuing Claims, est. 1789k, prior 1795k 10:00 am: May Leading Index, est. 0.1%, prior 0.1% 4:00 pm: Apr Total Net TIC Flows, prior 150.7b 4:00 pm: Apr Net Long-term TIC Flows, prior 81.3b DB's Jim Reid concludes the overnight wrap Kevin Warsh’s first appearance as Fed Chair yesterday proved to be a momentous one, with a hawkish dot plot and Warsh’s inflation-fighting rhetoric leaving a sense that rate hikes are firmly under consideration. This shift led investors to fully price in a Fed hike by October, with the repricing weighing on risk assets and sending the S&P 500 -1.21% lower. However, futures are erasing most of this decline overnight following news yesterday evening that US and Iranian leaders signed an MoU to end the war. Starting with the Fed, while the FOMC held rates steady for the fourth meeting in a row, the updated dot plot saw nine of eighteen participants pencil in at least one hike by year-end, and six expecting two hikes or more. A much-shortened post-meeting statement not only dropped the earlier dovish-leaning forward guidance but also included an unambiguous commitment to “deliver price stability”. Warsh then focused on inflation-fighting credibility in his press conference. At the outset he acknowledged the now 5-year-long upside miss on inflation, before repeatedly noting the importance of the Fed delivering on its “price stability” mandate. So, while the new Chair eschewed any policy guidance, including by not submitting his own forecast to the dot plot, he did not push back against the hawkish dot plot signal and did not lean into any potential dovish arguments. Separately, Warsh announced the establishment of task forces in five areas, including communications and the Fed balance sheet. In all, the meeting left an undeniably more hawkish Fed tone. While our US economists maintain their baseline view that the Fed is likely to keep rates steady, they note that a Fed that does not rely on forward guidance might prove to be nimbler, setting up the potential for earlier rate hikes than anticipated. That shifting Fed rhetoric led to a dramatic fed funds repricing, with chances of a September hike rising from 36% to 80% by yesterday’s close and 38bps of hikes being priced in by year-end (+17.2bps on the day). In turn, 2yr Treasury yields (+13.1bps) saw their largest increase in over a year to a 15-month high of 4.19%. However, the 10yr yield was up by a more moderate +4.9bps while 30yr yields actually ended the day -1.2bps lower. That marked the sharpest daily flattening in the Treasury curve since April 9 last year, when Trump paused the Liberation Day tariffs following a sell-off in Treasuries. The sharp Fed repricing weighed on risk assets, with the S&P 500 (-1.21%) and the NASDAQ (-1.34%) sliding, having been little changed pre-FOMC. The Mag-7 (-2.82%) led the decline, but the losses were broad as the S&P 500 saw the most daily decliners (429) so far this year. The aggregate decline would have been even worse were it not for the Philly semiconductor index (+1.38%) recovering after Wednesday’s losses. The rates repricing also weighed on assets such as gold (-1.71%) and Bitcoin (-2.15%). On the other hand, the dollar (+0.55%) gained against all G10 currencies. However, this sell off has partially reversed overnight following news shortly after the US close that the Presidents of the US and Iran had electronically signed an interim deal to end hostilities, with this MoU coming into effect. The signing had initially been expected on Friday, but Axios reported earlier yesterday that this may be brought forward. According to reports, the 14-point MoU foresees a rapid re-opening of the Strait of Hormuz, with an extendable 60-day period to negotiate a final deal that would cover nuclear issues and broad sanctions relief. The deal also envisages a $300bn fund for the "reconstruction and economic development" of Iran, though Trump stressed yesterday that the US will not be investing in Iran and that Iran would benefit only if it “behaves”. Following the MoU signing, Brent crude is -1.85% lower at $78.08/bbl as I type, more than reversing a +0.75% rise yesterday. This has led to a positive backdrop for major Asian markets this morning. The Nikkei (+1.82%) and the KOSPI (+1.87%) are leading the gains and pushing to new highs, supported by strong advances in semiconductor stocks. Elsewhere, China’s CSI (+0.12%) and Shanghai Composite (-0.37%) are mixed, while the Hang Seng (-1.70%) is underperforming. Australia’s S&P/ASX 200 (-0.51%) is trading a little lower. Outside Asia, futures on the S&P 500 (+0.70%) and Nasdaq (+1.09%) are recovering most of Wednesday’s losses, but those on the STOXX 50 (-0.60%) are catching down to the earlier decline on Wall Street. Meanwhile, 10yr Treasury yields are down -3.9bps to 4.45% as I type. In other corners of the market, the Japanese yen is largely unchanged, after falling -0.14% yesterday to a post-2024 low of 160.65 against the dollar. However, that decline was smaller than for other G10 currencies, with the restrained moves coming as the yen reached levels that triggered FX intervention back in late April. Earlier yesterday, European equities advanced for a second day amidst optimism over the US-Iran deal. The Stoxx 600 (+0.52%) and Italy’s FTSE MIB (+0.31%) reached fresh highs, while the DAX (+0.10%) and FTSE 100 (+0.14%) made smaller advances. European bonds were mixed, with 10yr yields on bunds (-0.2bps), OATs (+0.3bps), BTPs (-0.7bps) little changed, while front-end yields moved slightly higher, with those on 2yr bunds up +2.1bps. Investors priced 32bps of ECB hikes by year end (+0.7bps yesterday), with ECB’s Simkus saying he expects “at least one more” rate hike by the ECB and that it’s important to cap inflation expectations. Gilts were the notable outperformer in the rates space as investors looked forward to today’s Makerfield by-election, with the 10yr yield down -3.7bps to 4.7%. Greater Manchester's Mayor Andy Burnham is standing for the governing Labour Party and is widely expected to win, with results of the by-election expected in the early hours UK time tomorrow. This election could have important implications for markets as Burnham has said he'd stand in a leadership contest to replace incumbent UK Prime Minster Keir Starmer, with Polymarket now pricing a 77% likelihood of Burnham becoming PM by year-end. Burnham has said in the past that Britain shouldn't be "in hock" to the bond markets and suggested looser fiscal policies. However, Burnham has since committed to keeping the fiscal rules of the current government, leading investors to reduce the risk premium that had emerged in gilts and pound sterling. Otherwise in the UK, the other main event today will be the BoE decision. Investors widely except the central bank to keep rates unchanged, with attention more focused on the vote split (our economists expect 7-2), and any evolution in guidance. This has come against a backdrop of still-sticky inflation, although yesterday’s dovish inflation print for May should boost the MPC’s confidence to buy more time. The print saw headline (+2.8% y/y vs +3.0% y/y expected) and core CPI (+2.6% y/y vs +2.7% y/y) miss expectations, though services (+3.7% y/y vs +3.6% y/y) fell in line with forecasts. Reviewing yesterday’s other data, we saw a beat for US retail sales in May, with headline retail sales up +0.9% m/m (vs +0.6% m/m expected) and with retail control rising +0.7% m/m (vs +0.4% expected). With core goods CPI having eased in May, the beat for retail control was a real one rather than just due to higher prices. Finally, rounding off yesterday’s central bank news, Sweden’s Riksbank left its policy rate unchanged at 1.75% as expected, but raised its policy rate forecast for year-end up 5bps to 1.82%. To the day ahead now, in addition to the BoE, the SNB and Norges Bank will also hold their policy decisions. A slate of second-tier data releases includes the US June Philadelphia Fed business outlook, May leading index, initial jobless claims, UK unemployment rate, Italy April current account balance and Eurozone April construction output. Finally, today will see the start of the European Council summit (through June 19). Tyler Durden Thu, 06/18/2026 - 08:28

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Jun 22, 2026strikeUnverifiedUSIsraelIran

Iran agrees to invite IAEA inspectors back, says US

○ 1 source

Iran agrees to invite IAEA inspectors back, says US This is ‘the first step in permanently ending a nuclear weapons programme in Iran’, said US Vice-President J.D. Vance Tehran has agreed to invite International Atomic Energy Agency inspectors back into the country, US Vice-President J.

D. Vance said on Monday, after a first round of US-Iran talks towards ending the Middle East war. “The Iranians have agreed to invite IAEA inspectors back into their country,” Vance told reporters at Switzerland’s isolated Burgenstock resort, where his talks with Iran’s chief negotiator Mohammad Bagher Ghalibaf opened on Sunday.

“That is a major milestone for the American people and the first step in permanently denuclearising or permanently ending a nuclear weapons programme in Iran,” he said. The IAEA estimates that Iran had 440 kilograms (970 pounds) of uranium enriched to 60 per cent – close to the level needed for a bomb.

Iran suspended cooperation with the IAEA after Israel and the US launched a previous wave of attacks in June 2025, and inspectors have not seen the material since.

Agence France-Presse

Jun 22, 2026strikeUnverifiedUSIsraelIranProxyEUChina

Stocks Drift As Chips Extend Gains, Oil Slides On Positive US-Iran Talks

○ 1 source

Stocks Drift As Chips Extend Gains, Oil Slides On Positive US-Iran Talks

Futures are modestly lower coming off the US holiday weekend, after equities finished higher last week with both Dow and Russell clocking new ATHs and SPX finishing in the green for the 11th time in the last 12 weeks. As of 8:00am ET, S&P 500 futures edged down 0.1% while Nasdaq 100 contracts are higher by 0.1% with chips outperforming as usual while hyperscalers, aka "check payers" down as all Mag 7 are lower with TSLA (-1.4%) and GOOGL (-1.6%; Google’s DeepMind VP John Jumper is leaving the company to join Anthropic) being the biggest laggards. Overseas, Asian markets mostly higher overnight with China and Japan the big gainers, up over 1.5%. European markets higher, up ~0.3%. Big development over the weekend revolved around US-Iran talks in Switzerland, where both sides ultimately highlighted progress following some earlier headline noise. Donald Trump again threatened strikes on Iran if Hezbollah keeps attacking Israel, & US and Iran set up a communication line to avoid incidents and ensure safe passage of shipping through the Strait of Hormuz. In the UK, PM Keir Starmer announced his resignation outside 10 Downing Street. The pound erased losses after briefly touching a 2026 low, while gilts rallied as an orderly leadership transition took shape. Bond yields are 2-4bp higher, while the USD is largely unchanged. WTI crude fell $-0.58 to $75.27 reversing all earlier gains while Brent traded around $79. Gold and silver are higher as is bitcoin. There is little on the corporate calendar and scant macro data, leaving traders with little direction until Micron’s earnings due Wednesday and the Fed’s preferred inflation gauge on Thursday take center stage. Fed speaker slate includes Waller at 9am; Williams, Goolsbee, Kashkari and Barkin speak later this week

In premarket trading, SpaceX shares slid more than 5% in premarket trading, putting the stock on pace for a third straight loss. Meanwhile, the semi meltup continues: chipmakers including Intel rallied. Getty Images soared more than 300% after inking a display partnership with ChatGPT owner OpenAI. Here are the notable premarket movers:

Alphabet (GOOGL) -1.7%, Tesla (TSLA) -1.3%, Amazon (AMZN) -0.8%, Nvidia (NVDA) -0.2%, Meta Platforms (META) -0.9%, Apple (AAPL) -0.8%, Microsoft (MSFT) -0.4% Apogee Therapeutics (APGE) climbs 48% after AbbVie agreed to buy the company for $10.9 billion to bolster its anti-inflammatory portfolio amid growing competition for its best-selling drug. Arcosa (ACA) gains 7% after CRH said it has signed an agreement to acquire 100% of the provider of building materials in an all-cash transaction for $150 per share. Definium Therapeutics (DFTX) gains 32% after announcing positive topline results from a Phase 3 study evaluating a single dose of an orally disintegrating tablet in adults with major depressive disorder. Fervo Energy (FRVO) gains 8% after the geothermal-energy company agreed with Pacific Northwest National Laboratory and Nvidia to develop a digital twin platform for Enhanced Geothermal Systems technology. Getty Images (GETY) soars 156% after the company announced a display partnership With OpenAI. Regenxbio (RGNX) climbs 8% after the Wall Street Journal reported that the FDA has agreed to reverse the rejection of the firm’s rare-disease drug. SpaceX (SPCX) is down 5%, putting the stock on pace for a third straight loss. A peppering of M&A and ECM news is spicing up an otherwise quiet Monday morning. Budget airline EasyJet has rejected three offers by US private credit giant Castlelake. AbbVie is closing in on a nearly $11 billion deal to buy inflammatory disease drug developer Apogee Therapeutics, according to the FT, which also reports that building materials group Arcosa could be close to a takeout by larger rival CRH. SpaceX kicked off its debut US dollar high-grade bond offering expected to be at least $25 billion.

The big geopolitical development over the weekend revolved around US-Iran talks in Switzerland, where both sides ultimately highlighted progress following some earlier headline noise. Oil traders took comfort from evidence of progress in Middle East talks even as President Donald Trump threatened to strike Iran if Hezbollah militants continue to attack Israel. Vance said the warring sides set up a mechanism to keep the Strait of Hormuz open, while Iran agreed to invite nuclear inspectors.

“Even during the midst of the conflict in the Middle East, equities still priced a positive outcome,” said Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management. “It seems logical that markets don’t rally too hard on something which they had already priced to a fair degree.”

Traders also followed the latest developments in UK politics as Prime Minister Keir Starmer announced his resignation outside 10 Downing Street. The pound erased losses after briefly touching a 2026 low, while gilts rallied as an orderly leadership transition took shape. The departure of Starmer is putting Britain on course for its seventh premier in a decade and paving the way for Andy Burnham to replace him. The former mayor of Manchester announced his candidacy hours after Starmer’s resignation and received the backing of Wes Streeting, a potential rival. Starmer said nominations for a new Labour leader will open July 9 and that a contest will be finalized by Sept. 1. The question for investors is about the impact on the UK’s finances if Burnham were to become prime minister. A slew of all-but-forgotten niche option positions betting on an oil glut are coming back into play as crude cools.

“Markets would be watching for Burnham’s pick of Chancellor,” wrote Mohit Kumar at Jefferies. “The fear is that Burnham’s policies are left-leaning and if the new chancellor is not credible, it would raise concerns over deficits and borrowing.”

The AI trade still works and investors should keep it, say Goldman Sachs traders in charge of thematic investing, baskets and equity structuring.

In geopolitics, China has imposed export controls against US rare earth firms, in response to the Pentagon’s accusations against some of China’s biggest companies supporting the Chinese military.

Meanwhile, Trump’s administration is rolling out new tools with the same protectionist goals after the Supreme Court ruled his sweeping global tariffs to be illegal. The rising cost of living, and corruption, are shaping up to be major campaign battlefronts in races that will determine control of the US Congress.

Bond traders, recently forced to reposition for the possibility of higher interest rates ahead, are looking to Thursday’s US personal consumption expenditures price index for a read on whether the market’s hawkish stance is warranted. Forecasters expect the index, the Federal Reserve’s favorite inflation gauge, to show acceleration on both a monthly and year-over-year basis in May. Fed Governor Christopher Waller is due to speak later on Monday. Bloomberg Economics’ head Anna Wong expects a hot PCE reading will likely reinforce the hawkish tilt by the Fed at its June meeting.

Ahead of Micron’s earnings, a leveraged ETF linked to rival SK Hynix is lifting an option cap. Rising leverage is also showing up in FINRA’s margin debt statistics, and the Roundhill DRAM ETF has recorded 19 straight days of inflows and AUM surpassed $20 billion. Micron’s fiscal 3Q revenue may exceed consensus by about 13% and guidance by 18%, notes BI.

European stocks struggled to derive much benefit with the Stoxx 600 down 0.1%, with construction and media stocks leading declines, while technology and energy shares are the biggest outperformers. Here are the biggest movers Monday:

Infineon shares rise as much as 5.3%, after CFO Sven Schneider maintained his bullish stance on the chipmaker’s growth over the next few years, while Bernstein increased its price target for the stock EasyJet shares rise as much as 5.4% to the highest level in almost a year after the British budget carrier rejected a third takeover proposal from US investment firm Castlelake BioArctic jumps as much as 10%, the most in more than four months, after the Swedish biopharma company signed a research and collaboration agreement with Eli Lilly for its BrainTransporter technology LISI gains as much as 7.6%, reaching a record high, as Berenberg initiates on the component maker with a buy rating, citing entrenched positions in automotive and aerospace fasteners Sanofi shares slip as much as 2.1%, making them the biggest laggard by index points in the Stoxx 600’s healthcare subgroup on Monday morning Babcock shares fall as much as 5.7%, the most since February, as the defense contractor posts full-year results UBS shares are slide as much as 0.6%, falling for a second straight session after being downgraded at Zuercher Kantonalbank on valuation grounds, with the Swiss bank having hit a fresh 2008-high last Thursday Asian stocks surged to a record as chipmakers and other artificial intelligence-linked firms rallied amid optimism surrounding US-Iran peace talks. The MSCI Asia Pacific Index rose as much as 1.1%, with information technology the top performing sector. Markets in Taiwan, mainland China and Japan led regional gains. Continued interest in AI and semiconductor plays drove Taiwan’s benchmark to a record high. South Korea’s memory maker SK Hynix also rose to an all-time high on expectations over its planned ADR listing, helping to erase earlier losses in the Kospi gauge. Meanwhile, equities in Hong Kong underperformed, as weak consumption data weighed on sentiment and investors chased the AI rally elsewhere. A gauge of Chinese stocks listed in the city was headed for a bear market before trimming some losses.

“We continue seeing liquidities leaving ‘old Techs’ in Hong Kong including Tencent, Alibaba and Baidu to chase AI-related stocks in Japan, Korea and Taiwan,” said Steven Leung, executive director at UOB Kay Hian.

In FX, the pound is down a handful of pips near its year-to-date low. The yen is the weakest of the G-10’s, falling 0.3% against the greenback.

In rates, treasuries decline, pushing US 10-year yields up 3 bps to 4.48% as trading resumes after Friday’s US cash-market holiday. US yields are 2bp-4bp higher on the day with losses led by front-end tenors, flattening 2s10s and 5s30s by 0.5bp and 1.5bp respectively. 10-year around 4.48% is cheaper by 3bp with bunds and gilts in the sector outperforming by 5bp and 6.5bp. European bonds outperform led by gilts after Wes Streeting backed Andy Burnham to be new UK Prime Minister, removing a key uncertainty after Keir Starmer’s resignation. Oil trades lower on signs of diplomatic headway between the US and Iran. IG dollar issuance slate includes a few items so far. Dealers forecast about $50 billion of US investment-grade bond sales this week, likely to include a jumbo bond offering from SpaceX. Treasury auctions resume Tuesday with $69 billion 2-year notes, followed by 5- and 7-year note sales Wednesday and Thursday

In commodities, Brent crude futures fall 1.6% after Iran said there had been “major progress” in all-night discussions with the US. WTI crude oil futures are down 0.8% near session lows after US Vice President Vance says Hormuz is open and talks with Iran have made progress. Precious metals advance, with spot silver rising 2%.

US event calendar: US economic data calendar empty for the session. Fed speaker slate includes Waller at 9am; Williams, Goolsbee, Kashkari and Barkin speak later this week

Market Snapshot

Top Overnight News

The U.S. and Iran made progress during talks in Switzerland on Monday toward reaching a final deal within 60 days, including the agreement to establish a committee and a mechanism to end hostilities in Lebanon. CNBC The US and Iran set up a communication line to avoid incidents and ensure safe passage of shipping through the Strait of Hormuz. BBG UK PM Keir Starmer announced his resignation and outlined plans for a successor to take office by September. The move clears the way for Andy Burnham to become Britain’s seventh PM in a decade. Former Health Secretary Wes Streeting said he backed Burnham to become PM. The pound hovered near its weakest level of the year while gilts were little changed. BBG China announced on Monday that it will add 10 American firms to its export control list, including two rare earth firms, while also restricting 46 US firms from government procurement, signalling it would respond to Washington’s recent expansion of a military blacklist, even amid a broader stabilization of bilateral ties. SCMP South Korea’s exports jumped again in early June, thanks to AI fueling a sustained boom in the semiconductor sector. BBG Chevron signed a 20-year deal with Microsoft to supply natural-gas fired power to a planned West Texas data center that may become one of the largest in the US. BBG Semis are on pace to finish as the most net bought global subsector for a second straight year, with net allocations now at record highs. GS Prime Brokerage Major investors warned that Fed Chair Warsh’s push to axe the Fed’s guidance on the direction of monetary policy could increase volatility in the Treasury market and drive borrowing costs higher: FT. Hong Kong is in talks with Chinese authorities to expand cross-border investment channels and grant mainland buyers access to local IPOs. BBG Colombia elected Trump ally Abelardo de la Espriella president by a razor-thin margin. The preliminary result was immediately challenged by outgoing President Gustavo Petro, who backed rival candidate Senator Iván Cepeda. BBG US Secretary of State Rubio congratulates Colombia's presidential candidate De la Espriella who leads against leftist rival Cepeda following the Colombian election. Democrats are set to make corruption a major campaign battlefront in the midterms as polling suggests voters are eager to see lawmakers take on conflicts of interest and self-enrichment by leaders. BBG US Southern Command announces that Task Force Southern Spear has conducted a strike on a vessel operated by designated terrorist organisations in the Caribbean. US Secretary of State Rubio plans trip to the Middle East next week: Kuwait, UAE and Bahrain at the moment: Axios US President Trump told Axios that he doesn’t see Anthropic PBC as a national security threat, despite his administration recently taking steps to cut off foreign access to the tech company’s most advanced AI models. Furthermore, Trump said that it was seen as a threat last week, but relations have improved since with the AI giant. US Department of Agriculture announced three new cases of screwworm to take the total number of domestic detections to 15 cases. Iran Headlines: Latest News

US and Iran talks opened in Switzerland on Sunday after US VP Vance arrived in Switzerland and the Iranian delegation led by chief negotiator Ghalibaf, which included Foreign Minister Araghchi, arrived on Saturday, while Pakistan’s Premier Sharif and military chief Munir travelled to Switzerland to join the US-Iran talks. Iran's delegation reportedly left the negotiation site in protest against statements by US President Trump, while Fars also reported that Iran halted talks with the US after Trump threatened strikes over Hezbollah’s actions in Lebanon. Iran said Trump’s threat is a blatant violation of the MoU and halted talks in Switzerland, while it is reviewing a response to Trump’s threats. However, sources cited by Al Hadath later stated that the Iranian delegation had not left the negotiation headquarters at the Burgenstock resort and the Iranian delegation head discussed a joint statement draft with mediators. US President Trump threatened to resume bombing and take over the Strait of Hormuz if a deal is not reached, while Trump said the US may take tolls if it has to and that he has a 60-day option, in which he can do whatever after it. Trump stated he spoke with Iranian officials and used expletive language in the call with Iranian officials on Hormuz, as well as threatened that they won’t have a country if Hormuz is closed, according to Fox. US President Trump posted that Iran must immediately stop their proxies in Lebanon from causing trouble, or else the US would hit Iran very hard again, “just like we did last week, only harder!!!” Trump separately commented that there will be no tolls in the Strait of Hormuz, unless they are imposed by the US. UKMTO reported an incident in which a cargo vessel was approached by a craft with six armed persons onboard 92 nautical miles southwest of Yemen’s Mukalla in the Gulf of Aden. Israeli army chief said the Lebanon ceasefire is fragile and forces remain ready for combat. Israeli military convoy reportedly entered southern Syria’s Quneitra region, near the Israeli-controlled Golan Heights. Qatar and Pakistan issue joint statement on conclusion of US-Iran talks in Switzerland, while Qatar said first session of the US-Iran high level talks has concluded and that talks were conducted in a positive, constructive atmosphere. said:. Technical talks are to continue for remainder of the week. US and Iran agreed to de-confliction cell over Lebanon. Encouraging progress has been made, including creation of a mechanism for further technical talks. Parties agree to establish high-level committee to provide political oversight on mediation. High-level committee agrees on roadmap to reach final deal within 60 days. "The negotiations of the main Iranian delegation in Switzerland have ended, however, experts are still in Switzerland and are following up on the implementation of the memorandum of understanding", Tasnim reported citing sources. Iranian negotiating team member said executive procedures about the release of Iranian frozen funds have taken place with the Qatari delegation and that a draft has been finalised regarding waivers of Iranian oil sanctions, which will be issued soon, although negotiations about other subjects will not take place if the war does not end in Lebanon. "No negotiations have taken place on the nuclear file so far", Tasnim reported citing a source. US diplomat said talks included robust discussions on a nuclear deal and enforcing the ceasefire in southern Lebanon, while talks also involved clarifying the messaging on the Strait of Hormuz. Furthermore, a US official involved in the negotiations told Al Jazeera that they held in-depth discussions on all elements of the nuclear agreement, and that mechanisms have been worked on to prevent escalation and ensure the strait remains fully open. Pakistani Army Chief said negotiating parties reached success stage, according to Al Arabiya. US official involved in the negotiations told Al Jazeera that they held in-depth discussions on all elements of the nuclear agreement, adds mechanisms have been worked on to prevent escalation and ensure the strait remains fully open. Sources cited by Al Arabiya said an anticipated statement will be issued by the Iranian and American negotiators and the mediators. Sources cited by Al Hadath stated that the Iranian delegation has not left the negotiation headquarters at the Bürgenstock resort and Iranian delegation head discusses joint statement draft with mediators. Tasnim reported Iranian delegation refused to return to negotiations but message exchanges continue through intermediaries. Iranian Commentary:

Iran's Foreign Minister Araghchi posted Pakistani and Qatari mediation delivered major progress to end Lebanon War, oil and petrochem exports are waived, blockade lifted, frozen assets released, and major reconstruction & development plan launched for Iran. Iran's Foreign Ministry said the technical team is to continue work, but negotiation delegation work has concluded, adds significant progress achieved in quadrilateral talks in Switzerland. Spokesman said groundwork for starting negotiations for the final agreement was discussed. Iranian Foreign Ministry Spokesperson Baghaei said Iran is working on safe passage mechanism for Hormuz and that Iran reported progress on oil sales and asset unfreezing, adds the war in all fronts, including Lebanon, must end. Iranian Supreme Leader adviser Rezaei said the US is responsible for Israel's actions in Lebanon and Iran will hold the US accountable in the event of a threat against Iran. Iranian Deputy Foreign Minister Gharibabadi to lead the technical team in Switzerland, Sky News Arabia reported. Iran resumed oil loading from Kharg Island after about a six-week halt, following the lifting of the US blockade of its ports. Lebanon/Israel:

Al Jadeed News cites Haaretz source stating the Israeli army will be forced to partially withdraw from the Blue Line in Lebanon. Israeli army will be forced to partially withdraw from the yellow line (buffer zone), Al Jazeera reported, citing Israel's Haaretz sources. Israeli Foreign Minister Saar told his New Zealand counterpart, "Israel will respect the ceasefire in Lebanon as long as it won’t be breached by Hezbollah.". Israeli political and security cabinet will convene on Thursday amid US-Iran talks, N12 reported. Israeli officials are dismissing reported of an agreement to withdraw from certain points in southern Lebanon, amid a lack of US pressure to do, Maariv's Barsky reported. Officials add, "because in Washington they understand the Israeli position: no partial withdrawal, no point-specific withdrawal, and no diplomatic 'gesture'.". And, "as long as the Hezbollah threat persists, there is no change in the deployment of forces and no intention to relinquish the security positions in southern Lebanon.". Lebanese presidency discussed the issue of consolidating the ceasefire in Lebanon, in a call with Qatari PM and US's Vance. Other:

Two South Korean vessels were said to have passed through the Strait of Hormuz after US and Iran signed a ceasefire MoU. Three India-linked supertankers re-emerged in the Gulf of Oman, which suggests an increase in traffic through the waterway. A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed with price action choppy following the recent conflicting headlines concerning US-Iran negotiations in Switzerland, as the Iranian delegation was said to have walked out of talks following Trump's renewed threats to resume bombing them if a deal is not reached and if they don't stop their proxies in Lebanon from causing trouble. However, the reports that gradually followed were more encouraging as mediators stated that talks were conducted in a positive, constructive atmosphere and technical talks are to continue for the remainder of the week, with the US and Iran agreeing to a de-confliction cell over Lebanon. Furthermore, the parties agreed to establish high-level committee to provide political oversight on mediation and on a roadmap to reach final deal within 60 days, while Iran's Foreign Minister Araghchi confirmed that mediation delivered major progress to end the Lebanon war, as well as stated that oil and petrochem exports are waived, blockade is lifted, frozen assets released, and that a major reconstruction and development plan was launched for Iran. ASX 200 struggled for direction as strength in gold miners and financials was offset by weakness in tech, energy and defensives. Nikkei 225 extended on record highs and rallied firmly above the 72,000 level as exporters benefited from a weaker currency and a pullback in oil, although the index has pared some of the gains, but comfortably remained the outperformer. KOSPI swung between gains and losses amid a divergence between Samsung Electronics and SK Hynix, in which the latter took over the throne as South Korea’s largest Co. by market cap. Hang Seng and Shanghai Comp were mixed with sentiment not helped by trade frictions after China added 10 US firms to its export control list and announced to take relevant measures against 46 US companies in government procurement activities, while there was a lack of surprises from the announcement that the benchmark Loan Prime Rates were maintained for a 13th consecutive month.

Top Asian News

The Japanese Government is reportedly planning to deploy JPY 68tln in public and private funding for the semiconductor sector by FY 2040, TV Asahi reported citing sources. Australia's Agricultural Minister said testing has confirmed H5 bird flu detected in a second bird found in Western Australia. China's Vice Premier Ding Xuexiang said risk of fragmented supply chains is growing and that some countries abuse use of export controls, adds China is anchor of stability and propeller of the global economy. said: Can work with all sides to build inclusive supply chains. Japanese Finance Minister Katayama ready to act suitably on currency fluctuations whenever necessary, but declines to comment on particular forex rates. European bourses (STOXX 600 -0.2%) began the session on a muted footing, as markets digest the volatile geopolitical situation (see above). European sectors began the session mixed. Tech tops the pile with ASML +1.5% after it denied shipping EUV lithography machines, or any related component, to China, following US Commerce Secretary Lutnick’s accusations. Citi this morning wrote “we find it very hard to believe that they would jeopardise their position in the industry”. The sectoral laggard is Construction, one of its largest constituents Holcim -1.0% (9% weighting), after RBC downgraded Holcim’s PT, citing the completion of the acquisition of Xella and an update to Q2 results model

Top European News

UK PM Starmer announces he will step down; nominations for Labour leader will open on 9th July, conclude by end-summer; will act as caretaker until new leader elected. Will fully support whoever takes over. UK PM's Chief of Staff resigns, New Statesman reported. UK Minister Smith said "I would have been very happy for him to continue", in reference to PM Starmer. UK Foreign Minister Cooper urges UK PM Starmer to resign, according to Sky News. Ireland said EU capital markets deal is possible by year end, according to FT. Italian PM Meloni called out US President Trump for “senseless”, “constant, unprovoked attacks”, while she said that Trump’s statements are completely made up and she doesn’t know why he behaves like this towards allies, after Trump told an Italian TV channel that Meloni begged him to take a picture with her and that he wouldn’t have taken it, but he felt sorry for her. Furthermore, Trump criticised Italy and its PM for not becoming involved with Iran and its nuclear threat. FX

DXY is firmer against all peers as it stabilises towards recent highs above 100. JPY is the underperformer after unsuccessful jawboning attempts, NOK holds on to gains after crude gapped higher at the re-open. USD-specific drivers are light, focus overnight was on geopolitics with US-Iran talks over the weekend whipsawing crude benchmarks. The main data point this week is PCE on Thursday, the session today sees remarks from Fed's Waller, aside from this, the session is likely to be quiet and driven by geopolitical moves in oil/yields. DXY gapped higher at the APAC re-open and rose throughout the European morning to a peak of 101.01. Since this peak, the index has slipped and now more towards the unchanged mark. UK PM Starmer announces he will step down, remaining as a caretaker until a new leader is elected (Nominations begin on 9th July). Burnham is overwhelmingly considered as the front-runner, with GBP and Gilts seeing underperformance in recent weeks. There was no reaction to the announcement from Starmer himself, as it had been widely touted in recent days/weeks, especially following Burnham's convincing victory in the Makerfield by-election. Given Burnham is nearly certain to become the next PM, focus is on his cabinet appointments, specifically his Chancellor pick. Over the weekend, the FT and Times made it clear that Miliband would be the least market friendly, citing comments from FTSE 100 executives; retaining Reeves would be the most market-friendly option, though the same outlets noted Burnham would likely want to remove the current Chancellor in a shift away from the last administration. GBP/USD -0.1% and tracking the stronger Buck. EUR/GBP +0.1%, gapped higher at the APAC re-open, but reversed most gains. JPY continues to underperform and moves further into intervention territory as USD/JPY looks towards 161.81 highs made last week. Japanese Finance Minister Katayama was on the wires overnight, said they were “ready to act suitably on currency fluctuations whenever necessary”; not sparking a move in the Yen. USD/JPY marked a session high of 161.78, looking to the aforementioned levels to the upside; awaiting further comments from Japanese officials. South African Parliamentary Speaker Didiza plans to support President Ramaphosa’s bid to halt his impeachment proceedings. Central Banks

Japan's PM Takaichi said expect BoJ to closely coordinate with the government and conduct a monetary policy appropriately to achieve the 2% price goal. BoJ Deputy Governor Himino said takes some time for policy to have an impact on the economy. said:. Pass-through from oil prices to downstream goods has progressed somewhat rapidly. Recent easing of Middle East tensions doesn't deviate much from their April outlook. Accommodative conditions are expected to continue. Risks of price overshoot could materialise if there is a delay in the necessary adjustment in the degree of monetary easing. Will closely monitor impacts that raising policy interest rates may have on businesses and households. ECB's Escriva warns that rising oil and commodity prices linked to the Middle East conflict are feeding into consumer prices and could cause wage spillovers. said energy cost increases are already transmitting through areas such as transport services. ECB must monitor possible second-round wage effects depending on inflation persistence. Chinese Loan Prime Rate 1Y (Jun) 3.0% vs. Exp. 3.0% (Prev. 3.0%). Chinese Loan Prime Rate 5Y (Jun) 3.5% vs. Exp. 3.5% (Prev. 3.5%). SNB adjusts remuneration of sight deposits; lowering threshold factor from 15 to 13.5; effective August 1st 2026. Fixed Income

Fixed benchmarks are mixed. USTs in the red by around 10 ticks, but off a 109-07 trough by another five. USTs lower as a function of catch-up from the holiday session on Friday, and as the complex acknowledged the gap higher in energy at the resumption of trade after Iran seemingly shut Hormuz transit amid ongoing conflict in Lebanon. However, the updates from negotiators thereafter and as technical talks take place this week in Switzerland, points that allowed energy to retreat and gave relief to EGBs. USTs look ahead to remarks from Fed’s Waller. Bunds, as above, benefited from the energy retreat in the second half of the APAC session and are firmer by around 10 ticks, but a similar amount shy of the 126.34 high. Specifics light for the complex, no move to ECB commentary thus far, and we now await text from Lagarde at the ECON hearing. Additionally, Germany digests reports into another meeting of the pensions committee today. The main point from it being that the retirement age will increase, though not at the pace some have been seeking. More broadly, Politico reports budget progress, however, tax reform remains the major outstanding point. Last but not least Gilts, lower by 10 ticks and a similar amount of the low in 88.30-72 confines after gapping higher by 24 ticks, seemingly taking relief from numerous reports that the team around Burnham no longer saw Miliband as the favourite for Chancellor. Since, PM Starmer has resigned. He will serve as caretaker during the process which begins in three weeks and will last for no more than one week, 9th-16th July. Burnham is the clear favourite. However, the three weeks between now and the start of that process could potentially see the odds around Burnham and theoretical rivals, i.e. Streeting, change notably. Geopolitics

A very busy geopolitical weekend, which initially saw the Iranians shut the Strait of Hormuz, and it suggested that the US and Israel broke the interim ceasefire agreement amid the continued military strikes on southern Lebanon. This led Brent Aug’26 to gap higher by c. USD 2/bbl, to a session peak of USD 82.30/bbl. Attention then turned to US-Iran talks in Switzerland. The outcome of the initial talks were positive. A Qatari and Pakistani joint statement stated that US and Iran agreed to set up a de-confliction cell over Lebanon and agreed to establish a high-level committee to provide political oversight on mediation. The high-level committee also agreed to a roadmap to reach a final deal within 60 days. Following the positive mood music from the talks, Brent Aug’26 gradually moved off best levels and turned negative; currently lower by c. 1.1%, and at the bottom end of a USD 78.58-82.30/bbl range. Attention remains on further developments on the negotiation process, which is expected to continue throughout the week. For now, the heads of the delegation team have headed back to Iran, while technical teams will remain in Switzerland to follow up the implementation of the MoU. Spot gold (+0.8%) is in the green, benefiting from the disinflationary implications of the positive geopolitical mood music. XAU/USD is currently holding within a USD 4136-4221/oz range. On analyst commentary: Goldman Sachs expects central bank Gold buying to slow slightly but remain a structural floor for prices. GS forecasts central bank buying at roughly 50T a month in 2026, then slowing to around 40T a month in 2027. Base metals are broadly firmer this morning vs a mostly negative APAC session. Focus overnight remained on China adding US firms to its export control list and decided to take relevant measures against 46 US companies in government procurement activities. 3M LME Copper currently resides within a USD 13,598.28-13,736.93/t range. "Confirmed crossings through the monitored Strait of Hormuz zone rose sharply over 19–21 June, with 71 total transits recorded", Kpler's Bakr reported. Goldman Sachs expects central bank Gold buying to slow slightly but remain a structural floor for prices. GS forecasts central bank buying at roughly 50 T a month in 2026, then slowing to around 40 T a month in 2027. US Department of Agriculture announces three new cases of screwworm to take total number of domestic detections to 15 cases. Iraq asked operators of five major oil fields to boost output to pre-war levels, targeting output of more than 3mln bpd, while it was separately reported that Iraq intends to gradually increase oil production to between 4.2mln-4.3mln bpd, according to the deputy oil minister for upstream affairs. Qatar’s Interior Ministry reported an internal explosion at a factory in the Ras Laffan Industrial Area, although no injuries or leaks were reported. A fire occurred in Marathon Petroleum’s Galveston Bay refinery (631k bpd) but was extinguished. Guinea’s President Doumbouya announced a ban on raw gold exports, in an effort to boost local processing of the metal and help the domestic economy. Trade/Tariffs

Iranian delegation is set to travel to Tehran after talks in Switzerland. India's Trade Minister said they intend to secure preferential market access via a trade agreement with the US. Signing of a US-India trade agreement will take longer than expected, because the US initially imposed 50% tariffs on Indian goods. China's MOFCOM issues action plan on strengthening foreign Investment; to support qualified key foreign firms listing on domestic exchanges. China added 10 US firms to its export control list including USA Rare Earths, while the Finance Ministry announcing to take relevant measures against 46 US companies in government procurement activities. USTR Greer is to travel to India and Uzbekistan, while he will discuss the US-India joint statement as part of bilateral trade agreement talks. US Event Calendar

9:00 am: Fed’s Waller Delivers Opening Remarks DB's Jim Reid concludes the overnight wrap

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Talking of extreme heat, the latest developments out of the Middle East have turned more constructive after a highly volatile start to the weekend. Encouraging progress in US–Iran talks in Switzerland, mediated by Qatar and Pakistan, has seen both sides agree overnight to a roadmap towards a potential deal within 60 days, alongside the creation of technical working groups, a de conflict mechanism covering Lebanon, and a direct communication line aimed at avoiding incidents and keeping the Strait of Hormuz open. This marks a notable shift from Saturday’s confusion, when Iran suggested the strait was now closed again after Israeli attacks in Lebanon, and briefly stepped back from talks following renewed threats from President Trump, who reiterated that the US would strike again if Iranian-backed proxies in Lebanon continue attacks on Israel. Despite that rhetoric, oil flows through Hormuz have continued and even picked up over the weekend, helping to calm markets, with Brent reversing earlier gains this morning before details of the talks came through. What the overall positive weekend has perhaps taught us is that the path to a durable resolution remains fragile.

However, for now Brent crude (-1.61%) is reversing its earlier gains, currently trading at $79.27 per barrel. Asian equities are not seeing a clear trend with the Nikkei (+1.56%) notably higher, but with the KOSPI fairly flat after being up +2% earlier in the session. The Shanghai Comp is +0.18%, while the Hang Seng is down -0.98%. China's central bank has maintained its benchmark lending rates for the 13th consecutive month overnight.

10-year USTs have increased by +3.2 bps, trading at 4.49% as cash trading has resumed following Friday's US holiday. 2yr yields are +4.7bps. US equity futures are down around half a percentage point but that's roughly where they were for a lot of Friday when the cash market was closed.

The main data highlights this week are the global flash PMIs tomorrow, and the US core PCE on Thursday. Elsewhere, other data of interest include the Ifo survey in Germany (Wednesday), Tokyo CPI in Japan (Friday), and CPI reports in Canada (today) and Australia (Wednesday). Note there is much speculation around whether UK Prime Minister Keir Starmer will resign this week after leadership rival Andy Burnham’s by-election win last week. The Observer newspaper yesterday reported that Starmer was preparing to set out a timetable for his departure, with an announcement possible today. If true it’s notable it's happening on the eve of the 10th anniversary of the Brexit vote tomorrow, something the UK still hasn’t come to terms with. Since then, the UK has revolved through six Prime Ministers which alongside Brexit, underlines the immense difficulties many incumbents have in the Western World today. Everyone arrives in the post with great hopes but then the lack of growth and the financial realities hit. Until you have stronger economic growth and are less constrained by debt it’s highly likely the conveyor belt of PMs will continue.

On this, the Deutsche Bank Research Institute will be pleased to welcome you to our London offices on Thursday (11:30 refreshments for a 12-1 presentation) for a look at “Brexit 10 years on: Whats’s worked, what hasn’t, what’s next?”. I’ll be introducing Sanjay Raja and Shreyas Gopal in what looks set to be a fascinating week for the UK.

Moving over to the other side of the Atlantic, after a hawkish FOMC last week with a clear shift in style from new Fed Chair Kevin Warsh, our economists now have two 25bps hikes in their Fed forecast. They have warned that the US economy needed tighter policy but were waiting for the meeting to confirm the tightening view. The central scenario sees two rate increases this year, likely in September and December, taking the fed funds rate to around 4.1%, followed by a prolonged pause through 2027. Easing is then expected to resume in the first half of 2028, with around 50 basis points of cuts, potentially delivered in March and June, bringing policy back towards a neutral range of roughly 3.5–3.75%. See their piece explaining their view here.

In terms of the US week ahead, our economists expect appearances by Williams and Goolsbee on Thursday to be particularly informative. Williams, who also serves as Vice Chair of the FOMC, is seen as one of those not currently predicting a hike this year, while Goolsbee is viewed as leaning towards around 50 basis points of tightening.

Earlier that day, attention will centre on the data flow. US economists expect May personal income to rise by around 0.4% (from flat previously) and consumption to increase by 0.6% (from 0.5%). The core PCE deflator is projected to rise by around 0.37% month-on-month, up from 0.24%. On this basis, the year-on-year rate would move higher to approximately 3.44%, marking the strongest reading since October 2023 and reinforcing the narrative of persistent underlying inflation. The Fed will also release its bank stress test results on Wednesday and there is other second tier data.

Over in Europe, in addition to the PMIs, sentiment indicators in Germany will include the Ifo survey (Wednesday) and the July GfK consumer confidence print (Thursday). In France, there will be business confidence tomorrow and consumer confidence on Thursday. Finally, the ECB will release its May consumer expectations survey on Friday, with inflation expectations in focus. ECB speakers will include President Lagarde amongst others.

In Asia, inflation prints due include the Tokyo CPI for June on Friday in Japan (see our Chief Japan’s economist week-ahead here) and Australia’s May CPI due Wednesday (DB forecast for headline CPI is -0.4% MoM / 4.3% YoY). Other notable data features BoJ’s Summary of Opinions from its June meeting (Wednesday), Australia’s labour force survey (Thursday) and the 1-year and 5-year loan prime rates in China (Monday).

Finally, there will be a few notable earnings reports out next week, including FedEx, Cerebras and Carnival tomorrow as well as Micron and Jefferies on Wednesday. Micron is up around 830% over the last year and around 250% since the end of March with a market cap of nearly $1.3tn. So it’s becoming one to follow from the macro side.

Recapping last week, oil prices kept falling as they reacted to the news that the US and Iran had reached an interim deal. So that meant Brent crude fell -7.74% last week (+0.90% Friday) to $80.57/bbl. So that considerably eased fears about a stagflationary shock to the global economy, particularly as data showed more traffic was starting to flow through the Strait of Hormuz again. Indeed, near-term inflation expectations plummeted, with the 1yr US inflation swap down -30.8bps last week to 2.44%, whilst the 1yr Euro inflation swap was down -23.7bps to 2.60%.

But even as inflation expectations fell, the Fed’s latest decision on Wednesday led to a clear hawkish repricing for markets. Notably, 9 of the 18 officials in the dot plot signalled there should be a rate hike this year, although new Chair Kevin Warsh did not submit a dot himself. But Warsh did reiterate the Fed’s inflation target, pledging to return inflation to target after five years above. Meanwhile in Japan, the Bank of Japan delivered a 25bp rate hike, taking their policy rate to a post-1995 high of 1%.

That backdrop meant markets brought forward their expectations for a Fed rate hike. So by the end of the week, 39bps of Fed hikes were priced in by December, up from 21bps at the start of the week. In turn, that led to a flattening in the Treasury yield curve, with the 2yr Treasury yield up +9.6bps to 4.18%, whilst the 10yr yield (-2.6bps) fell to 4.45%. A similar pattern was evident globally, with Germany’s 2yr yield (+2.7bps) up to 2.64%, whilst the 10yr yield (-1.0ps) fell to 2.98%.

Whilst equities saw a pullback after the Fed decision, they still ended the week higher as concern about a stagflationary shock faded. So the S&P 500 was up +0.93%, Europe’s STOXX 600 was up +0.38%, and Japan’s Nikkei surged by +7.92%, marking its biggest weekly jump since August 2024. The moves were supported by the ongoing rebound in chip stocks, with the Philly semiconductor index up +7.26% to a new record.

Recapping last week now and oil prices kept falling as they reacted to the news that the US and Iran had reached an interim deal. So that meant Brent crude fell -7.74% last week (+0.90% Friday) to $80.57/bbl. So that considerably eased fears about a stagflationary shock to the global economy, particularly as data showed more traffic was starting to flow through the Strait of Hormuz again. Indeed, near-term inflation expectations plummeted, with the 1yr US inflation swap down -30.8bps last week to 2.44%, whilst the 1yr Euro inflation swap was down -23.7bps to 2.60%.

Tyler Durden Mon, 06/22/2026 - 08:26

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