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). 

SpaceX’s record-breaking IPO has fueled speculation that Elon Musk could take an even bigger step: merging SpaceX with Tesla to create a roughly $4 trillion technology conglomerate spanning rockets, AI, satellites, electric vehicles, robotics, energy, and social media, according to a new report from the New York Times. 

The idea has gained traction among investors, analysts, and even SpaceX executives. Tesla and SpaceX already share personnel, collaborate on major projects, and have business ties through AI development, data centers, batteries, and vehicle sales.

Because Musk controls SpaceX and is Tesla’s largest shareholder, any merger would effectively be a deal with himself, raising concerns about conflicts of interest and shareholder lawsuits. However, legal experts say Texas corporate law—where both companies are now incorporated—makes such challenges difficult. Shareholders generally need to own at least 3% of a company’s stock to sue, a threshold that would require roughly $45 billion in Tesla shares.

The Times notes that approval would still require support from two-thirds of Tesla shareholders. Musk controls about 20% of Tesla’s voting power, and many investors have historically backed his initiatives. Tesla’s board has also frequently aligned with Musk, while SpaceX recently added longtime Musk associate Roelof Botha to its board.

Supporters argue a merger could unlock significant synergies. Tesla’s expertise in chips, AI, and data-center construction could complement SpaceX’s ambitions in orbital infrastructure, satellite communications, and space-based computing. Ark Invest, which owns shares in both companies, has said the combination makes strategic sense, though it would prefer Tesla’s self-driving taxi business to mature first.

SpaceX President Gwynne Shotwell has acknowledged potential benefits, saying a merger could simplify Musk’s responsibilities and noting clear overlaps between the companies’ futures: “There’s no question that there are synergies between Tesla and SpaceX in our futures.”

Opponents could challenge the deal through securities-fraud claims, antitrust scrutiny, or national-security concerns, particularly given the companies’ combined presence in AI, robotics, communications, and space technology. Still, experts believe regulators would face significant hurdles, especially if the combined company continued to perform well.

“As long as he keeps running the business well and the stock price keeps going up, that is a pretty good bar to bringing a securities fraud suit,” said James Spindler, a professor of corporate law at the University of Texas School of Law.

Ultimately, the greatest obstacle may be financial rather than legal. As one corporate-governance expert noted, investors tend to support ambitious deals when markets are rising and shareholders are making money.

Charles Elson, the founding director of the Weinberg Center for Corporate Governance at the University of Delaware told The New York Times that Musk “has got this cheering section who will follow him to the gates of Hades or gates of heaven, wherever he leads them.” 

“Basically he’s gotten to the point where he can do almost anything he wishes…” 

Ferrari is reportedly using its first-ever EV, the Luce, a €550,000 model that looks more like a cross between a Tesla and a Kia, as a loyalty test inside its highly coveted allocation system.

Ferrari’s allocation system is a notoriously exclusive, invitation-only process managed directly by the factory in Maranello. Rather than using waitlists, Ferrari curates ownership by evaluating a buyer’s loyalty to the brand, requiring customers to build a multi-million-dollar history of ownership, participate in factory events, and retain cars in order to qualify to buy hypercars right off the production line.

Bloomberg sources say Ferrari is dangling the Luce to buyers in its allocation program, not only to offload the widely unpopular EV but also to give clients a path to move up in the allocation system.

“It is like a restaurant where it is impossible to get a table,” Max Girardo, founder of collector-car advisory firm Girardo & Co. and a former RM Sotheby’s auctioneer and motor-car specialist, told the outlet in an interview.

Girardo noted, “If you go every week, eventually they find you one. With Ferrari, the more you buy, the more you are treated as an important client.”

Here’s more detail on what Ferrari is telling clients in their allocation system:

Bloomberg spoke with more than half a dozen investors and collectors from Italy to China to gather details about how Ferrari communicated with clients following the Luce’s presentation.

One buyer said Ferrari made clear to him that taking the car mattered if he wanted to keep his place among top clients.

Another collector said the company is signaling to many clients, especially potential new buyers, that access to a future one-off model may first depend on buying the Luce or cheaper entry-level models.

Ferrari has long preserved its pricing power by intentionally keeping production below market demand, with output capped at roughly 14,000 vehicles last year. That scarcity drives the brand’s exclusivity and fuels its coveted allocation system.

The Luce will likely still be purchased by clients looking to leapfrog in the allocation system, especially if it helps secure access to more desirable future releases.

Related: 

• Ferrari Vs Tesla: $640K Luce EV Loses Key Speed And Range Battles To Model S Plaid

Our view is that the Luce risks becoming a modern repeat of the Mondial, the less-loved Ferrari produced in the 1980s and early 1990s that has been shunned by collectors.

Authored by Clive Pinder via DailySceptic.org,

There are few sights more comic than a modern minister pretending to be the stern parent of the nation.

We know the routine. The concerned expression. The voice lowered half an octave. The carefully arranged background of flags, earnest young people and laminated safeguarding jargon. Then comes the announcement. The government is going to protect children online.

At which point every parent in the country is expected to breathe a sigh of relief, put down the gin and thank the Department for Being Sensible on Our Behalf.

This would be comic enough at any time. It is even better when the Government now proposing to supervise teenagers online gives the impression of being unable to supervise itself. Sir Keir Starmer wants to childproof the internet while presiding over a state that cannot produce a defence policy that convinces its own side, let alone our allies or enemies.

Still, never mind the Russian threat. Has anyone thought about Chloe scrolling Instagram?

To be fair, there is a problem. Social media is not exactly a moral health spa. Much of it resembles a Victorian freak show redesigned by behavioural psychologists and funded by advertising executives. It is addictive, vain, cruel, stupid and often deranging. The idea that a 14 year-old girl with a smartphone is simply exercising ‘choice’ while being stalked by an algorithm designed to exploit insecurity is absurd.

So no, this is not a libertarian hymn to TikTok.

The problem is not that politicians worry about the effect of social media on young people. The problem is that they worry about it selectively.

The same political class that increasingly tells us young people must be protected from online manipulation is also very keen to tell us that those same young people are mature enough to vote.

This is where the argument begins to wobble like a drunk on a paddleboard.

Apparently, a teenager may not have the judgement to scroll through Instagram without state supervision, but does have the judgement to help choose the next government.

This is not a principle. It is a convenience.

Defenders of the idea will say social media and voting are entirely different activities. One involves psychological harm. The other involves civic empowerment.

Up to a point. But both depend on the same basic faculties. Judgement, emotional maturity, resistance to manipulation, the ability to process information and some capacity to distinguish truth from nonsense.

These are precisely the faculties politicians tell us young people lack when the topic is social media. Yet they mysteriously reappear when the topic is extending the franchise.

If a 16 year-old is too impressionable to cope with Andrew Tate videos, dieting influencers or Chinese-owned dopamine dispensers, why is he or she suddenly immune to political propaganda?

Modern electioneering is not a seminar in constitutional philosophy. It is organised emotional manipulation. It uses fear, flattery, identity, resentment, slogans and carefully tested nonsense. It promises free things that are not free. It manufactures panic. It tells voters that unless they vote correctly, the planet will boil, fascism will return, public services will collapse and everyone decent will suffer.

But this, apparently, is citizenship.

The difference is not that social media manipulates while politics enlightens. The difference is that one form of manipulation sits outside the control of approved institutions. The other benefits them.

That is the real story.

The modern state has developed an elastic theory of childhood. Young people are treated as children when the state wants more power over families, technology, schools or speech. They are treated as adults when the state wants their votes, their assent or their moral authority.

Too young to smoke. Too young to drink. Too young to rent a car. Too young, increasingly, to open an app without the digital equivalent of a permission slip.

Yet old enough to help determine who runs the country.

Parents have been quietly demoted in this arrangement. A mother and father may apparently lack the wisdom to decide how their child uses a phone. Yet that same child, guided by teachers, activists, celebrities and taxpayer-funded campaigns, is expected to make profound democratic choices.

The absurdity is not hard to spot. It merely requires the increasingly unfashionable skill of noticing.

This is not an argument that teenagers are stupid. Many are thoughtful, curious and better informed than adults who spend their evenings shouting at the television. Nor is it an argument that all social media regulation is wrong. Some of it may be necessary, particularly where very young children are concerned.

It is an argument for coherence.

Parliament cannot say young people need protection from algorithms then invite them to swim in the sewage works of political campaigning and call it citizenship.

It cannot claim to defend autonomy while constantly transferring authority from families to bureaucracies.

This is the contradiction at the heart modern government. It does not want young people to grow up. It wants them managed, mobilised and morally useful.

So by all means let us have a serious debate about children, screens and harm. Let us talk about addiction, anxiety, pornography, bullying, parental responsibility and the tech companies that have turned childhood attention into a commodity.

But let us also drop the pretence.

A government that does not trust teenagers or their parents to navigate social media cannot then turn around and declare those same teenagers mature enough to help govern the nation.

That is not democracy.

It is babysitting with a ballot box.

Demand for commercial divers who clean ship hulls has surged as vessels stranded in the Persian Gulf prepare to leave following a tentative US-Iran peace agreement reopening the Strait of Hormuz, according to Bloomberg.

According to Captain Manandeep Singh Kukreja of Prominence Shipping Services, requests for hull-cleaning crews have increased more than 30-fold since the announcement. Fees for cleaning a single vessel could rise up to 60%, from about $5,000 to $8,000.

Bloomberg reports that around 600 ships remain stuck in the Gulf after more than three months of disruption. Many have accumulated algae, slime, and barnacles, which can prevent entry into ports due to invasive-species concerns.

“The next 30 days, it’s going to be like striking gold for diving companies,” Kukreja said. “Everyone wants to get out of Hormuz and get back to earning money.”

“They’re going to make the best out of this opportunity. It’s a no-brainer that they will hike their prices.”

Cleaning needs vary by vessel. Some ships require only light slime removal, while others need extensive barnacle scraping after months in the warm Gulf waters.

The surge in demand for hull-cleaning crews reflects the broader disruption caused by months of conflict around the Strait of Hormuz, one of the world’s most important energy chokepoints.

Since fighting erupted in late February, hundreds of vessels have been stranded in the Persian Gulf, disrupting oil shipments, driving up shipping and insurance costs, and creating the largest interruption to global energy flows in decades. As a tentative peace deal raises hopes that traffic can resume, shipowners are racing to prepare vessels for departure, underscoring the scale of the operational and financial fallout from more than three months of turmoil in the region.

Via Remix News,

The Alternative for Germany (AfD) continues to run away from its main rival, the Christian Democratic Union (CDU) and its sister party, the Christian Socialist Union (CSU) in a new poll, which shows the AfD nine points ahead.

The AfD achieved a new record in the current YouGov poll, reaching 29 percent, while the CDU/CSU and SPD have hit all-time lows. The results are expected to pile on the pressure on a governing coalition the German public increasingly despises.

In the YouGov poll, CDU/CSU achieves 20 percent of the vote and SPD earns 12 percent. The Union parties have never been worse in a YouGov poll.

BUNDESTAGSWAHL | Sonntagsfrage YouGov

AfD: 29% (+1)
Union: 20% (-2)
GRÜNE: 14% (+1)
SPD: 12% (-1)
LINKE: 12% (+1)
FDP: 5% (+1)
BSW: 4%
Sonstige: 5%

Änderungen zur letzten Umfrage vom 12. Mai 2026

Verlauf: https://t.co/f9MV7iZ8iJ#btw29 pic.twitter.com/yO2VS2jJn5

— Deutschland Wählt (@Wahlen_DE) June 16, 2026

However, the Greens at 14 percent and the Left Party at 12 percent are making slight gains.

The FDP is also gaining ground, reaching 5 percent for the first time in a year and a half after a new chairman was elected, Wolfgang Kubicki.

The results for the CDU in particular are bound to spark further turmoil in the party, with some members perhaps even eyeing a future coalition with the AfD, a move that has been soundly rejected by CDU leadership. In particular, Chancellor Friedrich Merz has vowed to never work with the party.

The conundrum for the CDU remains that the party is forced to build coalitions with predominately left-wing parties like the Greens, the SPD, and even the Left Party, through its firewall against the AfD. The resulting politics have left CDU voters increasingly unhappy with the results, but remarkably, about half of CDU voters also reject a coalition with the AfD.

Majority of Germans reject politicizing the World Cup

YouGov also found that a majority of Germans do not want the World Cup politicized. The German national team has a history of taking a “woke” stance in the last two World Cups, but the German team was eventually humiliated in each tournament, failing to advance past the preliminary round in both World Cups.

However, Germans soundly reject politics in football, with 65 percent of respondents saying they want the World Cup and politics to be strictly separated. AfD voters (82 percent) and CDU/CSU voters (74 percent) are especially in favor of this position. More than half of SPD voters at 55 percent also share this view.

However, those on the more extreme left, back politics in football, like the Left Party (41 percent) and the Greens (34 percent).

Read more here…