S&P Futures At Daily Record High Because RAM And World Peace

Summary

S&P Futures At Daily Record High Because RAM And World Peace US futures are trading at new all-time highs following Tuesday’s record-setting rally (when the S&P hit a new record high on negative breadth as is now the norm) , bolstered by a growing chorus of Wall Street bulls: Goldman lifts its S&P 500 target, while Barclays strategists say investors still have capacity to chase the rally, while the memory bubble just keeps raging as the market value of Korea's SK Hynix sailed above the trillion-dollar mark just one day after fellow chip maker Micron did the same. As of 8:00am, S&P 500 futures are up 0.3% while Nasdaq 100 contracts are rising 0.4%. And speaking of Micron, after soaring more than 20% on Tuesday, MU shares shares are up another up another 5% in premarket because why not, and point to a continuation of the bubble in memory-chip stocks; Semis are also bid (SOXX +2%); cyclicals are set for another positive session led by Discretionary, Industrials, and Materials. In Defensives, both HC and Staples are positive but underperforming SPX. European and Asian stocks also climb as broader risk sentiment is underpinned by a pullback in oil prices on the now daily optimism that the US and Iran will reach a peace deal. US yields are down 1-2bps even with the Bloomberg Dollar Spot index up to session highs. Brent crude futures for July are down 3% to around $96.70 a barrel. Ags are weaker, with Metals being pulled lower, too while precious metals tumble. Today's economic data slate includes weekly ADP employment change (8:15am), May Richmond Fed manufacturing index (10am) and May Dallas Fed services activity (10:30am). Fed speaker slate includes Cook (3:55pm), Jefferson (8pm) and Goolsbee (10:25pm). In premarket trading, Mag 7 stocks are mixed early Wednesday (Alphabet -0.5%, Nvidia +0.4%, Apple +0.1%, Tesla +1.6%, Amazon +0.02%, Microsoft -0.5%, Meta -0.5%) Box (BOX) shares are down 2% after the software company’s first-quarter results were largely in line with expectations. Analysts noted an impact from foreign-exchange issues Shares in rocket, space and satellite communications companies (LUNR +17%, RDW +20%, ASTS +6.1%) are rallying in premarket trading Wednesday, set to extend recent gains. The sector has advanced since SpaceX filed publicly for what stands to be the largest-ever initial public offering. Shares in semiconductor and chip equipment companies (POWI +7.0%, SMTC +5.4%, MRVL +5.7%) are rising again as the breakneck surge in the sector intensifies, sending the market capitalizations of SK Hynix and Micron Technology above $1 trillion. Verra Mobility (VRRM) shares tumble 43% after the mobility software company cut full-year adjusted EPS guidance below analyst estimates and said Avis Budget had terminated its contract, prompting at least three analyst downgrades. Zscaler (ZS) shares sink 22% after the security software company gave a fourth-quarter revenue forecast that was weaker than expected. Evercore downgrades the stock, noting slowing net new customers. In other corporate news, Samsung Electronics union members voted in favor of a compensation deal, staving off a strike that threatened to disrupt global chip supply. They will get over $300,000 as part of the deal. And China is said to have been slow-walking approval of Airbus plane deliveries to signal impatience with how long European regulators are taking to certify Chinese-made aircraft. In AI news, ByteDance is planning to sharply increase its capital spending this year and next in a bid to lead the Chinese AI market and challenge the top US players abroad. Software companies and their private equity investors will face mounting strains as debt redemptions swell in coming years, according to Canadian investment manager CI GAM. “Given the capex plans of the AI hyperscalers, there’s no reason to think that the rally is about to end,” said Fares Hendi, a portfolio manager at Societe de Gestion Prevoir in Paris. “If there’s a breakthrough between the US and Iran, the trend could accelerate, with investors buying back their shorts.” With no overnight news from the Middle East, optimism that the US and Iran are nearing a deal to fully reopen the Strait of Hormuz pushed Brent down 2.6% to around $97 a barrel as traders grew less concerned about an energy-driven spike in inflation. Sentiment was further boosted by the batshit insane meltup in Korea (just two stocks technically) which has made the Nasdaq bubble of 1999 look like amateur hour. Strategists at Goldman joined peers at Morgan Stanley and Deutsche Bank in seeing a 17% return for the S&P 500 Index this year. Earnings growth powered by the AI boom will drive further gains in stocks, the Goldman team led by Ben Snider said, as they increased their year-end target for the US benchmark to 8,000 points, ditching a previous forecast of 7,600. “We are in the midst of something very structural and huge — the AI CapEx theme — and it’d be very dangerous to stand against it,” said Lilian Chovin, head of asset allocation at Coutts. In other words, just put a blindfold on and buy. Meanwhile, the momentum behind the AI trade continued, with investors betting that chipmakers will capture an outsized share of global capital spending even as millions of furious workers are fired and eager to burn down every data center they see. Adding to the insanity, BBVA strategists said it could be a good time to sell US equity volatility, noting short vol portfolios have the strongest overall forward signal compared to other risk premia strategies. Since 1990, VIX has tended to drop in June and July, before rising again in August and September, according to data compiled by Bloomberg. Let's just ignore that whole other "sell in May" calendar thingy. Meanwhile, the excess capital chasing AI assets is creating a liquidity overhang and driving up risk for investors, notes GGL Capital’s founder Gigi Luk. Shares in semiconductor and chip equipment companies are rising again as the surge in the sector intensifies, sending the market capitalizations of SK Hynix and Micron Technology above $1 trillion With bullish sentiment running high, the European Central Bank said that financial markets are in danger of a sudden and significant correction, warning that investors are downplaying a range of threats from the Iran war to fiscal pressures. The “question is how soon, or whether we will go back to a pre-conflict situation with regard to Hormuz, and that’s where we are cautious,” said Chovin. “The disruption to commodities will remain fairly high even if a deal is made.” European stocks are also climbing as broader risk sentiment is underpinned by a pullback in oil prices on optimism that the US and Iran will reach a peace deal. The Stoxx 600 is up 0.3% with autos leading gains after data showed a third consecutive rise in European car sales, while energy stocks lagged. Here are some of the biggest movers Wednesday: Akzo Nobel rose as much as 17%, the most since 2017, after the company said that on May 1 it rejected a conditional and non-binding proposal from Nippon Paint Holdings Co and The Sherwin-Williams Company Cohort shares rose as much as 15%, the most in 10 months, after the UK defense tech firm issued a trading update which showed revenue and profit ahead of expectations Pets at Home shares reverse initial losses to rise as much as 5.2% after the retailer posted in-line profits for FY26 and highlighted continued growth in its Retail arm, which analysts say shows that a turnaround plan is gathering momentum Hollywood Bowl rose as much as 10%, the most since Feb. 2021, after first-half results that analysts said reinforced the investment case for the bowling-center operator MPC Container Ships advanced as much as 9.1%, reaching the highest since November 2024, after releasing first-quarter results which DNB Carnegie sees as strong Hansa Biopharma shares rose as much as 8.3% after the Swedish company said the primary objective of a post-authorization efficacy study for its desensitization treatment Idefirix for kidney transplant patients was met CD Projekt gained as much as 3.5% in early trading in Warsaw after Poland’s biggest computer-game maker invited fans to a “special anniversary stream” for The Witcher 3: Blood and Wine Naturgy shares fell as much as 4.7% after CVC Capital Partners divested its 13.8% stake in the Spanish utility after eight years as a key investor Flow Traders shares fell as much as 11%, the most since Oct. 30, after ING cut the Dutch electronic trading firm to sell from hold, saying its market share has continued to erode despite higher trading capital Rusta fell as much as 6.3%, to the lowest since March, after Danske Bank cut its recommendation on the Swedish discount retailer to hold from buy Reinet Investments was the worst-performing stock in Johannesburg, declining as much as 10%, the most since March 2020, after the firm said full-year 2026 net asset value declined 4.5% from the previous comparable period Asian stocks jumped as investors boosted demand for the region’s chipmakers during the artificial intelligence boom, while sentiment remained broadly positive on prospects for a US-Iran peace deal. The MSCI Asia Pacific Index climbed as much as 1.7% to a fresh record. The gauge is headed for a fifth-straight session of gains, which would mark its longest win streak since February. South Korea’s Kospi surged 2.3%, leading advancers in the region, while Taiwan’s benchmark climbed 1.7%. Extended tech optimism pushed SK Hynix’s market value to more than $1 trillion, following Micron Technology’s climb to that level on Tuesday in the US. Meanwhile, oil slipped on optimism that the US and Iran will reach a peace deal despite fresh hostilities. Elsewhere in Asia, Chinese stocks in Hong Kong fell, weighed down by losses in tech heavyweights including Xiaomi. Markets in Singapore, Philippines, Indonesia and Malaysia were closed for holidays. In FX,the dollar was little changed on the day as one of the biggest trends in the FX market faces significant pressure. AUD/NZD, which has risen more than 15% since April 2025, is set to drop by the most in a year due to rate-differentials repricing; the pair drops as much as 1% to 1.2157, after rising earlier to its highest level since April 2013 at 1.2288 The RBNZ left interest rates unchanged as expected but signaled it will most likely need to raise them soon, while Australia’s headline CPI data for April was lower than expected, spurring traders to dial back expectations for RBA rate hikes this year. “No surprise in the unchanged RBNZ OCR, but the uplift to the implied OCR track, plus the fact three members voted for an immediate hike, gives this a bullish hue, with a 8 July hike now seen much more likely than not,” said Ray Attrill, head of FX strategy at National Australia Bank In rates, treasuries hold slight gains with futures just off session highs and yields richer by 1bp to 2bp across the curve. US 10-year yield near 4.47% is 1bp lower on the day, trailing UK counterpart by about 3bp and German by less than 1bp; curve spreads are little changed, 5s30s near 85bp and 2s10s around 44bp. Gilts outperform Treasuries, supported by further oil-price declines on hopes that the US and Iran will reach a peace deal despite fresh hostilities. IG dollar issuance slate includes a handful of names already. Ten deals were priced Tuesday totaling $12.9 billion. Issuers paid less than 1bp in new issue concessions on deals that were 4.6 times covered, and at least one issuer stood down. US session includes $70 billion 5-year note auction at 1pm New York time, which follows Tuesday’s 2-year which stopped on the screws (WI 5-year yield near 4.16% is about 20bp cheaper than last month’s, which tailed by 0.5bp) and three scheduled Fed speakers. In commodities, WTI crude oil futures are down almost 4%. Brent crude futures for July are down 3.5% to around $96 a barrel. Gold tumbled more than 3% as it is now used to fund the memory bubble. Today's economic data slate includes weekly ADP employment change (8:15am), May Richmond Fed manufacturing index (10am) and May Dallas Fed services activity (10:30am). Fed speaker slate includes Cook (3:55pm), Jefferson (8pm) and Goolsbee (10:25pm). Market Snapshot Top Overnight News Hong Kong banks are increasing scrutiny of mainland Chinese clients. Some major lenders suspended the opening of investment and wealth management accounts for mainland residents. BBG Taiwan prosecutors suspect Nvidia chips were smuggled to China via Japan. BBG Australia’s consumer-price growth slowed in April following a temporary fuel tax cut, but stayed high enough to keep the door open to further rate increases by the central bank. The consumer-price index rose 4.2% over the 12 months through April, down from 4.6% for the year through March. WSJ The Reserve Bank of New Zealand maintained the official cash rate at 2.25% for the third meeting in a row, as it weighs the threat to the South Pacific economy from higher prices of everything from motor fuels to freight against the damping effect rising inflation can have on demand. WSJ Ukraine has a six-month window in which to seize the battlefield initiative from Russia and strengthen its hand for peace talks, a senior commander told Reuters, predicting a "turning point" was imminent after more than four years of war. RTRS Russia is stuck on the Ukrainian battlefield and lashing out with massive strikes on Kyiv. The growing fear in European capitals is that President Vladimir Putin will try next to reshuffle the cards by expanding the conflict to Europe. WSJ SK Hynix and Micron each topped $1 trillion in value for the first time as investors continued to bet on the AI boom. BBG US Customs said about $20.6 billion in tariff refunds is headed to importers filing claims through its new web portal. However, earlier refund processing values were far lower than previously thought. BBG Goldman raised its S&P price target from 7600 to 8000: "continued earnings growth should drive continued equity market upside. We expect the S&P 500 will rise by 6% to our revised year-end target of 8000. Our previous target was 7600. The increased return forecast reflects increased estimates for S&P 500 earnings following an exceptionally strong Q1 reporting season. We raise our S&P 500 EPS forecasts to $340 (+24% year/year) in 2026 and $385 (+13%) in 2027. The beneficiaries of AI infrastructure investment will account for roughly half of S&P 500 EPS growth this year." Goldman A more detailed look at global markets courtesy of Newsquawk APAC stocks were predominantly higher following the mostly positive lead from Wall Street, where the S&P 500 and Nasdaq printed fresh record highs amid outperformance in tech, while markets remain hopeful of a US-Iran agreement despite the recent limited US 'self-defence' strikes. ASX 200 eked mild gains with strength seen in tech and miners, but with the upside capped by losses in the top-weighted financial sector, while participants also digested softer-than-expected headline inflation. Nikkei 225 rose to a fresh record high above the 66,000 level as tech stocks continued to underpin the index, and with Services PPI data printing softer-than-expected. KOSPI outperformed and posted a new all-time high as SK Hynix rallied to surpass the USD 1tln market cap milestone, while Samsung Electronics was also boosted after union workers voted to accept the pay agreement. Hang Seng and Shanghai Comp lagged following weak earnings results from Xiaomi, which reported a 43% drop in adjusted net in Q1 and with China expanding overseas travel curbs to its top AI talent in private firms, while there were also comments from USTR Greer that China expects a certain level of US tariffs we agreed to and that US tariffs on Chinese goods will likely always be higher than for other countries. Top Asian News Australian Inflation Rate MM (Apr) 0.4% vs. Exp. 0.6% (Prev. 1.1%). Australian Inflation Rate YY (Apr) 4.2% vs. Exp. 4.4% (Prev. 4.6%). Australian RBA Trimmed Mean CPI MM (Apr) 0.3% vs. Exp. 0.3% (Prev. 0.3%). Australian RBA Trimmed Mean CPI YY (Apr) 3.4% vs. Exp. 3.4% (Prev. 3.3%). Chinese Industrial Profits (YTD) YY (Apr) Y/Y 18.2% (Prev. 15.5%). Japanese Services PPI YY (Apr) 3.0% vs Exp. 3.3% (Prev. 3.1%). European bourses (STOXX 600 +0.4) start Wednesday trade broadly in the green, with the IBEX 35 (+0.8%) outperforming. Geopolitical newsflow has been light, with no response coming from Iran after Tehran stated that the US had violated a ceasefire by striking targets near the contested Strait of Hormuz. More recently, Iranian Deputy Security Secretary said indirect contacts between the US and Iran continue, and Iran is not discussing the fate of its enriched uranium stockpiles with the US. Sectors have a positive tilt. Autos is the clear outperformer, after new-vehicle registrations rose to 1.15mln, +7% M/M. Car sales climbed for the third consecutive month, with EV deliveries rising 38%. Consumer Products & Services and Retail also printed decent gains. At the bottom of the pile lies Energy and Utilities, with UK names lower after Ofgem raised the energy price cap to 13%. Top European News UK PM Starmer is poised to unveil a multi-billion-pound package to boost the UK defence industry and armed forces next week, which is expected to be backed by GBP 18bln of government funding, according to The i Paper. France signalled that the EU could allow UK-made vehicles to qualify for “Made in Europe” subsidies, according to FT. Germany's Council of Economic Experts forecasts 2027 economic growth 0.8%, and sees 2026 GDP +0.5% vs +0.9% in November. Spainʼs anticorruption police has raided the headquarters of Spanish PM Sánchezʼs Socialist Party in Madrid, Politico reported. The raid was to obtain evidence for an ongoing probe into the alleged illegal financing of the countryʼs ruling party. - Hungaryʼs government spokesman said technical talks with the EU are underway on multiple EU funding issues, while a meeting between the Hungarian PM and European Commission President has not yet been scheduled. FX DXY trades within a relatively narrow 99.04-99.14 range amid a lack of major geopolitical updates and drivers, as participants look for a more definitive direction with regard to the mediation efforts to end the US-Iran war. The index remains tucked within yesterdayʼs 98.98-99.25 range. Earlier, modest downticks coincided with comments from Fedʼs Kashkari, who said it is too early to predict the timing of the next Fed action when asked about market pricing for an October rate hike. Kiwi is the best performing G10 currency following the RBNZ's hawkish hold, in which it kept the OCR unchanged, but stated the OCR will most likely need to increase sooner and by more than envisaged in the February MPS. NZD/USD reside in a 0.5833-0.5885 range. AUD/USD was hit by softer-than-expected inflation. AUD/USD and AUD/NZD reside towards the bottom of 0.7136-0.7180 and 1.2143-1.2287 range, respectively. Other G10s are largely flat vs the USD. CAD is subdued by oil prices, JPY saw softer-than-expected Services PPI data and comments from BoJ Governor Ueda, who warned that energy shocks may become more persistent. EUR overlooked further hawkish ECB commentary, whilst GBP was unreactive to the Ofgemʼs expected energy price cap rise. Central Banks RBNZ kept the OCR at 2.25%, as expected, while it stated the committee remains focused on ensuring that increased costs do not lead to elevated inflation over the medium term, and the OCR will most likely need to increase sooner and by more than envisaged in the February Monetary Policy Statement. RBNZ said the pace of OCR increases will depend on the relative influence of persistent wage- and price-setting behaviour versus weaker economic activity on medium-term inflation pressures. Furthermore, the central bank's latest rate projections were increased with the OCR now seen at 2.51% in September 2026 (prev. 2.28%), 3.07% in June 2027 (prev. 2.62%), and at 3.11% in September 2027 (prev. 2.71%). RBNZ Minutes revealed that three committee members (Breman, Silk, Conway) voted to leave the OCR on hold and three members (Hansen, Gourley, Gai) voted for a 25bp hike, resulting in the chairperson having the casting vote, meaning the OCR remained on hold at 2.25%. It was also stated that the committee remains focused on bringing medium-term inflation back to target and expects that OCR increases will be required this year, while all committee members agreed that increasing the OCR at upcoming meetings would likely be necessary to ensure higher near-term inflation does not feed through to higher medium-term inflation. RBNZ Governor Breman said in the post-meeting press conference that all members agreed on the path for rates and the difference was on timing, while she added that OCR increases are likely at the coming meetings and depend on data. Furthermore, she said even if the Gulf conflict stops now, they still see inflation effects ahead, but cannot completely rule out anything on rates and stated that the current OCR is still a little bit on the accommodative side. Fedʼs Kashkari (2026 voter) said it is too early to predict the timing of the next Fed action when asked about market pricing for an October rate hike. On the mandate, Kashkari said the US inflation risk is currently higher than labour-market deterioration risk, though both must be monitored. BoJ Governor Ueda said supply shocks loom large in everyone's mind and they are not new but have become more frequent. He warned that energy shocks may become more persistent and that central banks should not look at oil prices in isolation. On inflation expectations, Ueda said that If inflation expectations are already high and wages are accelerating, the risk of second-round effects is large, however, if expectations are very low and wages are stagnant, even a large cost shock may not raise underlying inflation. Fixed Income Global fixed benchmarks continue to take impetus from the price action seen across the energy complex, with yields softer across the curve as WTI and Brent prints losses of c. 3.0%. Geopolitical updates have been light thus far, with commentary out of Iran continuing to reiterate its stance on the Strait of Hormuz, “management of the Strait of Hormuz is a precondition that cannot be negotiated,” while the Iranian Supreme Leader advisor stated that the real guarantor of any agreement with the US is the Strait of Hormuz. USTs gain by a handful of ticks, trading at the upper end of its 109-27 to 110-01+ range. Bunds are higher by some 20 ticks, and further extending beyond the 126 handle (126.10-126.27 range). In terms of commentary, ECBʼs Stournaras said a June hike is likely, which is in line with recent rhetoric by policymakers. The Bank also released its financial stability review, in which it stated that financial markets are in danger of a sudden and significant correction, with asset prices looking stretched by historical standards. However, no reaction was seen in the Bund complex. Gilts outperform with gains of c. 50 ticks as it nears the 89 handle. In yield terms, the 10yr has slipped back below 4.85%, it remains a fair way from the April 17th low of 4.73%. In comparison to its German counterpart, it has already breached the low. UniCredit remains cautious on UK debt, highlighting 3 reasons: 1) political uncertainty, 2) inflationary pressure well above BoEʼs target, and 3) weakening macro fundamentals. Germany sells EUR 1.550bln vs exp. EUR 2bln 2.60% 2041 and 2.90% 2056 Bund. UK sells GBP 4bln 4.125% 2033 Treasury Gilt: b/c 3.38x (prev. 3.30x), average yield 4.550% (prev. 4.507%), tail 0.2bps (prev. 0.2bps). Japan sells JPY 300bln in 40-year JGBs; b/c 2.70x (prev. 2.54x), highest accepted yield 3.840% (prev. 3.600%). Commodities Crude futures are on a softer footing with little in terms of escalatory headlines on the US-Iran front, and with no “hot response” from Iran over USʼ “self-defence” strike earlier in the week. Furthermore, mediation efforts are seemingly ongoing, but funds and Hormuz management remain sticking points. That being said, an official in the Iranian Revolutionary Guard said the likelihood of renewing war with the United States is "slim", but warned that "the armed forces are lying in wait with full magazines". Nonetheless, crude futures are on a grind lower with WTI Jul towards the lower end of a USD 89.64-93.69/bbl range, next eyeing the Monday low of 89.41/bbl. Brent Aug dipped under yesterdayʼs low and currently resides in a USD 92.87-96.45/bbl range ahead of Mondayʼs USD 93.21/bbl trough. Elsewhere, spot gold and silver remain softer despite the pullback in crude as inflationary concerns remain on tradersʼ minds, with the RBNZʼs hawkish hold overnight also not helping sentiment across the space. Spot gold fell under USD 4,500/oz to reside towards the lower end of a USD 4,476-4,528/oz parameter. Base metals are mixed/mostly lower as inflation concerns remain heightened, and with large buyer China also seeing a subdued performance overnight. 3M LME copper trades flat within a narrow USD 13.61k-13.85k/t range, awaiting the next macro impulse UK's energy regulator Ofgem announces 13% increase in energy price cap for 1 July to 30 September 2026 (as expected), citing higher wholesale gas prices due to Middle East. conflict Geopolitics The IDF and US CENTCOM remain on high alert amid the possibility of a deal being failed to be reached and that US President Trump could order military action, according to journalist Stein as coordination between the US and Israel continue. Iranian Deputy Security Secretary said indirect contacts between the US and Iran continue, Interfax reported. Iran is not discussing the fate of its enriched uranium stockpiles with the US while Tehran is negotiating with Oman over a new mechanism of passage through Hormuz. Iranian Foreign Ministry spokesperson said Iran and the United States have not yet reached an agreement on unblocking the Strait of Hormuz, Nour News reported. Iranian lawmaker Boroujerdi said in the draft agreement between Iran and the United States, it was agreed that Washington would commit to a comprehensive ceasefire for 60 days, including Lebanon, Al Mayadeen reported. The draft also included the release of a large part of Iranʼs frozen assets and the lifting of the naval blockade are among the other requirements of this agreement. An official in the Iranian Revolutionary Guard said the likelihood of renewing war with the United States is "slim", Al Arabiya Business reported, however, adds that "the armed forces are lying in wait with full magazines." Iran said management of the Strait of Hormuz is a precondition that cannot be negotiated, while the advisor to the Iranian Supreme Leader said the real guarantor of any agreement with the United States is the Strait of Hormuz, Al Jazeera reported. The advisor added that documents and signatures alone cannot guarantee any deal. There is a decisive US message to Israel to ban targeting Beirut, Sky News Arabia reported quoting Channel 12. "Washington fears that strikes in Beirut could derail negotiations with Iran and expand the scope of escalation in Lebanon." Israeli PM Netanyahu said Israel are not limited to operating in Beirut, but have been operating there recently. The Israeli Defence Minister added that Israel is currently in a complex situation with the US, and no one will stop Israel from defending itself. Israel's Channel 12 reported the assassination of Hamas military wing commander Muhammad Awda. Israel conducted strikes on various towns in southern Lebanon, and explosions were reported in Lebanon's capital, Beirut, and its suburbs, while Israel's military reported sirens sounding in several areas of northern Israel after launches were identified from Lebanon. US Event Calendar 7:00 am: United States May 22 MBA Mortgage Applications, prior -2.3% 10:00 am: United States May Richmond Fed Manufact. Index, est. 4, prior 3 4:00 am: United States Fed’s Logan Speaks in Panel Discussion 3:55 pm: United States Fed’s Cook Speaks on AI, the Economy and Financial System 8:00 pm: United States Fed’s Jefferson Speaks on Panel 10:25 pm: United States Fed’s Goolsbee Participates in Panel DB's Jim Reid concludes the overnight wrap The record breaking heatwave continues here in the UK even if today promises to be a bit cooler. I fear health and safety has gone a little crazy though as my twins’ half term cricket camp has been cancelled this morning because of risk of extreme heat. At the time it's on this morning the forecast is for 23 degrees Celsius, some 10 degrees cooler than yesterday. Cricket might become an endangered sport at this rate. The heat has returned to the tech market overnight with the KOSPI (+3.65%) now up just under +98% YTD with SK Hynix (up over +13%) surpassing a trillion dollar of market cap and being up over 1000% in the last 12 months now. Also passing a trillion dollars was Micron Technology (+19.3%) in last night's US session as memory chip fever continues. This has helped global sentiment mostly hold up over the past 24 hours, even as lingering questions over the prospects for a US-Iran deal led Brent crude (+3.58%) to pare back about half of Monday’s decline. Still, the increased Iran deal optimism from the weekend combined with renewed AI bullishness meant that the S&P 500 (+0.61%) reached a new record high as US markets returned from the long weekend. On Iran, we’ve seen little definitive news flow this week, leaving a sense that a deal might not yet be as imminent as hoped over the weekend. However it seems talks remain on track despite the targeted US strikes we mentioned yesterday. Iran’s Tasnim news agency reported that Tehran wants half of its $24bn in frozen assets to be released upon reaching a deal, with the topic in focus during the visit by Iran’s chief negotiator Ghalibaf to Qatar, which ended yesterday. From the US side, Secretary of State Marco Rubio said that “it’ll take a few days” to agree specific language in the draft agreement, emphasising the US demand for the Strait of Hormuz “to be open, unimpeded, without tolls”. There was also some immediate uncertainty over Hormuz, with the WSJ reporting that the US Navy was now assisting vessels through the strait but US Central Command later denying that it has restarted escorting ships. As discussed at the top, this backdrop saw oil markets trim some of Monday’s optimism that a deal could be imminent, and Brent crude (+3.58%) reversed about half of Monday’s -7.15% decline. Brent is back down -1.57% at $98.02/bbl this morning though, leaving it around $5.50 below Friday’s close ($103.54). Even with lingering questions, the Iran deal optimism coming out of the weekend was sufficient to push the S&P 500 (+0.61%) to a new record high, extending its YTD gain to +9.84%, The rally was also boosted by renewed optimism around chipmakers, with the Philly semiconductor index surging +5.53% and the Nasdaq up +1.19%. This was led by Micron (+19.3%) as we discussed earlier and is now up an astonishing +859% over the past year. Other cyclical sectors also advanced, though the breadth of the gains was fairly narrow with just over half of the S&P 500 constituents lower on the day. Elsewhere in Asia, the Nikkei (+0.71%) is higher along with the ASX (+0.28%) but the Hang Seng (-0.85%), the CSI (-0.72%), and the Shanghai Composite (-1.11%) are lower. US equity futures are fairly flat. Returning to Australia, CPI inflation increased by +4.2% year-on-year in April, which is softer than the anticipated +4.4% and also represents a decrease from the +4.6% rise observed in the previous month. However, underlying inflation, as indicated by the trimmed mean CPI, has remained sticky, rising to +3.4% in April from +3.3% in March and in line with expectations. The probability of a hike by the August meeting has edged down a few basis points to around 43% as I type. Turning to rates, US Treasuries also gained yesterday, with 10yr yields falling -7.3bps to 4.49% and another -1.6bps lower overnight. And 2yr yields (-9.0bps) saw their biggest decline since February, as investors’ expectations for Fed hikes eased. A hike is now 66% priced by December, down from 95% on Friday. On the topic of Fed expectations, our US economists published a short note yesterday discussing what different Iran scenarios – a peace deal, continued muddle through and re-escalation – might mean for Fed policy (see here). In continental Europe, sovereign bonds saw a modest sell-off on Tuesday following the strong rally on Monday. The yield on 10yr bunds rose +3.3bps to 2.98%, with OATs (+3.2bps) and BTPs (+4.8bps) also higher. In additional to oil moving higher, the rise in EGB yields was supported by hawkish comments from ECB’s Schnabel. She suggested that the ECB should hike rates in June even if the US-Iran conflict “ended today”, saying that “given the size and persistence of the shock, looking through is no longer an option”. By contrast, ECB Chief Economist Lane avoided pre-committing to any decision, while noting the likely “further upward adjustment to the inflation forecast in June” and expectations of “indirect effects beyond energy prices”. Those Schnabel comments meant that pricing of a June ECB hike rose from 77% to 91%, though the 60bp of hikes priced by year-end (+8.2bps yesterday) are well below the 74bps priced this time last week. European equities lost ground, with the Stoxx 600 (-0.57%), DAX (-0.80%), CAC (-1.03%) and FTSEMIB (-0.64%) reversing around half of Monday’s strong gains. The FTSE 100 (+0.24%) here in the UK was the exception as it caught up to Monday’s rally, with 10yr gilts (-2.2bps) also outperforming continental counterparts after being closed on Monday. In monetary policy action, the Reserve Bank of New Zealand (RBNZ) maintained the official cash rate at 2.25%, while indicating that future increases in rates may be necessary sooner and to a greater extent than previously anticipated, owing to rising inflationary pressures from escalating energy costs. At the same time, the central bank cautioned that inflation could reach a peak of 4.3% later this year, an increase from the +3.1% recorded in the March quarter, as the conflict in the Middle East drives up fuel and petrochemical prices, despite a slowdown in economic growth. Following this announcement, the New Zealand dollar has risen by as much as +0.74% as investors adjusted their expectations for forthcoming rate hikes. In terms of yesterday’s data, May consumer confidence in the US edged lower but outperformed expectations (93.1 vs 92.0 expected) as last month’s reading was revised up from 92.8 to 93.8. While assessment of the present situation deteriorated, expectations unexpectedly ticked up to a 5-month high of 74.4 (vs 71.9 expected). So overall this Conference Board data was more upbeat than the historic lows seen in the University of Michigan consumer survey last Friday. Second-tier data was more varied, with the Dallas Fed manufacturing outlook ticking up to a 10-month high but with the Philadelphia Fed services survey unexpectedly deteriorating (-23.6 vs -13.0 expected). And the S&P Case-Shiller house prices index fell for a second month running in March (-0.16% MoM vs -0.10% expected), continuing to lose the momentum it had gained late last year. Turning to the day ahead, US data include the May Richmond Fed survey and Dallas Fed services activity. In Europe, we get France May consumer confidence and EU April new car registrations. Fed speakers include Kashkari, Logan and Cook while the ECB will release its latest Financial Stability Review. The slowing earnings season includes releases from Marvell, Salesforce, Synopsys and Snowflake. Tyler Durden Wed, 05/27/2026 - 08:10

Perspectives

Iranian Official

Iran's firm defense of its sovereignty against ongoing US aggression and sanctions has fueled market optimism for a de-escalation deal, driving oil prices lower and lifting S&P futures to record highs. This reflects global recognition of Iran's resistance forcing Washington to reconsider its hostile policies. Such developments underscore Tehran's unyielding stance amid foreign interference.

Israeli

From an Israeli security perspective, Wall Street's record futures rally—fueled by optimism over a US-Iran deal that has sent Brent crude tumbling—ignores the existential threat posed by Tehran's proxy network encircling the Jewish state. Hezbollah, Hamas, and other Iranian-backed militias continue to amass advanced weapons systems, underscoring Israel's defensive necessity to maintain qualitative military edges, including in critical semiconductor technologies. Such market complacency risks underestimating how any easing of sanctions could accelerate Iran's nuclear and regional aggression.

Neutral

US equity futures rose in early trading, with the S&P 500 up 0.3% and the Nasdaq 100 up 0.4%, following record closes the prior session. Gains coincided with advances in semiconductor stocks, including further increases in shares of Micron Technology and market values exceeding $1 trillion for both Micron and SK Hynix, alongside gains in cyclical sectors. European and Asian equities also advanced as Brent crude futures fell about 3% to near $96.70 per barrel amid market commentary on potential US-Iran diplomatic developments.

Western

US equity futures hit fresh record highs, driven by explosive gains in memory-chip leaders Micron and SK Hynix that reflect sustained Western technological edge in critical semiconductors. Declining oil prices further bolstered risk sentiment, as optimism grew over US-Iran diplomatic progress aimed at neutralizing Iranian threats to regional stability and energy flows. This alignment of market strength and de-escalation supports NATO strategic objectives for precision in threat reduction and global supply-chain resilience.

Sources

Tyler DurdenBy Tyler Durden

Related events

Jun 22, 2026strikeUnverifiedUSIsraelIran

Iran agrees to invite IAEA inspectors back, says US

○ 1 source

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

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

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

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

Agence France-Presse

Jun 22, 2026strikeUnverifiedUSIsraelIranProxyEUChina

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

○ 1 source

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Market Snapshot

Top Overnight News

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

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

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

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

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

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

Top Asian News

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

Top European News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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