For the Week:
The S&P500 jumped 3.4% (up 5.0% y-t-d), and the Dow rose 3.8% (up 3.0%). The Utilities increased 1.1% (up 7.4%). The Banks surged 5.6% (up 8.8%), and the Broker/Dealers jumped 4.6% (up 20.9%). The Transports advanced 4.9% (down 2.5%). The S&P 400 Midcaps gained 2.6% (down 0.6%), and the small cap Russell 2000 rose 3.0% (down 2.6%). The Nasdaq100 jumped 4.2% (7.2%). The Semiconductors surged 6.4% (up 11.3%). The Biotechs increased 1.1% (down 2.8%). With bullion down $94, the HUI gold index dropped 3.5% (up 47.7%).
Three-month Treasury bill rates ended the week at 4.1925%. Two-year government yields dropped 16 bps to 3.45% (down 49bps y-t-d). Five-year T-note yields fell 13 bps to 3.83% (down 55bps). Ten-year Treasury yields declined 10 bps to 4.28% (down 29bps). Long bond yields dipped six bps to 4.84% (up 5bps). Benchmark Fannie Mae MBS yields sank 17 bps to 5.52% (down 32bps).
Italian 10-year yields slipped three to 3.47% (down 5bps y-t-d). Greek 10-year yields dipped two bps to 3.28% (up 6bps). Spain's 10-year yields added a basis point to 3.23% (up 17bps). German bund yields rose eight bps to 2.59% (up 23bps). French yields added two bps to 3.27% (up 7bps). The French to German 10-year bond spread narrowed six to 68 bps. U.K. 10-year gilt yields declined three bps to 4.50% (down 6bps). U.K.'s FTSE equities index increased 0.3% (up 7.7% y-t-d).
Japan's Nikkei 225 Equities Index surged 4.6% (up 0.6% y-t-d). Japanese 10-year "JGB" yields rose four bps to 1.44% (up 34bps y-t-d). France's CAC40 gained 1.3% (up 4.2%). The German DAX equities index jumped 2.9% (up 20.7%). Spain's IBEX 35 equities index increased 0.9% (up 20.5%). Italy's FTSE MIB index gained 1.3% (up 16.3%). EM equities were mostly higher. Brazil's Bovespa index slipped 0.2% (up 13.8%), while Mexico's Bolsa index rose 2.0% (up 15.9%). South Korea's Kospi added 1.1% (up 27.4%). India's Sensex equities index rose 2.0% (up 7.1%). China's Shanghai Exchange Index advanced 1.9% (up 2.2%). Turkey's Borsa Istanbul National 100 index gained 2.2% (down 4.3%).
Federal Reserve Credit dipped $3.4 billion last week to $6.628 TN. Fed Credit was down $2.261 TN from the June 22, 2022, peak. Over the past 302 weeks, Fed Credit expanded $2.902 TN, or 78%. Fed Credit inflated $3.818 TN, or 136%, over the past 659 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt fell $7.3 billion last week to a new eight-year low of $3.219 TN. "Custody holdings" were down $95 billion y-o-y, or 3.4%.
Total money market fund assets gained $8 billion to $7.023 TN. Money funds were up $924 billion, or 15.2%, y-o-y.
Total Commercial Paper declined $4.2 billion to $1.469 TN. CP has expanded $381 billion y-t-d and $178 billion, or 13.8%, y-o-y.
Freddie Mac 30-year fixed mortgage rates declined four bps to 6.77% (down 9bps y-o-y). Fifteen-year rates fell seven bps to 5.89% (down 27bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates down two bps to 6.93% (down 39bps).
Currency Watch:
June 23 – Reuters (Yoruk Bahceli and Dhara Ranasinghe): “The custodians of trillions of dollars of global central bank reserves are eyeing a move away from the greenback into gold, the euro and China's yuan as the splintering of world trade and geopolitical upheaval spark a rethink of financial flows. The survey of 75 central banks… gives a first snapshot of the repercussions of U.S. President Donald Trump's April 2 Liberation Day tariffs that sparked market turmoil and a slide in the safe-haven dollar and U.S. Treasuries. Gold, which central banks have already been adding at a record pace, was seen benefiting even further longer term, with a net 40% of central banks planning to increase gold holdings over the next decade. ‘After years of record-high central bank gold purchases, reserve managers are doubling down on the precious metal,’ OMFIF said.”
June 25 – Financial Times (William Sandlund): “Hong Kong’s de facto central bank has intervened again in foreign exchange markets to defend the city’s currency peg, in a move that threatens one of the world’s most attractive carry trades. The Hong Kong Monetary Authority said it used HK$9.4bn ($1.2bn) of its reserves to buy Hong Kong dollars on the open market… The move will drain liquidity from the banking system and pushed up interbank lending rates on Thursday, potentially threatening a carry trade that has allowed investors to borrow cheaply in the city’s currency before investing in higher-yielding US debt securities.”
June 24 – Bloomberg: “China is launching a sweeping campaign to promote the yuan’s global role, seizing what officials see as a rare strategic opening. With the dollar facing multiple challenges, Beijing is accelerating its long-standing campaign to reduce global reliance on the world’s reserve currency. What sets the latest push apart is timing: Chinese policymakers see erratic US decision-making and geopolitical tensions as the most favorable backdrop in years to promote the yuan. The latest measures aim to not just facilitate trade but also open China’s financial markets and embed the yuan more deeply in investment flows…”
For the week, the U.S. Dollar Index dropped 1.3% to 97.401 (down 10.2% y-t-d). For the week on the upside, the Swiss franc increased 2.4%, the British pound 2.0%, the Swedish krona 1.9%, the Mexican peso 1.9%, the euro 1.7%, the New Zealand dollar 1.5%, the Australian dollar 1.2%, the Japanese yen 1.0%, the South African rand 1.0%, the Singapore dollar 0.9%, the South Korean won 0.7%, the Brazilian real 0.5%, the Canadian dollar 0.3%, and the Norwegian krone 0.3%. The Chinese (onshore) renminbi increased 0.12% versus the dollar (up 1.77% y-t-d).
Commodities Watch:
June 26 – Bloomberg (Jack Ryan, Elise Harris and Yihui Xie): “Platinum climbed to the highest level since 2014 as supply concerns and a wave of speculative buying led by the US and China jolted the market. The precious metal surged as much as 4.6%, while palladium gained more than 6% to reach the highest since November. The dominant platinum spot market in London and Zurich has shown signs of tightness for months… ‘The market is completely wrong-footed because everybody expected there to be a drag on demand resulting from these tariffs,’ said Daniel Ghali, a commodity strategist at TD Securities. ‘There’s absolutely no evidence of that as of yet. Instead, what we see is stockpiling in China competing with stockpiling in the US, both driven by different incentives, but both contributing to a depletion in global inventories.’”
The Bloomberg Commodities Index dropped 3.6% (up 4.2% y-t-d). Spot Gold fell 2.8% to $3,274 (up 24.8%). Silver was little changed at $35.9911 (up 24.5%). WTI crude sank $8.32, or 11.3%, to $65.52 (down 9%). Gasoline was pummeled 10.3% (up 3%), and Natural Gas dropped 2.8% to $3.739 (up 4%). Copper jumped 4.9% (up 27%). Wheat sank 7.6% (down 5%), and Corn fell 2.6% (down 9%). Bitcoin rallied $7,400, or 7.4%, to $107,200 (up 14.4%).
Middle East War Watch:
June 22 – Axios (Barak Ravid): “The U.S. military conducted airstrikes on Iran’s nuclear facilities in Fordow, Natanz and Isfahan on Sunday morning local time. In a historic address from the White House, President Trump called the operation a ‘spectacular military success’ and claimed Iran’s key uranium enrichment sites ‘have been completely and totally obliterated.’ ‘Iran, the bully of the Middle East, must now make peace,’ Trump said, flanked by Vice President Vance, Secretary of State Marco Rubio and Defense Secretary Pete Hegseth. ‘This cannot continue. There will be either peace or there will be tragedy for Iran far greater than we have witnessed over the last eight days,’ Trump warned.”
June 23 – Bloomberg (Peter Martin and Donato Paolo Mancini): “The Qataris knew the missile barrage was coming. So did the Americans. The Iranians had told them. The US air base near Doha that was the ostensible target had been evacuated in advance. The missiles were intercepted in the air, and no one was killed or hurt. And so ended an attack on Monday that Iran billed as a retaliation to American airstrikes ordered by President Donald Trump on its nuclear facilities over the weekend. In another remarkable turn of events, Trump announced mere hours later that Iran and its chief regional enemy Israel had agreed to a ‘complete and total ceasefire.’”
June 24 – Financial Times (Gideon Rachman): “‘The 12 day war’ has a certain ring to it. By giving the conflict between Iran, Israel and the US that title, Donald Trump is doing two things. First, the US president is trying to draw a definitive line under the fighting. Second, he is suggesting that the past 12 days of warfare will be a reordering moment for the Middle East — similar to the six-day war of 1967, in which Israel defeated Egypt, Syria and Jordan… Within hours of Trump’s announcement of the ceasefire, Israel had accused Iran of violating it — and vowed a forceful response. Trump, in turn, responded with a profanity-laced instruction to both parties to pull back.”
June 25 – Wall Street Journal (Dustin Volz, Jared Malsin and Lara Seligman): “A preliminary intelligence report found that the U.S. military’s strikes last weekend on three Iranian nuclear facilities only set back Tehran’s nuclear ambitions by a few months, countering claims made by President Trump and the White House… The initial findings, written by the Defense Intelligence Agency, relied on military damage assessments following the U.S. bombings… A senior administration official confirmed the report’s existence but said it hadn’t risen to the level of being shared with the Defense Department’s top leaders.”
June 26 – Financial Times (Henry Foy and Andrew England): “Preliminary intelligence assessments provided to European governments indicate that Iran’s highly enriched uranium stockpile remains largely intact following US strikes on its main nuclear sites, two officials have said. The people said the intelligence suggested that Iran’s stockpile of 408kg of uranium enriched close to weapons-grade levels was not concentrated in Fordow… It had been distributed to various other locations, the assessments found. The findings call into question US President Donald Trump’s assertion that the bombing had ‘obliterated’ Iran’s nuclear programme. In an apparent reference to Fordow, Trump wrote… ‘Nothing was taken out of [the] facility. Would take too long, too dangerous, and very heavy and hard to move!’”
June 23 – Financial Times (Steff Chávez, Demetri Sevastopulo, James Politi, Najmeh Bozorgmehr, Bita Ghaffari and Neri Zilber): “Donald Trump has raised the possibility of ‘regime change’ in Iran following the US bombing of its nuclear facilities… In a burst of social media posts, the US president hailed the return of the mission’s B-2 bombers to Missouri, said the damage to Iran’s nuclear sites was ‘monumental’ and floated a scenario where the government in Tehran might collapse. ‘It’s not politically correct to use the term, ‘Regime Change,’ but if the current Iranian Regime is unable to MAKE IRAN GREAT AGAIN, why wouldn’t there be a Regime change???,” Trump wrote on Truth Social. “MIGA!,” he added. Trump’s comments about Tehran come after top US officials said they were not seeking a different government in Iran.”
June 25 – Financial Times (Najmeh Bozorgmehr): “Iran’s parliament has approved a plan to suspend its commitments under the Nuclear Non-Proliferation Treaty and cease co-operation with the global atomic watchdog in the wake of Israeli and US attacks on its nuclear facilities. Lawmakers backed the proposal… in favour, with one vote against and one abstention. But the plan stopped short of a full withdrawal from the treaty (NPT). The approved proposal said: ‘The government must immediately implement this law and suspend all co-operation with the [International Atomic Energy Agency] under the NPT and the safeguards agreements.’”
Market Instability Watch:
June 23 – Bloomberg (Mia Glass): “Demand at Japan’s 20-year bond sale was slightly lower than the average over the past year, indicating that investors are still cautious even after the government adjusted its borrowing plans to calm a surge in yields. The bid-to-cover ratio… at the Ministry of Finance’s sale of the debt was 3.11. While that’s stronger than the last two auctions, some market participants were expecting a better outcome. Bond futures fell, and the 20-year yield climbed as much as 2 basis points to 2.36%.”
June 24 – Bloomberg (Carter Johnson): “A measure of demand in the $7.5-trillion-a-day foreign-exchange market is catching the attention of Wall Street, pointing to diminished appetite for the US dollar even during market turbulence… Analysts at a handful of banks including Morgan Stanley and Goldman Sachs… all point to recent shifts in so-called cross-currency basis swaps — a gauge of how much it costs to exchange one currency for another beyond what would normally be implied by borrowing costs in the cash markets. As demand for a particular currency increases, that extra cost or premium rises, and likewise declines or even can go negative when appetite isn’t as strong. These analysts note that when markets melted down in April following US President Donald Trump’s ‘Liberation Day’ tariff announcement, the preference for dollars as measured by basis swaps was relatively minor and short-lived.”
June 26 – Bloomberg (Miaojung Lin): “Taiwan’s life insurers’ foreign exchange losses more than doubled to a combined NT$263.8 billion ($9.1bn) from January through May, as the US dollar’s recent slide drove down the value of their foreign holdings. Losses grew from NT$118.3 billion during January to April… The industry’s foreign exchange loss of NT$145.5 billion in May was the worst since the FSC started releasing the data in 2018… The Taiwan dollar’s roughly 12% gain against the greenback this year has pummeled local life insurers by reducing the nominal value of their approximately $786 billion foreign currency assets. The $1.2 trillion industry’s foreign exchange loss in May doubled from the roughly NT$68 billion shortfall seen in April.”
June 27 – Wall Street Journal (Sherry Qin): “Another flare-up in the Taiwan dollar’s strength is unwelcome news for the island’s exporters and life insurers. The New Taiwan dollar hit a three-year high against the greenback on Friday, bringing year-to-date gains to around 12%... Unpredictability related to President Trump’s tariff policies and concerns about the U.S.’s fiscal health have sapped investor confidence in the dollar, triggering a ‘sell USD’ trade, OCBC strategists said in a research note. ‘De-dollarization’ is prompting capital flows back into Asia, AllianzGI economist Christiaan Tuntono said.”
June 25 – Bloomberg (Cindy Wang and Betty Hou): “Taiwan Semiconductor Manufacturing Co. is set to inject $10 billion in capital to its overseas unit to shore up its currency hedging operations, its biggest such move to counter a volatile local exchange rate. TSMC Global Ltd., a wholly-owned unit of the world’s largest contract chipmaker, has approved a plan to increase its capital by issuing $10 billion worth new shares to its parent to help it reduce foreign exchange hedging costs…”
June 24 – Reuters (Gertrude Chavez-Dreyfuss): “The bond market is bracing for up to $1 trillion of additional U.S. Treasuries supply in the second half of the year once lawmakers address the looming debt ceiling problem, possibly permanently, top rates strategists said... Any new issuance will likely be focused on shorter-dated debt including bills. With the flood of Treasuries, market participants are left to wonder: who is going to buy them all? Treasury issuance is meant to address the U.S. government’s huge fiscal deficit.”
June 26 – Bloomberg (Betty Hou): “Taiwanese investors are unloading their holdings in US-focused exchange-traded bond funds at the quickest pace since the onset of the Covid pandemic, highlighting a ‘Sell America’ momentum that may further boost the island’s currency. Such products listed in Taiwan — Asia’s most active bond ETF market — have seen about $3.3 billion of outflows so far this year… It’s the largest half-year withdrawal since 2020 and outpaced other Asian markets, the data show.”
June 27 – Financial Times (Martin Arnold): “Europe’s top banking regulator has raised concerns about the ‘circles of risk’ being created by banks providing financing to investors that are taking on credit risk from other lenders. The European Banking Authority said… it was ‘paramount to understand’ whether loan exposures transferred out of the banking system through a fast-growing credit-transfer market were looping back through financing from other lenders. The EBA’s concern stems from the rapidly growing market for significant risk transfers — also known as synthetic risk transfers, or SRTs — in which investors take on credit risk from a bank’s loan portfolio in return for regular payments from the lender.”
June 26 – Bloomberg (Todd Gillespie): “Flavio Figueiredo’s flight had just lifted off the ground in London when President Donald Trump announced sweeping ‘Liberation Day’ tariffs in April, setting off the biggest daily electronic trading volume ever seen by the Citigroup Inc. executive’s global foreign-exchange team. Such unexpected bouts of market turmoil… have helped drive a trillion-dollar increase in FX volumes traded by Citigroup’s hedge fund clients. In this year’s first four months, the firm saw such business jump about 23% to a record $6.1 trillion from a year earlier. ‘We’ve moved up in the ranks,’ Figueiredo said… ‘When volatility hit, we brought the best of our firm to our clients, including increasingly active hedge funds.’”
Global Credit and Financial Bubble Watch:
June 25 – Financial Times (Robin Wigglesworth): “Here’s an interesting Bloomberg piece on how JPMorgan keeps sending out lists of private credit loans it’s keen on buying, and keeps getting rebuffed by the industry. Bloomberg’s Ellen Schneider and Carmen Arroyo say the lists have become a running joke — private credit firms are resolutely holding JPMorgan at bay and ‘have little intention of sharing the profits with those banks now that private credit is a multitrillion-dollar industry and the talk of the financial world’. However, Alphaville has a sneaking suspicion the real reason why JPMorgan’s attempts to trade private credit loans are being stymied is actually this paragraph: ‘They have another strong motivation, too: The fear that if JPMorgan, or any of the other banks following in its footsteps, is successful in creating a vibrant trading market for the loans, it could shatter the perception — or mirage, as critics would argue — of price stability that they’ve spent years selling to investors. The value of the loans, the pitch goes, won’t ever get whipsawed around, and dragged down, by the vagaries of the broader markets because they are privately held assets. But if they trade regularly, price levels get marked, day after day, and private credit suddenly doesn’t look all that different than its public market counterparts.’”
June 25 – Bloomberg (Claire Ruckin and Aaron Weinman): “The junk-debt market is racing ahead on both sides of the Atlantic, with over $140 billion of loans and bonds in a pre-summer deal frenzy. Private equity companies…are driving the rush… This week, in particular, is morphing into one of the year’s busiest as borrowers finalize deals while the backdrop of a tentative ceasefire between Iran and Israel spurs investor appetite for risk.”
June 26 – Bloomberg (Silla Brush): “Larry Fink is taking the next step in his plan to give possibly millions of Americans access to private markets through their retirement savings accounts. BlackRock Inc. said… that Great Gray Trust Co., which provides services for more than $210 billion in assets, plans to start a target-date fund that will include private credit, along with BlackRock private equity, stock, fixed income and other investments. BlackRock… said it’s committed to offering new target-date retirement funds that invest in private equity, credit and possibly other types of assets alongside conventional stocks and bonds… ‘Blending public and private markets exposures requires a thoughtful approach to asset allocation and the ability to actively manage risk,’ Nick Nefouse, BlackRock global head of retirement solutions, said.”
June 26 – Wall Street Journal (Anne Tergesen): “BlackRock is accelerating a push into private investments by including them in funds for 401(k) retirement plans. The world’s largest asset manager plans to offer a 401(k) target-date fund with a 5%-to-20% allocation to private investments… As a step toward that goal, BlackRock said… it is providing public and some private investments for a 401(k) target-date fund offered by Great Gray Trust Co., which offers 401(k) investments. Firms that specialize in privately held debt and equity investments see the $12.2 trillion market for 401(k)-type retirement plans as a way to reach the everyday investors that are crucial to their growth.”
June 24 – Bloomberg (Silla Brush): “Wealthy retail investors in the US piling into private credit are pushing the market for semi-liquid funds to about $350 billion and exposing themselves to new risks, according to a Morningstar Inc. report. The total market for semi-liquid funds has surged 60% since the end of 2022… That growth comes alongside potential sticker shock for investors: fees can be up to three times higher than traditional stock-and-bond funds. The average annual expense ratio for semi-liquid funds was 3.16%, while the comparable figure for active mutual and exchange-traded funds was 0.97%... ‘Asset growth comes from investors looking for higher and seemingly smoother returns from private markets than public stocks and bonds, but these funds also court significant risk even if the returns appear to be less volatile,’ Morningstar analysts said.”
June 27 – Bloomberg (Ethan M Steinberg): “Global life insurance companies are facing competitive pressure to keep boosting their allocations to private credit to generate higher profit, even as risk in the debt shows signs of rising. This year, some 58% of insurers plan to boost their allocations to private credit, a Goldman Sachs Asset Management survey of… insurers found. They’re looking for higher returns than publicly traded corporate bonds can offer... While larger insurance companies have been funneling more money into private credit for years, mid-sized and smaller firms are making the shift now too, according to Wellington Management’s Elizabeth Kleinerman, who manages assets for those types of insurers.”
June 25 – Reuters (Duncan Miriri): “China’s practice of securing its loans to low-income nations through commodity revenue streams and cash held in restricted escrow accounts is curbing their ability to manage their finances effectively… China has lent hundreds of billions of dollars for infrastructure and projects in developing countries, but has been criticised for using earnings of commodity exports from borrower nations as security for the loans, sometimes arranged during times of economic strife for the borrower… China's total public and publicly guaranteed lending to low and middle-income countries totals $911 billion… Of that, nearly half - or $418 billion across 57 countries - is secured with cash deposits in Chinese bank accounts, it said.”
Trump Administration Watch:
June 27 – Financial Times (Claire Jones): “Donald Trump has said he will only pick a new Federal Reserve chair who will cut US interest rates, as he called on the central bank to slash borrowing costs to 1%. The president also renewed his attack on the current chair Jay Powell, describing him as a ‘stubborn mule’ and saying he would ‘love him to resign if he wanted to’. Powell has said he will serve the duration of his term, which ends in May 2026. ‘Whoever’s in there will lower rates,’ Trump told reporters… ‘If I think someone is going to keep rates where they are I’m not going to put them in.’ Trump’s comments mark the latest barrage in an unprecedented attack by a US president on the head of the country’s central bank.”
June 27 – Reuters (Trevor Hunnicutt and Kanishka Singh): “U.S. President Donald Trump said… he would ‘love’ if Federal Reserve Chair Jerome Powell were to resign, and the president also said he wanted interest rates cut to 1%. Key quotes. ‘I’d love him to resign if he wanted to, he’s done a lousy job,’ Trump said, also labeling the Fed chair as ‘stupid.’ ‘I think we should be paying 1% right now, and we’re paying more because we have a guy who suffers from, I think, Trump Derangement Syndrome,’ Trump added.”
June 27 – Bloomberg (Daniel Flatley): “Treasury Secretary Scott Bessent played down speculation that President Donald Trump may consider an early move to nominate a successor to Federal Reserve Chair Jerome Powell, pointing to one potential timeline that could see a name emerge in October or November. ‘I don’t think anyone is necessarily talking about that,’ Bessent said…”
June 20 – Wall Street Journal (Josh Dawsey and Rebecca Ballhaus): “Stephen Miller wanted to keep the planes in the air—and that is where they stayed. When a federal judge in March told the Trump administration to turn around flights of deported migrants headed to El Salvador, senior officials hastily convened a Saturday evening conference call to figure out what to do. If they didn’t return the passengers, they would be defying a court order, some administration officials worried. Miller, who is President Trump’s deputy chief of staff, pushed for the planes to keep flying… The 39-year-old immigration hawk, who has been by Trump’s side since the 2016 campaign, has emerged as a singular figure in the second Trump administration, wielding more power than almost any other White House staffer in recent memory—and eager to circumvent legal limitations on his agenda. He has his own staff of about 30 and a Secret Service detail…”
China Trade War Watch:
June 27 – Wall Street Journal (Brian Spegele): “China… pledged to approve export applications for rare earths to the U.S., potentially easing a major irritant in the countries’ trade negotiations that has also become a source of deepening concern for American manufacturers. China’s Commerce Ministry… appeared to confirm details of a deal alluded to by President Trump hours earlier, with Beijing promising to ‘review and approve eligible export applications for controlled items in accordance with the law.’”
June 26 – Wall Street Journal (Jon Emont): “Two weeks after China promised the U.S. it would ease the exports of rare-earth magnets, Chinese authorities are dragging out approval of Western companies’ requests for the critical components… Western companies say they are receiving barely enough magnets for their factories and have little visibility of future supplies. Firms are waiting weeks as Chinese authorities scrutinize their applications—only to be rejected in some cases... ‘It’s hand to mouth—the normal supply-chain scrambling that you have to do,’ said Lisa Drake, a vice president overseeing Ford’s industrial planning for batteries and electric vehicles, earlier this week. Although she said the situation had improved, the scarcity of the rare-earth magnets is forcing Ford to ‘move things around’ to avoid factory shutdowns, she said.”
June 27 – Bloomberg (Keith Naughton): “Ford... temporarily idled factories in the US over the last three weeks due to a shortage of magnets containing rare earth minerals… Chief Executive Officer Jim Farley said the situation demonstrates the need to develop a domestic supply chain for critical auto components. China has instituted a new approval process for exports of rare earths that has slowed supply lines. ‘We cannot get any high powered magnets without China,’ Farley said… ‘We shut down plants for the last three weeks because we cannot get high powered magnets.’ Farley said those magnets are critical to seats, windshield wipers, doors and audio systems. ‘We can’t make that stuff,’ he said of the magnets.”
June 24 – Financial Times (June Yoon): “For over a decade, the US has been waging its chip cold war with a familiar arsenal. Blacklists, export controls and extraterritorial rules — all staples of Washington’s well-worn playbook — were meant to deny China access to critical technologies and stall the ascent of its tech capabilities. The stall never came. In response, restrictions have grown increasingly severe. The US government is now weighing additional restrictions on China, including revoking waivers that allow global chipmakers to access US technology in their China-based operations, according to a report in the Wall Street Journal. China, meanwhile, has continued to advance. Local tech giant Huawei weathered US blacklisting in 2019.”
June 25 – Wall Street Journal (Jon Emont): “China has told companies in its rare-earth industry to give the government lists of employees with technical expertise, aiming to ensure they don’t divulge trade secrets to foreigners. The queries point to the growing geopolitical significance of China’s control over the materials, which are widely used in cars, electronics and weapons and stand at the center of the U.S.-China trade war…”
Trade War Watch:
June 27 – Bloomberg (Akayla Gardner, Mathieu Dion and Melissa Shin): “President Donald Trump said he was ending all trade discussions with Canada in retaliation for the country’s digital services tax and threatened to impose a fresh tariff rate within the next week. “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period,’ Trump posted… Treasury Secretary Scott Bessent said… he expects the administration will launch a so-called Section 301 investigation into Canada, a tool the US has used against other countries including China, which may lead to higher import taxes.”
June 26 – Bloomberg (Malcolm Scott, Yoshiaki Nohara, Shruti Srivastava and Philip J. Heijmans): “Tariff negotiations with the Trump administration are running into roadblocks, as partners including Japan, India and the European Union balk at signing deals without knowing how badly they’ll be hit by separate levies on exports including chips, drugs and steel. The US Commerce Department is set within weeks to announce the outcomes of its investigations into sectors deemed vital to national security, including semiconductors, pharmaceuticals and critical minerals. The probes are widely expected to result in levies applied under Section 232 of the Trade Expansion Act on a range of foreign-made products in those industries.”
June 27 – Bloomberg (Stephanie Lai and Daniel Flatley): “President Donald Trump hardened his threat to raise tariffs on certain countries by his July 9 deadline, while Treasury Secretary Scott Bessent signaled there may be some extensions to wrap up major pacts by the Labor Day holiday... ‘At a certain point over the next week and a half or so, or maybe before, we’re going to send out a letter, we talked to many of the countries that we’re just going to tell them what they have to pay to do business in the United States,’ Trump said…”
June 21 – Bloomberg (Alberto Nardelli and Jorge Valero): “The US is demanding the European Union make what the bloc’s officials see as unbalanced, unilateral concessions as part of ongoing trade talks, setting up a tough decision over whether to move ahead with countermeasures if the terms of any deal don’t improve. The best-case scenario remains an agreement on principles that would allow the negotiations to continue beyond an early July deadline… Among Washington’s requests are measures relating to quotas for fish exports that EU officials say may be incompatible with WTO rules; tariff-related moves that aren’t mutual; and a series of demands on economic security described by the officials from the bloc as far-fetched… Many of US President Donald Trump’s tariffs would stay even in the event of a deal, the people said.”
June 27 – Politico (Tim Ross, Camille Gus, Gabriel Gavin and Clea Caulcutt): “Late at night, after a dinner of dumplings and duck legs, the European Union’s leadership excitedly revealed a new plan to combat the hell-raising American president’s trade war: Take him on at his own wild game. For six months, Donald Trump has upended the global trading order, threatening and announcing tariffs, then easing them to open negotiations, while warning that punitive levies will be reimposed if the terms are not to his liking. With just 13 days until the Trump-imposed deadline to conclude a EU-U.S. deal, European Commission President Ursula von der Leyen decided the time for conventional negotiating tactics was over. She floated the idea that the EU’s 27 countries could join forces with 12 members of the Asian-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership bloc (CPTPP)… to form a new world trade initiative… Crucially, the U.S. would not automatically be invited.”
June 26 – Bloomberg (Malcolm Scott, Yoshiaki Nohara, Shruti Srivastava and Philip J. Heijmans): “Tariff negotiations with the Trump administration are running into roadblocks, as partners including Japan, India and the European Union balk at signing deals without knowing how badly they’ll be hit by separate levies on exports including chips, drugs and steel. The US Commerce Department is set within weeks to announce the outcomes of its investigations into sectors deemed vital to national security, including semiconductors, pharmaceuticals and critical minerals. The probes are widely expected to result in levies applied under Section 232 of the Trade Expansion Act on a range of foreign-made products in those industries.”
June 25 – Bloomberg (Stephanie Lai and Josh Wingrove): “President Donald Trump assailed Spain for refusing to agree to new defense spending targets adopted by NATO and suggested the country could be penalized by facing tariffs twice as high from the US. ‘You’re the only country that is not paying. I don’t know what the problem is,’ Trump said… at the NATO summit at The Hague when asked about Spain balking at paying 5% of their GDP on defense. ‘We’ll make it up. You know, we’re going to do, we’re negotiating with Spain on a trade deal. We’re going to make them pay twice as much. And I’m actually serious about that,’ Trump added.”
Budget Watch:
June 28 – Associated Press (Lisa Mascaro, Kevin Freking and Joey Cappelletti): “Senate Republicans voting in a dramatic late Saturday session narrowly cleared a key procedural step as they race to advance President Donald Trump’s package of tax breaks, spending cuts and bolstered deportation funds by his July Fourth deadline. The tally, 51-49, came after a tumultuous night with Vice President JD Vance at the Capitol to break a potential tie. Tense scenes played out in the chamber as voting came to a standstill, dragging for more than three hours as holdout senators huddled for negotiations, and took private meetings off the floor. In the end, two Republicans opposed the motion to proceed, joining all Democrats. There’s still a long weekend of work to come.”
June 25 – Bloomberg (Erik Wasson and Cam Kettles): “House Republicans from high-tax states remain at loggerheads with the Senate GOP over limits on the state and local tax deduction despite a meeting with Treasury Secretary Scott Bessent to try to resolve differences, a New York lawmaker said. ‘We are far from a deal still,’ Representative Nick LaLota, a Republican who represents parts of New York’s Long Island, said... LaLota and several other Republicans from New York, New Jersey and California have threatened to block President Donald Trump’s massive tax and spending package over the issue.”
June 26 – Axios (Andrew Solender and Kate Santaliz): “House Republicans are looking on with a combination of horror and frustration as President Trump’s ‘big, beautiful bill’ morphs into something closer to a hulking monstrosity in their eyes. It seems every House Republican you ask… has something they don’t like. For lawmakers from high-tax states, that’s the watering down of a hard-fought increase to the State and Local Tax (SALT) deduction cap. For fiscal hawks, it’s rulings made by the Senate parliamentarian that have axed a variety of spending cuts and regulatory changes they sought. Driving the news: The Senate parliamentarian has ruled out provisions to cut Medicaid and the Consumer Financial Protection Bureau, weaken environmental regulations and bolster President Trump's immigration crackdown.”
June 25 – Associated Press (Lisa Mascaro): “One key unsettled issue stalling progress on President Donald Trump’s big bill in Congress is particularly daunting: How to cut billions from health care without harming Americans or the hospitals and others that provide care? Republicans are struggling to devise a solution to the health care problem their package has created. Already, estimates say 10.9 million more people would be without health coverage under the House-passed version of the bill. GOP senators have proposed steeper reductions, which some say go too far. ‘The Senate cuts in Medicaid are far deeper than the House cuts, and I think that’s problematic,’ said GOP Sen. Susan Collins of Maine.”
June 26 – Wall Street Journal (Richard Rubin, Siobhan Hughes and Joseph Walker): “Several of Republicans’ largest proposed spending reductions can’t be done as written in the fast-track budget process they are using to advance their megabill, the Senate parliamentarian determined... The ruling affects several of the largest and most controversial reductions in President Trump’s ‘one, big, beautiful bill,’ and Republicans will likely be forced to drop or rewrite them. The changes could amount to hundreds of billions of dollars, making it harder for Republicans to hit their budget targets. But the ruling wasn’t the final word, and Senate Republicans said… they thought some slight tweaks to the wording of some proposed Medicaid cuts would be enough to break the logjam.”
June 26 – Wall Street Journal (Richard Rubin): “The U.S. and other countries reached an agreement to exempt U.S.-based companies from some corporate taxes that were part of a 2021 international minimum-tax agreement, Treasury Secretary Scott Bessent said… The agreement among the Group of Seven largest economies means the ‘revenge tax’ being contemplated in Republicans’ tax-and-spending bill should be removed from the legislation, Bessent said. The provision would have imposed additional taxes as high as 20% against companies from countries that imposed what the U.S. deemed as discriminatory taxes. The potential tax, which would have become Section 899 of the tax code, had roiled markets and frustrated foreign-owned companies… ‘We will defend our tax sovereignty and resist efforts to create an unlevel playing field for our citizens and companies,’ Bessent said.”
June 27 – Bloomberg (Ben Steverman): “Silicon Valley’s favorite tax break may be getting an upgrade. Venture capitalists, along with successful tech founders and early startup employees, already pay no taxes on billions of dollars of gains annually, thanks to a lucrative and complicated provision called Qualified Small Business Stock, or QSBS. Now the carve-out could get even more generous in changes included in Senate Republicans’ proposed tax and spending bill… The once-obscure provision is the subject of ‘every dinner conversation in Silicon Valley,’ said Christopher Karachale, a partner at law firm Hanson Bridgett in San Francisco. ‘It’s already an exceptional benefit for people who take risks on startups.’”
Constitution Watch:
June 28 – Bloomberg (Greg Stohr): “With a 6-3 ruling Friday restricting the power of judges to issue nationwide blocks on presidential initiatives, the court put an exclamation mark on a term dominated by Trump victories. The court’s conservative supermajority sided with Trump on both broad legal questions and an unprecedented barrage of emergency requests to let his policies take effect right away. The end result was a stack of decisions deferring to Trump. The court let him discharge transgender people from the military, fire top officials at government agencies and open hundreds of thousands of migrants to deportation. The Supreme Court repeatedly reinstated Trump policies found by lower courts to be illegal, and it undercut judges who said the administration had violated their orders.”
June 20 – Reuters (Trevor Hunnicutt and Jasper Ward): “U.S. President Donald Trump… again floated the idea of firing Jerome Powell, the Federal Reserve chair he has long attacked over interest rates he wants lowered. ‘I don't know why the Board doesn’t override (Powell),’ Trump wrote… ‘Maybe, just maybe, I’ll have to change my mind about firing him? But regardless, his Term ends shortly.’ Trump added: ‘I fully understand that my strong criticism of him makes it more difficult for him to do what he should be doing, lowering Rates, but I’ve tried it all different ways.’”
U.S./Russia/China/Europe/Iran Watch:
June 23 – CNBC (Kevin Breuninger): “President Donald Trump… lashed out at former Russian President Dmitry Medvedev for claiming that multiple countries are ‘ready to directly supply’ Iran with nuclear warheads as a result of the U.S. strikes on key Iranian nuclear sites. ‘Did he really say that or, is it just a figment of my imagination?’ Trump said of Medvedev, the deputy chairman of Russia’s security council. ‘If he did say that, and, if confirmed, please let me know, IMMEDIATELY,’ he wrote… Trump chided Medvedev that the ‘N word’ — which he specified stood for ‘Nuclear’ — ‘should not be treated so casually’… ‘By the way, if anyone thinks our ‘hardware’ was great over the weekend, far and away the strongest and best equipment we have, 20 years advanced over the pack, is our Nuclear Submarines,’ Trump wrote, calling them ‘the most powerful and lethal weapons ever built.’”
June 26 – Associated Press (Mike Corder, Sylvie Corbet, Molly Quell and Lorne Cook): “NATO leaders agreed on a massive hike in defense spending Wednesday after pressure from U.S. President Donald Trump, and expressed their ‘ironclad commitment’ to come to each other’s aid if attacked. The 32 leaders endorsed a final summit statement saying: ‘Allies commit to invest 5% of GDP annually on core defense requirements as well as defense- and security-related spending by 2035 to ensure our individual and collective obligations.’”
June 26 – Financial Times (Edward White and Kathrin Hille): “Donald Trump’s dramatic intervention in the Iran-Israel war has reverberated well beyond the Middle East, forcing rival China to reassess how the US president might wield American military power in the event of a conflict in Asia. Beijing strongly criticised Trump’s decision to strike Iranian nuclear targets… But analysts and US and Taiwanese officials said the attack on Iran would prompt a sweeping rethink among Chinese President Xi Jinping’s foreign policy advisers of how Trump might act on issues Beijing sees as vital to its national interest, such as Taiwan. ‘They thought Trump 2.0 was going to be more transactional, possibly more pragmatic, so maybe a more stable relationship,’ said Andrea Ghiselli, an expert on China’s Middle East policy with the University of Exeter. ‘It is not turning out that way at all.’”
Taiwan Watch:
June 25 – Reuters (Alessandro Diviggiano and Ben Blanchard): “China and Taiwan have clashed over their competing interpretations of history in an escalating war of words over what Beijing views as provocations from Taiwan's government, and said it is impossible to ‘invade’ what is already Chinese land… Speaking… to European ambassadors in Beijing, Chinese Foreign Minister Wang Yi said he was alarmed at Taiwan's ruling party ‘doing everything they can to try to move towards Taiwan independence, which is very dangerous’. Japan had ‘stolen’ Taiwan, he said, and its return to China was agreed in the 1943 Cairo Declaration and confirmed at the 1945 Potsdam Declaration ahead of the surrender of Japan at the end of World War Two. Taiwan had been a colony of Japan since 1895. ‘So the matter is very clear, Taiwan is part of China, and the return of Taiwan to China has been one of the victorious outcomes of World War Two.’”
June 24 – Bloomberg: “Beijing vowed to respond to Taiwan’s ‘technological blockades’ after the self-ruled island blacklisted Chinese companies including Huawei Technologies Co., limiting their ability to develop cutting-edge artificial intelligence. ‘We will take forceful measures to resolutely safeguard the normal order of cross-strait economic and trade exchange,’ Taiwan Affairs Office spokeswoman Zhu Fenglian said... Taiwan last week joined a yearslong US campaign to curtail China’s technological ascent by adding the country’s AI and chipmaking champions — Huawei and Semiconductor Manufacturing International Corp. — to its entity list.”
New World Order Watch:
June 26 – Axios (Courtenay Brown): “Some Wall Street veterans say appetite for the U.S. dollar is waning in ways not seen in years. It could be the great unwind of the greenback binge of the past decade, when exposure to America was the world’s safest — and a highly rewarding — investment. Now investors are hedging those bets. ‘We’re in a new era, where global investors no longer reflexively buy dollars or treasuries at the first sign of trouble,’ Jason Thomas, the head of global research and investment strategy at Carlyle, tells Axios. Themos Fiotakis, a currency strategist at Barclays, puts it this way: ‘Since April, there's this trend that investors are trying to reduce the amount of dollar exposure. Some of that is a little bit of normalization, but there is a sense they need to go even deeper.’”
AI Bubble Watch:
June 27 – New York Times (Cade Metz): “Silicon Valley’s artificial intelligence frenzy has found a new gear. Two and a half years after OpenAI set off the artificial intelligence race with the release of the chatbot ChatGPT, tech companies are accelerating their A.I. spending, pumping hundreds of billions of dollars into their frantic effort… The tech industry’s giants are building data centers that can cost more than $100 billion and will consume more electricity than a million American homes. Salaries for A.I. experts are jumping as Meta offers signing bonuses to A.I. researchers that top $100 million. And venture capitalists are dialing up their spending. U.S. investment in A.I. companies rose to $65 billion in the first quarter, up 33% from the previous quarter and up 550% from the quarter before ChatGPT came out in 2022... ‘Everyone is deeply afraid of being left behind,’ said Chris V. Nicholson, an investor with the venture capital firm Page One Ventures…”
June 22 – Wall Street Journal (Meghan Bobrowsky, Berber Jin and Ben Cohen): “The smartest AI researchers and engineers have spent the past few months getting hit up by one of the richest men in the world. Mark Zuckerberg is spending his days firing off emails and WhatsApp messages to the sharpest minds in artificial intelligence in a frenzied effort to play catch-up. He has personally reached out to hundreds of researchers, scientists, infrastructure engineers, product stars and entrepreneurs to try to get them to join a new Superintelligence lab he’s putting together. Some of the people who have received the messages were so surprised they didn’t believe it was really Zuckerberg… Zuckerberg is also offering hundreds of millions of dollars, sums of money that would make them some of the most expensive hires the tech industry has ever seen. In at least one case, he discussed buying a startup outright.”
June 27 – Financial Times (Eric Platt, Oliver Barnes and Hannah Murphy): “Meta is looking to raise $29bn to fund its all-in push into artificial intelligence, turning to private capital firms to finance its build out of data centres in the US. Talks between the Instagram-owner and private credit investors have advanced, with several large players including Apollo Global Management, KKR, Brookfield, Carlyle and Pimco involved in the discussions… Meta is hoping to raise $3bn of equity from them and then a further $26bn of debt.”
June 23 – New York Times (Adam Satariano, Paul Mozur, Karl Russell and June Kim): “Last month, Sam Altman, the chief executive of the artificial intelligence company OpenAI, donned a helmet, work boots and a luminescent high-visibility vest to visit the construction site of the company’s new data center project in Texas. Bigger than New York’s Central Park, the estimated $60 billion project, which has its own natural gas plant, will be one of the most powerful computing hubs ever created when completed as soon as next year. Around the same time as Mr. Altman’s visit to Texas, Nicolás Wolovick, a computer science professor at the National University of Córdoba in Argentina, was running what counts as one of his country’s most advanced A.I. computing hubs. It was in a converted room at the university, where wires snaked between aging A.I. chips and server computers. ‘Everything is becoming more split,’ Dr. Wolovick said. ‘We are losing.’”
June 24 – New York Times Karen (Weise, Cade Metz and A.J. Mast): “A year ago, a 1,200-acre stretch of farmland outside New Carlisle, Ind., was an empty cornfield. Now, seven Amazon data centers rise up from the rich soil, each larger than a football stadium. Over the next several years, Amazon plans to build around 30 data centers at the site, packed with hundreds of thousands of specialized computer chips. With hundreds of thousands of miles of fiber connecting every chip and computer together, the entire complex will form one giant machine intended just for artificial intelligence. The facility will consume 2.2 gigawatts of electricity — enough to power a million homes. Each year, it will use millions of gallons of water to keep the chips from overheating. And it was built with a single customer in mind: the A.I. start-up Anthropic, which aims to create an A.I. system that matches the human brain.”
June 25 – Bloomberg (Sarah Rappaport): “It wasn’t so long ago that headlines proclaimed San Francisco to be ‘dead’ or in a ‘doom loop.’ But the city is now undergoing a major renaissance in its luxury housing market, according to the Sotheby’s International Realty 2025 Mid-Year Luxury Outlook report… ‘San Francisco became a magnetic location really quickly because if an entrepreneur or a tech investor was saying, ‘OK, I want to make a bet in AI,’ they were deciding they needed to do it in San Francisco and in the Bay Area for access to the labor pool with that technical expertise,’ says Bradley Nelson, the company’s chief marketing officer… Nelson says more homes sold above $20 million in San Francisco in 2024 than in any other year in history.”
June 24 – Bloomberg: “China’s advantages in developing artificial intelligence are about to unleash a wave of innovation that will generate more than 100 DeepSeek-like breakthroughs in the coming 18 months, according to a former top official. The new software products ‘will fundamentally change the nature and the tech nature of the whole Chinese economy,’ Zhu Min, who was previously a deputy governor of the People’s Bank of China, said during the World Economic Forum… Zhu… sees a transformation made possible by harnessing China’s pool of engineers, massive consumer base and supportive government policies.”
Bubble and Mania Watch:
June 26 – Bloomberg (Esha Dey and Matthew Griffin): “Investors are piling into speculative and volatile edges of the stock market, throwing caution to the wind… The risks remain: President Donald Trump’s tariff pause is scheduled to end in two weeks, signs of a slowing economy and weakening consumer sentiment are mounting, and war is rumbling in the background… The Invesco S&P 500 High Beta ETF, an exchange-traded fund that tracks highly volatile stocks, is on track for its best quarter since 2020 relative to the Invesco S&P 500 Low Volatility ETF. Meanwhile, a Goldman Sachs gauge of stocks with weak balance sheets is on track for the best month relative to the S&P 500 since September.”
June 26 – Bloomberg (Anthony Hughes): “Roaring returns for US IPOs are driving fresh optimism that activity will pick up steam later this year and into 2026, even as worries over geopolitics and President Donald Trump’s tariffs hang over the market. Led by triple-digit-percent increases for Circle Internet Group Inc. and CoreWeave Inc. — two of the year’s five largest initial public offerings on US exchanges — this year’s class of debutantes are trading up by a weighted average of about 53%... That’s left investors hungry for more…”
June 25 – Bloomberg (Chris Bryant): “Following a surge in new listings by special purpose acquisition companies, one can’t help but worry about how astonishingly short Wall Street’s memory is. These cash shells experienced a spectacular boom and bust in 2020-2022 as unrealistic valuations and retail investor enthusiasm for firms with little or no revenue ended in bankruptcies, shareholder litigation and financially painful liquidations. Now, this maligned asset class is off to the races again. US SPACs have raised $11 billion so far this year compared with less than $2 billion in the same period a year earlier… They’ll try to find a firm to merge with, providing them with a shortcut to joining the public markets amid a still fairly tepid revival of traditional initial public offerings. SPACs have accounted for almost two-thirds of US IPO volume so far this year and more than 40% of proceeds, according to SPAC Analytics.”
June 24 – Wall Street Journal (Veronica Dagher, Elizaveta Galkina and Stephanie Stamm): “Homeowners who bought around the peak of the market are increasingly finding they owe more on their mortgages than their properties are worth. The number of owners who are underwater is small but growing, and they have recently been concentrated in pandemic boomtowns such as Austin, Texas, and Cape Coral, Fla. A rapid rise in prices in these areas was followed by drops of almost 20% in some of them… During the financial crisis of 2008, many owners walked away from their underwater homes, allowing the lender to foreclose… Homeowners nationwide still have tens of trillions of dollars in equity overall. While some pockets of the U.S. housing market have softened, prices remain high overall…”
June 25 – Yahoo Finance (Claire Boston): “The DOGE effect is finally here. After months of speculation, there are growing signs that the housing market in the Washington, D.C., metro area is starting to shift, and federal workforce layoffs are to blame… For-sale inventory in the region is spiking… While prices are holding steady for now, some real estate agents are reporting buyer hesitancy that could translate to lower prices down the line. Nearly 40% of D.C.-area agents surveyed by Bright MLS said they worked with clients who were buying or selling due to federal layoffs or buyout offers last month. Over half said the job cuts were affecting the market, and 43% reported seeing more sellers.”
June 24 – Bloomberg (Claire Ballentine): “Federal student loan borrowers are missing payments at the highest rate on record, according to data from TransUnion. Almost one-third of borrowers — or 5.8 million people — are delinquent on their loans, meaning they haven’t made a payment in at least 90 days. That’s up from 21% in February and the highest rate since the credit agency began collecting the data in 2012. Before the pandemic, only about 12% of Americans with student loans were delinquent.”
Inflation Watch:
June 23 – New York Times (Farah Stockman): “President Trump’s pledge to revive American manufacturing is running into the stubborn obstacle of demographic reality. The pool of blue-collar workers who are able and willing to perform tasks on a factory floor in the United States is shrinking. As baby boomers retire, few young people are lining up to take their place. About 400,000 manufacturing jobs are currently unfilled… Difficulty attracting and retaining a quality work force has been consistently cited as a ‘top primary challenge’ by American manufacturers since 2017, said Victoria Bloom, the chief economist at the National Association of Manufacturers…”
June 21 – CNBC (Greg Iacurci): “Electricity prices are rising quickly for U.S. households, even as overall inflation has cooled. Electricity prices rose 4.5% in the past year, according to the consumer price index for May 2025 — nearly double the inflation rate for all goods and services. The U.S. Energy Information Administration estimated in May that retail electricity prices would outpace inflation through 2026. Prices have already risen faster than the broad inflation rate since 2022, it said. ‘It’s a pretty simple story: It’s a story of supply and demand,’ said David Hill, executive vice president of energy at the Bipartisan Policy Center and former general counsel at the U.S. Energy Department.”
Federal Reserve Watch:
June 24 – Associated Press (Chris Rugaber): “The Federal Reserve will continue to wait and see how the economy evolves before deciding whether to reduce its key interest rate, Chair Jerome Powell said…, a stance directly at odds with President Donald Trump’s calls for immediate cuts. ‘For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,’ Powell said in testimony… ‘We do expect tariff inflation to show up more,’ Powell said. ‘We really don’t know how much of that’s going to be passed through the consumer. We have to wait and see.’”
June 23 – Wall Street Journal (Nick Timiraos): “President Trump escalated his long-running public attack on the Federal Reserve… The assault has little modern precedent and forces the Fed to confront a dreadful choice: It could cut rates sharply as Trump demands and risk fueling inflation that damages its credibility with markets. Or it could maintain its current wait-and-see stance, and face further bullying that would weaken its standing… The presidential pressure is being applied at the same time that a divide is opening up among Fed policymakers that could further complicate Chair Jerome Powell’s effort to balance political and economic hazards in the months ahead.”
June 26 – Reuters (Michael S. Derby): “Federal Reserve Bank of Richmond President Thomas Barkin said… tariffs are very likely to push inflation up over coming months, in remarks that said U.S. central bank policy is where it needs to be to deal with what lies ahead. ‘I do believe we will see pressure on prices,’ Barkin told a gathering of the New York Association for Business Economics… ‘That said, I don’t expect the impact on inflation to be anywhere near as significant as what we just experienced’ during the pandemic and there are signs that consumers will try to move away from tariffed goods…”
June 26 – Bloomberg (Catarina Saraiva): “A flurry of Federal Reserve officials this week made clear they’ll need a few more months to gain confidence that tariff-driven price hikes won’t raise inflation in a persistent way. Fed Governors Christopher Waller and Michelle Bowman captured attention in the past week when they signaled they’d be open to lowering rates as soon as the Fed’s July 29-30 meeting if inflation remains contained. Since then, however, nearly a dozen policymakers — including Chair Jerome Powell, New York Fed President John Williams and San Francisco Fed chief Mary Daly — have dumped cold water on that idea…”
June 20 – Reuters (Jonnelle Marte): “Federal Reserve Governor Christopher Waller said the central bank can lower interest rates as soon as next month, reiterating his view that the inflation hit from tariffs is likely to be short-lived. ‘We could do this as early as July,’ Waller said… Waller said economic data show GDP growth and inflation are running close to the central bank’s targets. He also said he believes the Fed’s benchmark rate is 1.25 to 1.5 percentage points above the estimated neutral level… ‘I think we’ve got room to bring it down, and then we can kind of see what happens with inflation,’ he said... ‘We’ve been on pause for six months to wait and see, and so far the data has been fine.’”
June 23 – New York Times (Ben Casselman): “A second Federal Reserve official has indicated that the central bank should begin cutting rates as soon as next month — the latest sign of division among policymakers… Michelle W. Bowman… said… that with inflation cooling and the labor market showing signs of weakness, ‘it is time to consider adjusting’ interest rates to avoid putting too much downward pressure on economic growth. ‘Should inflation pressures remain contained,’ Ms. Bowman said…, ‘I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market.’”
June 24 – Bloomberg (Catarina Saraiva): “Federal Reserve Bank of Minneapolis President Neel Kashkari said the US central bank needs more clarity on how tariffs will impact prices before adjusting policy, even as recent inflation data has been ‘quite positive.’ ‘The last two or three months the inflation data we’ve been getting has been quite positive, it suggest that the disinflationary path I described has been on track,’ Kashkari said… ‘But it isn’t obvious that we’ve seen the full effects of the tariffs yet so we’ve been taking our time to try to get a sense of what’s really going on before we made any dramatic changes in our policy outlook.’”
June 24 – Reuters (Howard Schneider): “The U.S. Federal Reserve has time to study the effect of rising import tariffs on prices and economic growth before deciding on further interest rate cuts, Kansas City Fed President Jeff Schmid said… ‘The current posture of monetary policy, which has been characterized as 'wait-and-see,' is appropriate,’ Schmid said… ‘The resilience of the economy gives us the time to observe how prices and the economy develop,’ before changing the benchmark policy rate, said Schmid…”
June 26 – Reuters (Ann Saphir and Howard Schneider): “President Donald Trump says that tame inflation means the Federal Reserve should already be reducing its policy rate, but inside the U.S. central bank the idea has little traction, with only two Fed policymakers to date embracing the possibility of a rate cut at the central bank's next meeting in July. The rest clearly aren’t convinced. ‘We’re only going to have really one more month of data before the July meeting,’ Boston Federal Reserve Bank President Susan Collins told Bloomberg… ‘I expect to want to see more information than that.’”
U.S. Economic Bubble Watch:
June 26 – Reuters (Lucia Mutikani): “The U.S. trade deficit in goods increased in May amid a decline in exports, but an ebbing inflow of imports likely positions trade to make a big contribution to gross domestic product in the second quarter. The goods trade gap widened 11.1% to $96.6 billion last month… Exports of goods dropped $9.7 billion to $179.2 billion. Goods imports were little changed at $275.8 billion.”
June 23 – Reuters (Lucia Mutikani): “U.S. business activity slowed marginally in June, though prices increased further amid President Donald Trump’s aggressive tariffs on imported goods, suggesting that an acceleration in inflation was likely in the second half of the year… S&P Global said its flash U.S. Composite PMI Output Index… slipped to 52.8 this month from 53.0 in May… The survey's flash manufacturing PMI was unchanged at 52.0… A measure of prices paid by businesses for inputs fell to 61.6 from 63.2 last month. But manufacturers faced higher input costs, with this price gauge jumping to 70.0. That was the highest reading since July 2022 and followed 64.6 in May. Prices paid for inputs by services businesses remained elevated, with tariffs, higher financing, wage and fuel costs cited.”
June 27 – Reuters (Lucia Mutikani): “U.S. consumer spending unexpectedly fell in May as the boost from the pre-emptive buying of goods like motor vehicles ahead of the Trump administration’s tariffs faded… Consumer spending… dropped 0.1% last month after an unrevised 0.2% gain in April… Goods spending dropped 0.8% amid a 1.8% decline in outlays of long-lasting manufactured goods, mostly motor vehicles. Spending on nondurable goods like gasoline and food also fell, with the former reflecting lower prices at the pump.”
June 24 – Reuters (Lucia Mutikani): “U.S. consumer confidence unexpectedly deteriorated in June as households increasingly worried about job availability… The ebb in confidence reported by the Conference Board… was across all age cohorts and nearly all income groups. It was also across the political spectrum, with the largest decline among Republicans. Consumers remained pre-occupied with the import duties and were mostly undecided on big-ticket purchases… The share of consumers viewing jobs as plentiful was the smallest since March 2021, aligning with the continued elevation in the number of people collecting unemployment checks as well as a moderation in job growth.”
June 26 – Associated Press (Christopher Rugaber): “The number of Americans applying for unemployment benefits fell last week…, a sign that companies aren’t cutting many jobs. Jobless claims for the week ended June 21 dropped 10,000 to 236,000, a historically-low level… The difficulty many of the unemployed are having in finding work can be seen in the number of people continuing to claim unemployment aid, which rose 37,000 to 1.97 million for the week ending June 14. That is the most since November 2021.”
June 26 – Reuters (Lucia Mutikani): “Orders for long-lasting U.S. manufactured goods rebounded sharply in May, boosted by a surge in commercial aircraft bookings… Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, jumped 16.4% last month after a revised 6.6% decline in April… Transportation equipment orders soared 48.3%, driven by a 230.8% surge in commercial aircraft orders, which are extremely volatile.”
June 25 – CNBC (Diana Olick): “Applications for a mortgage to buy a home dropped 0.4% last week compared with the previous week, according to the MBA’s seasonally adjusted index, which included a separate adjustment for the Juneteenth holiday. Purchase demand was 11% higher than the same week one year ago, but overall it is historically low.”
June 24 – Bloomberg (Patrick Clark): “Home-price gains in the US decelerated in April as buyers pulled back. A national gauge of prices was up 2.7% from a year earlier, the smallest gain since the summer of 2023, according to… S&P CoreLogic Case-Shiller. That was smaller than the 3.4% annual increase in March... In April, contracts to buy previously owned homes fell by the most since September 2022… ‘We’re witnessing a housing market in transition,’ said Nicholas Godec, head of fixed income… at S&P Dow Jones Indices. ‘The era of broad-based, rapid price appreciation appears over, replaced by a more selective environment where local fundamentals matter more than national trends.’”
June 24 – Wall Street Journal (Oyin Adedoyin): “Nearly two million student loan borrowers are at risk of having their wages garnished this summer. Roughly six million federal student-loan borrowers are 90 days or more past due after a pandemic-era reprieve ended… The credit-reporting company estimates that about a third of them, or nearly two million borrowers, could move into default in July and start having their pay docked by the government. That’s up from the 1.2 million that TransUnion had estimated in early May. An additional one million borrowers are on track to default by August, followed by another two million in September.”
China Watch:
June 26 – CNBC (Anniek Bao): “China’s industrial profits plunged 9.1% in May from a year earlier, in the latest sign that Beijing’s stimulus efforts are falling short in boosting enterprises’ profitability. That marked the largest monthly decline since October last year… Cumulative profits at major industrial firms fell 1.1% in the first five months of 2025, compared to a year earlier… The statistics bureau attributed the sharp decline in May to insufficient domestic demand and lower prices for industrial products.”
June 22 – Bloomberg: “China’s revenue from selling land plunged to the lowest in a decade, contributing to the widening of budget deficit as the government ramped up spending… Land sales revenue slumped 14.6% on year to 194.1 billion yuan ($27bn) last month, the lowest since May 2015. The figure… reversed a 4.3% growth in April, which had been the first increase in three months. The contraction contributed to a decline in overall government income, which reached 11.2 trillion yuan in the first five months of the year… Meanwhile, total expenditure jumped to 14.5 trillion yuan as authorities increased spending at the fastest pace in three years to bolster economic growth, pushing the budget deficit to 3.3 trillion yuan.
Japan Watch:
June 24 – Wall Street Journal (Megumi Fujikawa): “The Bank of Japan should consider additional interest-rate hikes without delay, board member Naoki Tamura said, as it could hit its inflation target sooner than expected. ‘My basic thinking is that the bank will analyze the data and various information without preconceptions, and will accordingly raise the policy interest rate and adjust the degree of monetary accommodation in a timely and appropriate manner in line with improvements in economic activity and prices, without haste or delay,’ he said…”
Social, Political, Environmental, Cybersecurity Instability Watch:
June 24 – Associated Press (Seth Borenstein): “Extensive triple digit heat, broken temperature records and oppressive humidity piled up into a steaming mess as the heat dome crushing the Eastern half of the nation sizzled to what should be its worst Tuesday. New York City’s John F. Kennedy Airport hit 100 degrees Fahrenheit a little after noon, the first time since 2013. Then Baltimore, Philadelphia and Boston joined the 100 club… The dangerous heat sent people to the hospital, delayed Amtrak trains and caused utilities to urge customers to conserve power.”
June 26 – Financial Times (Attracta Mooney and Steven Bernard): “Scientists said ‘heat domes’ and related atmospheric events behind extreme weather around the world this week had almost tripled in strength and duration since the 1950s, as tens of millions of people sweltered in ‘dangerous heat’ in parts of the US and Europe. Temperatures passed 40C in parts of the US as a so-called heat dome… Countries including Greece, Spain and France have also faced heatwaves this month due to another heat dome having formed over part of Europe, while areas of China have been hit with severe flooding.”
June 24 – Bloomberg (Mark Gongloff): “Weather isn’t climate, and a heat wave isn’t proof of human-induced global warming any more than a snowball disproves it. At the same time, nothing quite focuses the mind on the causes and effects of a hotter planet than Mother Nature covering half of the United States with a giant pot lid, turning up the burner and letting it boil for a while. Thanks to a massive heat dome squatting on North America for most of the week, nearly 150 million Americans in 28 states were under some level of heat advisory… as of Monday morning. More than 91 million people from Iowa to New York City face the highest level of alert, ‘extreme heat,’ with heat indexes in the triple digits, through at least Wednesday.”
Geopolitical Watch:
June 25 – Bloomberg (Alastair Gale and Sakura Murakami): “China has stepped up construction of drilling rigs and other platforms off its east coast to tap into maritime resources such as natural gas and fish, raising the ire of Japan and South Korea and fanning fresh concerns about Beijing’s regional ambitions. In the latest development, Japan said… it lodged a protest with China after observing a new structure in a natural gas field in the East China Sea. Tokyo reported finding another similar Chinese structure in the same area in May.”