Mike Dolan
London (Reuters) – What matters in today’s US and global markets
I am currently looking forward to announcing that I am part of the Reuters Open Gift (ROI). This is an expert commentary on new data-driven sources of information: markets and economic trends. You can find ROIs on the Reuters website and follow them on LinkedIn and X.
In this latest Middle Eastern violence, oil prices were surprising to see that they didn’t do the same as what they had. Oil prices first rose this morning after a US strike in Iran over the weekend, but since then, crude has returned all these profits.
Here’s what we’ll talk about with this and the rest of the market news: And in today’s column, we ask why the market remains surprisingly calm despite US debt concerns.
Today’s market
*Iran said Monday that it called President Donald Trump a “gambler” to expand the scope of its military’s legal targets due to attacks on US nuclear sites and participate in Israel’s military campaign against the Islamic Republic.
*The US bombing has injected new uncertainty into the outlook for inflation and economic activity at the start of the week, filled with new economic data and commentary from central bankers.
*Utilities in developed countries emphasize how to keep up with demand from data centers and artificial intelligence searches. But globally, keeping people cool can become a much larger drain in the power grid and become a more pressing challenge for the electricity sector. Read the latest news from ROI Global Energy Transition columnist Gavin Maguire.
*Escalations in the Middle East conflict have led Tehran to disrupt important oil and gas exports from the region, causing a surge in energy prices. But as ROI energy columnist Ron Bousso says, history says that the confusion is probably short-lived.
*Several recent global developments have created the highest level of uncertainty in decades. Joachim Kumem, an outside contributor to ROI, argues that stock investors seeking clarity should be aware of what they want.
The oil calms down and the Middle East conflict continues
US and European stocks rallied following the weekend event as global stocks and bond markets use crude as roadsters on how they respond to the Iran crisis, resulting in a very rapid reflux and fall in US oil prices on Monday.
Wall Street futures rose about 0.25% from Monday’s Bell. Europe and the Chinese were also high, and Japan’s Japan had suppressed the trend even if the yen weakened. The dollar index was harder, mainly because of the slides of yen.
President Donald Trump said he “eliminated” Iran’s major nuclear sites on a strike over the weekend, and that he took part in Israel’s attacks in the Middle East, as Tehran vowed to protect himself. Trump then openly hinted at a “change of administration” in a social media post on Sunday.
U.S. crude oil prices initially rose to a high of over $78 per barrel since January, but trade on Friday fell below $74, this year, more than $6 below its high, down 11% at the level seen a year ago. Brent prices also fell on the day.
The escalating conflict surrounding Iran has become unpredictable, but it happens in a market where the global space oil production capacity is operating at over 4 million barrels a day.
Furthermore, the large-scale bet on the oil direction associated with the outcome of the Iranian war has been unhappy with the numerous binary outcomes, including both the survival of the Tehran government and the possibility of mining the Strait of Hormuz. The latter could be shipped in the region for a short time, but it is not clear how long it will last.
Later this year, speculative oil price punts are extremely dangerous as there is global demand that have come to adopt later this year, as the growth effect of US trade tariffs declines and the growth of US production increases.
Oil prices still primarily restrict the laps, so the US Treasury fallout is similarly limited.
Turning to Federal Reserve Chief Jerome Powell’s six-annual Congressional testimony on Tuesday and a series of weekly debt auctions, the recent range of 10-year yields remained choked at around 4.4%.
Trump on Friday had the idea of fire Powell again.
“I don’t know why the board isn’t void (Powell),” Trump wrote in a lengthy post about the true social criticism of Fed policies. “Maybe, maybe I have to change my mind about firing him? But despite this, his term will soon be over.”
San Francisco Fed President Mary Daly said on Sunday that the US Central Bank should consider less positive guidance on monetary policy intentions, especially in times of uncertainty. “Words have power. It’s a great tool. But words can be more difficult to reverse than interest rates,” she said.
The Economic Data Calendar is being held at the Business Survey in June, with the sound of the Flash version of S&P Global scheduled later in the day.
Business activities across the eurozone expanded slightly in June, slightly improving the dominant service industry, offsetting more downbeat manufacturing.
The service has tweaked it to sit on 50 broken markups from its final read on May 49.7. Optimism among service companies increased, with the business expectation index reaching a four-month high of 56.2 to 57.9.
European Central Bank boss Christine Lagarde testified to the European Parliament later that day.
The economic surprise indicator captures the way economic readings generally exceed and below expectations, indicating a rapid divergence between Europe and the US. The Eurozone Index is the most positive since May, the most negative in nine months and the US equivalent.
Elsewhere, Bitcoin has dropped sharply over the weekend, but gold prices also fell early on Monday.
The chart of the day
The relatively quick reversal of oil price spikes is due to the large amount of reserve capacity, and the fact that crude oil prices are shunned in turn as they rise rapidly. There certainly is a spare capacity in the current global oil market. OPEC+, an alliance of producers, today holds around 5.7 million barrels per day in excess capacity, of which Saudi Arabia and the United Arab Emirates hold 4.2 million bpd. There is concern about the closure of the main channel of the Hormuz waterway, but the forces of the two Gulf could be bypassed by the oil pipeline. Saudi Arabia produces around 9 million bpd and has a rough pipeline that runs from the Abqaiq oil field on the eastern Gulf coast to the Red Sea port city of Yambu in the western part of the country. The United Arab Emirates, which produced 3.3 million bpd of crude oil in April, has a 1.5 million bpd pipeline linking the land-based oil fields to the Fujairah oil terminal east of the Strait of Hormuz.
Events to watch today
* Flash June business survey from S&PGLOBAL (0945EDT) Existing home sales (1000EDT)
*Fed Governor Christopher Waller, Adriana Coogler Committee Committee, Vice-Chairman of Superintendent Michelle Bowman and President Chicago Free Austan Ghoolsby will all speak. European Central Bank Chairman Christine Lagarde speaks to the European Parliament (0800EDT)
*The Eu-Canada Summit will be held in Brussels
*The US Treasury sells 3-year memos of $58 billion
The opinions expressed are those of the author. They do not reflect the views of Reuters News. Reuters News is committed to integrity, independence and freedom from bias under the principle of trust.
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(Edited by Mike Dolan and Anna Szymanski)
