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Bullish Or Bearish Into Year-End? BTIG & Fundstrat To Face Off

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Bullish Or Bearish Into Year-End? BTIG & Fundstrat To Face Off

S&P 500 and Nasdaq remain near record highs despite yesterday’s post-Fed freakout. Risk-on is still in fashion as investors remain hopeful of a lasting U.S.-Iran peace. Though the question remains: Is the rally sustainable or are markets poised for a painful reversal before year-end?

Tonight at 7pm ET, Adam Taggart of Thoughtful Money hosts a debate between two of Wall Street’s closely followed technical strategists: Jonathan Krinsky, Chief Market Technician at BTIG, and Mark Newton, Head of Technical Strategy at Fundstrat.

Bull Case (Newton):

Newton sees the upward trend in tech/AI continuing higher, which will lift the broader market into 2027… even if there’s a little chop.

While he expects periods of volatility and some consolidation, easing energy prices and continued investment in artificial intelligence infrastructure will support further gains into year-end, even in the already-lofty tech/AI trade. With oil retreating sharply from wartime highs and investors increasingly focused on the long-term productivity benefits of AI (economic benefits that are real and not merely a bubble), Newton sees pullbacks as opportunities.

Oil was sent sharply lower on the news of a ceasefire, something Newton sees continuing into year end in the broader energy sector:

Bear Case (Krinsky):

Krinsky has maintained a more cautious stance as equities push further into historically stretched territory.

While the recent peace agreement between the U.S. and Iran has boosted risk appetite and eased inflation concerns, Krinsky has argued recently that elevated valuations, particularly in tech, are due for a correction at some point… especially with a seemingly hawkish fed. Krinsky has also pointed to the recent decoupling of bond yields and oil prices, having risen in tandem until post-peace deal where yields continued rising (possibly Fed-related) while oil tanked.

Recent gains have been driven largely by AI-related technology shares, semiconductors, and the Magnificent Seven, while many other areas of the market have failed to keep pace. Both Newton and Krinsky agree on this, though only one sees it as fuel to further propel markets higher… the other sees a ticking time bomb.

Both panelists rely on technicals and regularly change their market outlooks based on data. Neither guest is a perma-bull or bear… so no broken clocks tonight.

Tune in tonight at 7pm ET on the ZH homepage, X Feed, and Youtube channel to watch live to see how they’re looking at Iran, Fed chair Warsh, and markets.

Tyler Durden
Thu, 06/18/2026 – 14:45

Fed Moves To Close Stablecoin Loopholes With New Customer ID Rules

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Fed Moves To Close Stablecoin Loopholes With New Customer ID Rules

Authored by Micah Zimmermann via BitcoinMagazine.com,

The Federal Reserve proposed Thursday that payment stablecoin issuers maintain written customer identification programs, a move that signals Washington’s determination to bring digital asset markets under the same anti-money laundering discipline long applied to traditional banks — even as regulators race to finalize rules before a statutory deadline this coming January.

The proposal would require so-called permitted payment stablecoin issuers, or PPSIs, to collect from each new customer a legal name, date of birth or formation, physical address, and a government-issued identification number before opening an account. 

The Federal Reserve framework mirrors CIP obligations that banks, broker-dealers, mutual funds, and futures commission merchants have operated under for more than two decades. Regulators will take public feedback on the proposal for 60 days.

The Federal Reserve’s action follows a wave of rulemaking set in motion by the Genius Act — formally, the Guiding and Establishing National Innovation for U.S. Stablecoins Act — which President Trump signed into law in July 2025.

That landmark legislation created the first federal regulatory system for stablecoins, mandating 100% reserve backing with liquid assets and subjecting issuers to the Bank Secrecy Act for the first time. 

The statute requires stablecoin issuers to establish effective anti-money laundering, sanctions compliance, and customer identification programs. The Genius Act becomes effective on the earlier of January 18, 2027, or 120 days after primary federal regulators issue their final implementing rules.

Federal Reserve Governor cautions towards stablecoins

Federal Reserve Governor Michael Barr has emerged as the most vocal voice of caution within the regulatory apparatus, even as his colleagues have embraced digital assets with new openness. Speaking in March at a Federalist Society conference in Washington, Barr warned that stablecoins face material risks around reserve asset quality, regulatory arbitrage, anti-money laundering gaps, and financial stability — concerns he argued the Genius Act’s primary text does not resolve on its own. 

“While some digital asset service providers are subject to anti-money laundering and anti-terrorist financing requirements in their home jurisdiction, it is far too easy for bad actors to evade these restrictions and operate without detection when transacting in digital assets,” Barr said in a statement Thursday. 

Barr, who previously served as the Federal Reserve’s top bank cop, contends that detailed rulemaking remains the critical instrument for translating the statute’s intent into enforceable protections.

Thursday’s proposal is the latest in a dense sequence of rulemakings from multiple agencies. In April 2026, the Treasury Department’s Financial Crimes Enforcement Network and the Office of Foreign Assets Control issued a joint proposed rule requiring PPSIs to adopt written AML and countering-the-financing-of-terrorism programs and a full sanctions compliance framework. 

That rule would carve PPSIs out of the existing money services business category and treat them as a distinct class of BSA-covered financial institutions — a significant structural change, given FinCEN’s finding that roughly half of known stablecoin issuers have not registered as MSBs at all. 

The FDIC and OCC each issued their own notices of proposed rulemaking in parallel, covering licensing, reserves, capital requirements, and redemption standards. The CIP proposal announced Thursday is a separate, complementary rulemaking to those AML and sanctions rules.

Stablecoin rules and nuance

The proposed customer identification requirements carry technical nuance tailored to stablecoin markets. Unlike banks, a PPSI can face demands for direct redemption from token holders who acquired coins on the secondary market rather than through a direct issuance relationship. 

The proposal addresses this by defining an “account” to include that redemption event, meaning an individual who acquires a stablecoin on an exchange and later redeems it directly with the issuer would trigger CIP obligations at the moment of that interaction. 

Purely secondary market transactions in which the PPSI is not a direct counterparty — including transfers conducted via smart contract — would not constitute an account relationship under the proposed framework.

The timeline for finalization is tight. With the Genius Act’s effective date potentially arriving as early as 120 days after the agencies publish their final rules, the window for comment, revision, and adoption is compressed. Final CIP rules are not expected before 2027, which means the statute could take effect before its customer identification architecture is fully in place. 

Tyler Durden
Thu, 06/18/2026 – 14:45

Take-Two Shares Jump As ‘Grand Theft Auto VI’ Pre-Orders Open Next Week

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Take-Two Shares Jump As ‘Grand Theft Auto VI’ Pre-Orders Open Next Week

Take-Two Interactive Software shares jumped early in the cash session after the company announced on X that pre-orders for Grand Theft Auto VI will open next Thursday. The move is easing investor concerns that the highly anticipated game could face another delay, reinforcing expectations that Rockstar Games remains on track for its Nov. 19 launch date.

“Pre-orders for Grand Theft Auto VI will officially begin on June 25 on digital storefronts and at other select retailers,” Rockstar Games wrote on X. The gaming studio is a wholly owned subsidiary of Take-Two.

The last major GTA release was GTA V, which launched on Sept. 17, 2013. Gamers have been waiting 13 years for a major GTA installment.

Rockstar has upset not just Take-Two investors but also GTA gamers on numerous occasions, indicating that its developers needed more time to finish the game, thereby delaying the launch. The launch date is set for Nov. 19.

Take-Two shares are up nearly 6% in the cash session, though the stock has traded mostly sideways since peaking around $262 in October 2025.

Last month, we asked:

BMO Capital Markets analyst Brian Pitz noted, “We highlight that the game’s price remains a key question, as the launch of preorders next Friday should confirm base game pricing. We will also closely monitor for any higher-priced SKUs that give players early access to the game. Reiterate our Outperform, Top Pick, and $280 target price.”

According to Bloomberg data, 97% of the analyst coverage on TWWO is “Buy” rated with an average 12-month price target of $281.97.

For reference, GTA V sold about 225 million to 230 million copies worldwide.

There is already a report from Oppenheimer analyst Martin Yang that console sales are increasing ahead of the GTA VI release.

Tyler Durden
Thu, 06/18/2026 – 13:05

RFK Jr. Announces More Than $700 Million To Target Mental Illness, Homelessness

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RFK Jr. Announces More Than $700 Million To Target Mental Illness, Homelessness

Authored by Zachary Stieber via The Epoch Times,

The Trump administration is going to spent more than $700 million on programs aimed at reducing drug addiction, homelessness, and mental illness, Health Secretary Robert F. Kennedy Jr. said on June 17.

Health Secretary Robert F. Kennedy Jr. in Washington on May 18, 2026. Kent Nishimura/AFP via Getty Images

The largest portion of the new funding, nearly $239 million, is going to a lifeline that people who are suicidal can call. Some $223 million is going to community behavioral health clinics. Nearly $100 million is being offered to communities that apply to the Safety Through Recovery, Engagement, and Evidence-based Treatment and Support (STREETS) Program, which provides services for homeless people who are addicted to drugs or have serious mental illness.

The other funds are going to programs targeting the prevention of, treatment for, and recovery from drugs, or programs that support mentally ill people.

“These investments will help move people from the streets into treatment and recovery, strengthen families, save lives, and make communities safer,” Kennedy said in a statement.

The funding follows an executive order from President Donald Trump that directed officials to work on shifting homeless people into institutions to help address crime and disorder in the nation’s cities, and another order that says the disease of addiction must be stopped through an emphasis on treatment.

“My Administration will drive a new national response to the disease of addiction that will create stronger coordination across government, the healthcare sector, faith communities, and the private sector in order to save lives, restore families, strengthen our communities, and build the Great American Recovery,” Trump said in the latter order.

Kennedy on Wednesday visited the Easterseals Michigan-Clinton Township Certified Community Behavioral Health Clinic, part of the Easterseals network of facilities that assist people with disabilities, their families and caregivers, and veterans.

“Our goal is to provide comprehensive outpatient mental health and substance use services that are person-centered, trauma-informed and evidence-based,” the clinic’s website states.

Kennedy said that homelessness is “one of the greatest problems that we have now, health problems in this country” and that it is interconnected with the crisis of drug addiction, which has caused more than 1 million deaths since 2000.

Kennedy said administration officials do not support so-called harm reduction initiatives, such as needle exchanges or “safe injection sites.” Instead, the administration is emphasizing treatment.

“Recovery works. Treatment works. Accountability works,” he said.

Kennedy did say that the withdrawal drugs Suboxone and methadone work, particularly for addicts who cannot enter treatment at certain times. They are “good bridge solutions,” he said.

Tyler Durden
Thu, 06/18/2026 – 12:45

Amazon In Talks To Sell Its Trainium AI Chips To Other Firms, In Challenge To Nvidia Dominance

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Amazon In Talks To Sell Its Trainium AI Chips To Other Firms, In Challenge To Nvidia Dominance

Amazon is in talks to sell its custom-made Trainium AI chips for use in other companies’ data centers, Bloomberg reports, noting this “represents a key expansion of its efforts to cut into Nvidia’s dominance”, although a less optimistic read is that the company does not have enough demand or capacity to use the chips for its own uses.

Peter DeSantis, Amazon’s AI chief, said the world’s largest cloud computing company has begun discussions but declined to name potential customers. Presumably, it will try to steal market share by offering its product at a much more competitive terms, which suggests more pricing pressure across the AI ecosystem.

“We view AI infrastructure as rapidly evolving,” he said in an interview in Paris. “And we’re constantly looking at ways to get to more customers.”

Introduced in 2020, Amazon’s AI accelerator, Trainium, has won a few marquee buyers, including OpenAI, Anthropic and Uber, which access the hardware via Amazon Web Services. The chip has produced more than $225 billion in revenue commitments, Amazon said in April (for a word of caution about purchase commitments read our discussion on the trillions in off-balance sheet liabilities sloshing inside the AI ecosystem).

That same month, CEO Andy Jassy wrote in his shareholder letter that it’s “quite possible” Amazon would sell racks of its chips to third parties. It was part of a broader attempt to reposition the sprawling company around AI, an area where it’s seen as falling behind rivals.

Amazon and other cloud computing titans have each been developing their own alternatives to Nvidia’s popular graphics processing units — and ramped up these efforts after ChatGPT’s arrival.

While the AI boom has generated soaring cloud sales, it’s also fueled a new crop of specialized AI cloud providers and driven demand for “sovereign” services in Europe and other regions that are subject to local laws and usually locate information and data processing in the host country.

In April, Alphabet CEO Sundar Pichai said Google will begin to deliver its Nvidia GPU rival chips, called tensor processing units, to a “select group of customers” for use in their own data centers. Amazon is following suit with Trainium, in part, due to the growing demand outside of the US for computing resources that are controlled locally, according to DeSantis. Alternatively, there is just not enough demand in the US, no matter what the daily bullish propaganda says (because as a reminder, due to the $2 trillion in interlinked off-balance sheet liabilities, the moment one counterparty trips, it will drag down everyone else with it). 

Meanwhile, some of that foreign push, particularly in Europe, has prompted calls for countries to lessen their reliance on US technology or drop it altogether. Speaking at the VivaTech conference in France, DeSantis said the AWS business has not been impacted at all by this trend. Yet. 

The third version of the Trainium chip, which began shipping earlier this year, is “largely sold out,” he said. Amazon said there’s already strong interest in a fourth version that’s expected to debut next year.

DeSantis dismissed the idea that selling Trainium outside of AWS would eat into the company’s cloud business. “There’s so much underconsumption in AI,” he said. “I’m not worried about it.” But with token prices tumbling, and compute rental costs in free fall, both of which signal a sudden drop in demand (or excess supply) for compute…

… he should be.

The executive also cited growth for Amazon’s Graviton chips, a general-purpose processor that it recently began providing to Meta. Over the last three years, DeSantis said Amazon has added more Graviton chips to its computing systems than any other type of chip.

Amazon shares gained as much as 2.5% on Thursday, reaching an intraday high of $243 on the news.

Tyler Durden
Thu, 06/18/2026 – 12:25

Forward Guidance Is Gone

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Forward Guidance Is Gone

By Philip Marey, senior US strategist at Rabobank

Summary

  • As widely expected, the FOMC kept the target range for the federal funds rate unchanged and dropped its easing bias. However, this unanimous decision was announced in an unusually short statement.
  • What’s more, at his first press conference as Fed Chair Kevin Warsh terminated forward guidance.
  • However, the Summary of Economic Projections had already revealed that half of the FOMC participants (who submitted a forecast) expected to hike before the end of the year. Warsh did not submit his forecasts.
  • Other interesting features of the statement were the reaffirmation of maintaining ample reserves and the conclusion that the Committee will deliver price stability.
  • At the press conference, Warsh announced the establishment of five task forces on: Fed communications, the balance sheet, improving data, productivity and jobs, and inflation frameworks.
  • As uncertainty regarding the disruption in the Strait of Hormuz remains, we expect the Fed to remain on hold for the remainder of 2026.

Introduction

As widely expected, the FOMC kept the target range for the federal funds rate unchanged at 3.50 3.75% and dropped its easing bias. However, this decision was announced in an unusually short statement. The decision was unanimous, with Miran – who repeatedly dissented because he wanted to cut – was replaced by Warsh. The press conference was a clear break from in the Bernanke-Yellen-Powell era, with Warsh making an end to forward guidance.

FOMC statement and projections

The statement was so short, that we replicate it here:

The Federal Open Market Committee approved the following statement for release by a 12 – 0 vote:

The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee reaffirmed its policy of maintaining ample reserves in the banking system.

Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.

Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.

Most notably, the easing bias previously expressed in the statement as “In considering the extent and timing of additional adjustments to the target range for the federal funds rate…”., which suggested that the next change would be a rate cut -because the last three adjustments were rate cuts- was dropped.

Other interesting features of the statement were the reaffirmation of maintaining ample reserves – despite Warsh’s earlier stated goal to reduce the balance sheet – and the conclusion that the Committee will deliver price stability.

The new Summary of Economic Projections saw a large upward revision to the inflation forecasts for 2026 and core inflation in 2027. With minor changes to GDP and unemployment forecasts, the federal funds rate forecasts were revised upward in 2026, 2027, and 2028. In fact, the dot plot revealed that 9 out of 18 forecasting participants expected to hike before the end of the year. Warsh’s dots were missing. The median participant expects to get back to the current federal funds rate in 2027 and make another cut in 2028. This means we would have to wait at least until 2029 before the federal funds rate reaches its neutral level.

Warsh’s press conference

At the press conference, Warsh said that the FOMC recognized that inflation has been elevated for five years and that this Committee will deliver price stability. Warsh also announced the establishment of five task forces on: Fed communications, the balance sheet, improving data, productivity and jobs, and inflation frameworks. These task forces will include external experts.

Warsh also said that the FOMC statement was shorter and simpler, and that forward guidance was absent, because it is not suited for the current circumstances. He also confirmed that he refrained from providing projections, but he encouraged others to give their projections.

During the Q&A, he effectively terminated forward guidance. Any question regarding future policy decisions was deflected. He did say that financial markets work best if they react to the data and not to the Fed.

He also elaborated on his plans to improve the data: he prefers real-time data instead of echoes from history. He thinks current data are often based on old-fashioned survey methods.

Conclusion

Although Warsh ended forward guidance, the SEP remains in place at least until the task force on communication has completed its work, probably by the end of the year. Although half of the forecasting participants now expects to hike before the end of the year, it was only three months ago – and after the outbreak of the war – that the median participant still expected one cut in 2026. This proves Warsh’s point that projections may not be very useful in the current situation. As uncertainty regarding the disruption in the Strait of Hormuz remains, we expect the Fed to remain on hold for the remainder of 2026. We expect the Fed to cut twice in 2027, provided that inflation expectations remain stable. If not, we may also have to pencil in hikes.

Tyler Durden
Thu, 06/18/2026 – 12:00

Bullish Or Bearish Into Year-End? BITG & Fundstrat To Face Off

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Bullish Or Bearish Into Year-End? BITG & Fundstrat To Face Off

S&P 500 and Nasdaq remain near record highs despite yesterday’s post-Fed freakout. Risk-on is still in fashion as investors remain hopeful of a lasting U.S.-Iran peace. Though the question remains: Is the rally sustainable or are markets poised for a painful reversal before year-end?

Tonight at 7pm ET, Adam Taggart of Thoughtful Money hosts a debate between two of Wall Street’s closely followed technical strategists: Jonathan Krinsky, Chief Market Technician at BTIG, and Mark Newton, Head of Technical Strategy at Fundstrat.

Bull Case (Newton):

Newton sees the upward trend in tech/AI continuing higher, which will lift the broader market into 2027… even if there’s a little chop.

While he expects periods of volatility and some consolidation, easing energy prices and continued investment in artificial intelligence infrastructure will support further gains into year-end, even in the already-lofty tech/AI trade. With oil retreating sharply from wartime highs and investors increasingly focused on the long-term productivity benefits of AI (economic benefits that are real and not merely a bubble), Newton sees pullbacks as opportunities.

Oil was sent sharply lower on the news of a ceasefire, something Newton sees continuing into year end in the broader energy sector:

Bear Case (Krinsky):

Krinsky has maintained a more cautious stance as equities push further into historically stretched territory.

While the recent peace agreement between the U.S. and Iran has boosted risk appetite and eased inflation concerns, Krinsky has argued recently that elevated valuations, particularly in tech, are due for a correction at some point… especially with a seemingly hawkish fed. Krinsky has also pointed to the recent decoupling of bond yields and oil prices, having risen in tandem until post-peace deal where yields continued rising (possibly Fed-related) while oil tanked.

Recent gains have been driven largely by AI-related technology shares, semiconductors, and the Magnificent Seven, while many other areas of the market have failed to keep pace. Both Newton and Krinsky agree on this, though only one sees it as fuel to further propel markets higher… the other sees a ticking time bomb.

Both panelists rely on technicals and regularly change their market outlooks based on data. Neither guest is a perma-bull or bear… so no broken clocks tonight.

Tune in tonight at 7pm ET on the ZH homepage, X Feed, and Youtube channel to watch live to see how they’re looking at Iran, Fed chair Warsh, and markets.

Tyler Durden
Thu, 06/18/2026 – 11:40

Energy Cliff, Supply Chain Shock: The Toxic Cocktail Behind The Urgent Push For An Iran Deal

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Energy Cliff, Supply Chain Shock: The Toxic Cocktail Behind The Urgent Push For An Iran Deal

The U.S.-Iran interim peace deal has been signed, and the normalization of the Strait of Hormuz is now beginning. Tanker traffic through the critical waterway is slowly resuming, though a full return to pre-war or near-pre-war energy flows could take months.

But behind the urgency to get the memorandum of understanding deal across the finish line were two uncomfortable realities.

First, President Trump recently met with oil and gas executives, who likely informed the administration that the conflict and the shuttered Hormuz maritime chokepoint were leading to an energy cliff that would materialize by mid-summer.

On Wednesday at the G7 Summit in France, Trump acknowledged the uncomfortable truth that SPRs used to offset lost Gulf energy production were being drained at an alarming rate.

“We run out of reserves in about four weeks,” Trump told reporters.

The latest Department of Energy data showed Cushing, Oklahoma, stockpiles declined for the eighth straight week, taking inventories to just above 20 million barrels. That’s the lowest inventories have been at the storage hub since October 2014, and takes us to what are considered essentially ‘tank-bottoms’, the point at which the hub is unable to fully operate.

Second, the physical disruption in global supply chains had begun spreading beyond energy flows and into shipping costs, threatening to transmit the Hormuz crisis into broader goods inflation.

Last month, UBS analyst Pierre Lafourcade warned, “Supply chain stress is rising at its fastest pace since the early pandemic.” This prompted Lafourcade to re-launch the Global Supply Chain Stress Index.

Earlier this morning, Lafourcade warned in a new note that “supply chain stress spreads to shipping cost” and that “continues to rise.”

He continued:

Our Global Supply Chain Stress Index has continued to deteriorate, despite the recent decline in energy prices. In our update mid-May (here), we noted that the index had worsened by roughly 1.2 standard deviations since the onset of the Middle East conflict. Figure 1 below shows the latest June reading, based on weekly data up to last Friday (with missing observations proxied by the prior month’s values). The median of the 23 component series (blue line) now stands at 2.9 standard deviations—an increase of around 2½ standard deviations since the conflict began—and marks the highest level since May 2022. This reading predates the geopolitical developments of the past few days and so may well end up being a high watermark. But we suspect a sustained improvement across many indicators will likely require a tangible normalization in the flow of global energy shipments, not just a decline in prices driven by expectations of resolution alone.

Our Global Supply Chain Stress Index has After a slow reaction to the conflict, shipping costs are now accelerating The indicator is constructed as the cross‑sectional average of z-scored series—a first-order approximation to the data’s first principal component. Figure 2 overleaf shows the contributions over the past four months. The indicator most directly capturing the supply-shock nature of the Hormuz bottleneck is our measure of seaborne oil and gas flows (shown on the right of the figure, with the sign flipped to indicate rising stress). All other components reflect the shock more indirectly. Oil and gas shipping volumes have dropped even more from the immediate post-closure lows, while the volume of other cargo shipping has bounced back somewhat from earlier lows (see here for our latest read on global tracking). Delivery times and air-freight costs deteriorated primarily in March and April, with little additional movement since. Initially, supply chain stress appeared relatively contained and concentrated in these indicators. However, shipping costs now seem to be responding with a lag: after little change in March and April, prices have ramped up noticeably in May and June to date, across all major reporters (Baltic, Harper Petersen, Drewry, and Freightos).ntinued to deteriorate, despite the recent decline in energy prices. In our update mid-May (here), we noted that the index had worsened by roughly 1.2 standard deviations since the onset of the Middle East conflict. Figure 1 below shows the latest June reading, based on weekly data up to last Friday (with missing observations proxied by the prior month’s values). The median of the 23 component series (blue line) now stands at 2.9 standard deviations—an increase of around 2½ standard deviations since the conflict began—and marks the highest level since May 2022.

This reading predates the geopolitical developments of the past few days and so may well end up being a high watermark. But we suspect a sustained improvement across many indicators will likely require a tangible normalization in the flow of global energy shipments, not just a decline in prices driven by expectations of resolution alone.

If SPRs are drained and supply chain stress keeps rising, the global economy moves from a manageable disruption to a stagflationary shock. That would send energy prices higher, create weaker fuel demand, lead to margin compression for companies, and eventually risk a recession.

The sequence of disasters that could’ve unfolded:

1. Energy prices reprice violently higher

2. Shipping costs feed into goods inflation

3. Corporate margins get squeezed

4. Consumers get hit

5. Central banks face the stagflation trap

6. Emerging markets falter

7. Global equities shift into recession pricing

These two pressures help explain why the Trump administration moved urgently to secure an MoU with Iran to reopen the Strait of Hormuz. The immediate goal was to normalize tanker flows and avert an energy cliff as SPR buffers came under pressure. The second objective is to stop the Hormuz disruption from spilling deeper into global supply chains, where rising shipping costs, longer transit times, and tighter effective vessel capacity were beginning to transmit the shock beyond energy markets and into the broader global economy.

Professional subscribers can read more about the global supply chain and the Strait of Hormuz on our new Marketdesk.ai portal. 

Tyler Durden
Thu, 06/18/2026 – 09:00

Continuing Jobless Claims Hit 3-Month-Highs

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Continuing Jobless Claims Hit 3-Month-Highs

The number of Americans filing for unemployment benefits for the first time fell from 230k (4 month highs) to 226k (vs 225k exp) last week – elevated but still within the range of the last four years…

Source: Bloomberg

Pennsylvania and Oregon saw the largest rise in initial claims last week while Ohio and Illinois saw the biggest decline…

Meanwhile, continuing jobless claims rose back above 1.8 million Americans – the highest print in 3 months – but still well off cycle highs near 2 million in Q4 2025…

Source: Bloomberg

The bottom line is that while initial claims are rising, they remain low by historical standards and continue to run below year-ago levels, reinforcing the more hawkish ‘labor market is resilient’ framework introduced yesterday.

Tyler Durden
Thu, 06/18/2026 – 08:36

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

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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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