📰 Market Report.
🕊️ According to U.S. President Donald Trump’s announcement on Truth Social, Israel and Iran have reached an agreement on a “Complete and Total CEASEFIRE,” which will start this Tuesday at midnight. He stated that the ceasefire would be in place “forever”. Israel and Iran, meanwhile, have not made it known that they agree with Trump’s proposed ceasefire schedule.
🚀 Iran’s military claimed to have launched a “powerful and destructive missile strike on the United States’ Al-Udeid military base in Qatar” on Monday. Al-Udeid Air Base, which has about 10,000 service members, is the biggest American military facility in the Middle East. According to Qatar’s Defence Ministry, the missile attack on Al-Udeid was stopped by its air defence, and no one was hurt or killed.
🛢️ As the immediate threat to the crucial Strait of Hormuz shipping waterway seemed to have diminished, oil prices rightfully fell by about 3%, adding to their nearly 9% overnight decline. This is a relief for global inflation, which will ease the pressure on central banks to control inflation.
🤝 Tehran had agreed to a truce, according to an Iranian official earlier, but the foreign minister of Iran stated that a ceasefire would not be implemented until Israel ceased its strikes.
🎭 What if this war were a staged show? Reports indicate that Iran evacuated the nuclear facilities days prior to the strikes, suggesting foreknowledge of the attacks. This evacuation aligns with the U.S. military’s public announcements and visible preparations, which may have signaled the impending action. Furthermore, secret talks between U.S. and Iranian officials in Oman shortly before the strikes raise questions about potential undisclosed arrangements.
🔍 Given these factors, it is plausible to theorize that the U.S. and Iran orchestrated a coordinated operation: the U.S. conducted strikes on pre-emptively evacuated sites, while Iran’s anticipated retaliatory measures were designed to minimize actual damage. This scenario would allow both nations to project strength domestically and internationally without escalating into a full-scale conflict.
⚠️ Another possible scenario also exists. Since arriving at the White House, all of Donald Trump’s announcements of attempts at peace agreements have been boycotted. While he was bringing Ukraine and Russia to the negotiating table, a complex surprise attack was being planned to catch Russia off guard, which ruined the peace efforts. While he was publicly speaking about his negotiations for a new Iranian nuclear deal, an Israeli surprise attack killed part of Iran’s negotiating team, escalating the conflict. Now he announces a ceasefire between Israel and Iran. Considering the track record of failures in peace attempts, a new surprise attack will frustrate this ceasefire.
💰 Are those interest rate cuts coming soon? Because of the inflationary effect of Trump’s tariffs, the Fed has not changed interest rates this year. However, several Fed members are siding with Powell, who has angered Trump with his hardline stance on interest rates. Governor Christopher Waller stated that he would also think about lowering rates next month, while Fed’s Michelle Bowman stated overnight that she was amenable to doing so in July.
📢 Tonight, more Fed officials will be speaking. Cleveland Fed President Beth Hammack is scheduled to discuss monetary policy in London, while New York Fed President John Williams will give keynote remarks in New York.
💶 ECB policymaker Joachim Nagel, who is also the Bundesbank’s president, is signaling the ECB wants to turn the page on the aggressive money-printing policy that marked the last decade. The ECB bought 5 trillion euros worth of debt in 2014-21, a wave of money printing that has been criticized for creating bubbles in property and financial markets.
📈 ECB President Christine Lagarde said the central bank “certainly prefer(red) to use interest rates” over QE as its policy tool. ECB vice-president Luis de Guindos said the central bank had “learned much more” about the side effects of its stimulus policies. The ECB is reviewing its long-term strategy, including the role of massive bond purchases, or quantitative easing (QE), and an announcement is expected in the coming weeks.
💳 Meanwhile, European Central Bank (ECB) President Christine Lagarde urged European lawmakers to speed up the introduction of legislation backing the launch of a digital euro. The ECB has been working for years on a digital version of the single currency, but it needs the European Parliament to pass legislation, which has proven elusive amid resistance from lawmakers. Lagarde described the digital euro as key to Europe’s financial autonomy and took aim at competing, privately issued digital currencies known as stablecoins. Lagarde said stablecoins posed “risks for monetary policy and financial stability” because they could lure deposits away from banks and don’t always maintain their fixed value.
🏦 European bankers have mostly been skeptical, fearing that a digital euro would empty their coffers as customers transfer some of their cash to the safety of an ECB-guaranteed wallet. A study by PwC estimated the digital euro may cost the banking sector between 18 billion euros and 30 billion euros in technical, commercial, and operational expenses.
🚗 Good news for Elon Musk. After the company’s robotaxis was introduced in Austin, Texas, on Sunday, Tesla’s stock increased 8.2%; nevertheless, authorities are investigating claims that the robotaxis is operating faultyly.
📊 Market View:
📈 The Mini S&P 500 futures have surged following announcements of a ceasefire in the Middle East conflict, currently trading above 6,125 points. Simultaneously, the Nasdaq 100 futures have surpassed 22,300 points.
📈 In Europe, the DAX 40 futures are also advancing sharply, exceeding 23,800 points at present. The Euro Stoxx 50 futures are positioned above 5,300 points, with a significant resistance level approaching at 5,350 points. Here, the charts might indicate that this movement is a pullback, suggesting that other bearish factors could be approaching.
💵 The dollar strengthened solely after the increase in global tensions over the weekend, but as soon as Donald Trump announced a peace agreement between Iran and Israel, the dollar has weakened again. The DXY dollar index approached levels of 99.50 during yesterday’s session, from which it has fallen sharply to the current 98 points. This has led the EUR/USD pair to recover to 1.16 and the USD/JPY pair to reverse the spectacular upward movement it made since Friday, falling back to the 145 area.
📉 However, the yield on US bonds has decreased considerably in recent hours, which could support the value of the dollar in the coming days.
🛢️ Crude oil is plummeting. Brent crude started the week at $80 per barrel, but after the announced ceasefire, it has fallen below $68 at present.
🪙 Gold futures are also deflating; yesterday they exceeded $3,400 per ounce, and at present, they have fallen below $3,350.
₿ Meanwhile, Bitcoin continues its strong upward rebound above $100,000 and is currently striving to consolidate above $106,000.
