This Week
This week saw renewed hopes for an Iran deal, fresh inflation data ahead of next week’s Federal Reserve meeting and SPCX’s IPO on Nasdaq – the biggest IPO of all time!
Odds of a peace deal looked remote as recently as yesterday morning, with the U.S. and Iran exchanging attacks and President Trump promising further strikes.
But, starting midday yesterday things turned around as President Trump canceled those attacks, and then said “final points [in a peace deal] have been… approved by all parties involved.” He added that the deal could be signed “maybe over the weekend,” and “we ended the war with Iran today.”
Early Friday, there were questions around the details of the deal after an Iranian news agency posted supposed terms, which President Trump later said were incorrect. Still, hopes for a deal remain, with the U.S., Iran and Pakistan all saying an initial deal is nearly done.
While previous deals have fell through, oil markets appear optimistic, with U.S. oil prices down to $85 per barrel – near a three-month low.
And yet it’s energy prices that pushed headline CPI inflation to a three-year high of 4.2% year-over-year (YOY) in May from 3.8%, with energy driving about 80% of the increase. Core inflation, however, which excludes energy and food, only rose to 2.9% YOY from 2.8%. While the Fed is expected to leave rates unchanged next week, markets are pricing 20 basis point (bp) in Fed hikes this year (though economists see no change).
Despite rising inflation, markets are up this week on hopes for a peace deal, with the Nasdaq-100® up 2% and 10-year Treasury yields down 5bp to 4.5%.
Next Week
Here are the top events I’m watching next week:
- Monday: Industrial Production (May)
- Tuesday: Building Permits (May), Bank of Japan Decision
- Wednesday: Fed Decision, Retail Sales (May)
- Thursday: Jobless Claims, Bank of England Decision
