Market Report.
🚀 Iran’s armed forces fired missiles at unidentified targets in southern Iran late on May 28, according to state media outlet Fars. The Pentagon had earlier reported that Iran launched a ballistic missile toward Kuwait, which was intercepted by Kuwaiti forces, and deployed attack drones in and around the Strait of Hormuz, all intercepted by U.S. forces.
🤝 Earlier that day, a White House official confirmed a report that the U.S. and Iran have mostly agreed to terms of a temporary deal to end the three-month-old war. The 60-day memorandum of understanding would extend the ceasefire and start nuclear negotiations, but President Trump has yet to give final approval.
💰 The U.S. Treasury sanctioned Iran’s Persian Gulf Strait Authority, the agency Tehran launched to exert control over transit through the strait, as part of Operation Economic Fury.
🇮🇱 Israel views Iran’s remaining nuclear infrastructure, ballistic missile capabilities, and proxy networks as unfinished business. Benjamin Netanyahu said Israel still has “work to complete in Iran” and that he discusses the issue with President Trump “almost every day”.
🕵️ Israeli Channel 12 reported that senior Israeli intelligence sources see no indication that Iran’s Supreme Leader Mojtaba Khamenei has given final approval to the tentative 60-day memorandum of understanding with the United States. The sources stated that without Khamenei’s approval, Trump has nothing to sign off on.
⚖️ The report noted that even if Iran’s parliament speaker or foreign minister accept the framework, Khamenei is the ultimate decision-maker, and internal disagreements in Tehran persist. This directly contradicts U.S. claims that the deal had received approvals from all levels of Iranian leadership.
🔔 Israeli intelligence’s assessment aligns with Israel’s repeated warnings that any deal not fully dismantling Iran’s nuclear and missile capabilities is insufficient. U.S. officials tout progress while Israeli sources and some Iranian hardliners continue to express doubt or outright rejection.
📰 According to Bloomberg, “Hezbollah Turns the Tables as Iran Talks Creak” highlights Hezbollah regaining momentum against Israel through persistent low-cost drone attacks. The group has forced Israel to redirect warplanes inland again, adapting and imposing costs deeper into Israeli-held or border areas.
⚠️ This comes as U.S.-Iran negotiations for an interim ceasefire and Strait of Hormuz deal are advancing but stalled on key issues. Israel’s renewed escalation in Lebanon risks complicating those talks.
🛩️ In recent days, Hezbollah surged attacks using small fiber-optic FPV explosive drones. These cheap, cable-guided drones evade Israeli electronic jamming and have struck vehicles, troop positions, and infrastructure near the border. After months of Israeli pressure, the militia is now using asymmetric drone tactics to bleed Israeli forces and complicate Netanyahu’s broader strategy.
📌 Israel views Hezbollah as unfinished business even if a U.S.-Iran framework is reached.
Be careful, Oman.
🗨️ Treasury Secretary Scott Bessent posted a direct warning on X on May 28, 2026. He stated that the United States government will not tolerate any effort to impose a tolling system in the Strait of Hormuz. He singled out Oman, saying the Treasury will aggressively target any actors involved directly or indirectly in facilitating tolls and that any willing partners will be penalized.
💬 The threat was prompted by reports that Iran was negotiating with Oman to help enforce a tolling system on commercial vessels. This would charge fees reportedly up to one to two million dollars per ship in exchange for safe passage. Washington views any Omani facilitation of Iranian tolls as crossing a red line.
🗣️ One day earlier, President Trump issued a more blunt warning at a cabinet meeting, saying Oman will behave just like everybody else or we will have to blow them up. Bessent said he spoke with Oman’s ambassador, who assured him there are no plans for tolling the Strait.
🛑 Oman has not publicly responded beyond the ambassador’s private assurance.
The crude inventories are running out.
⚠️ Exxon Mobil has warned that global oil stocks are approaching levels never seen before. Senior Vice-President Neil Chapman said that these critically low stocks could run out in two or three weeks, at which point prices will skyrocket.
📈 Chapman projected that physical prices for Brent crude could rise to $150–160 per barrel once minimum inventory thresholds are breached. That price level would then trigger a collapse in demand to rebalance the market.
📉 Iran’s closure of the Strait has already cost the market more than a billion barrels, the largest disruption to oil supplies in history according to the International Energy Agency.
🛢️ Existing inventories and a record release of 400 million barrels by IEA members have cushioned the impact so far, but Chapman stressed that this cannot last forever. Once inventories run out, the only way for prices to go is up.
The next wars: The storm is coming.
🗣️ Jonathan Pollard, a former U.S. Navy intelligence analyst convicted of spying for Israel and now a Knesset candidate, gave an interview to the Israeli nationalist outlet Arutz Sheva in late May 2026. He stated that after current conflicts, Israel must prepare for the next war, which he said would probably be against Turkey and Egypt.
🌩️ Pollard used dramatic language, saying “The storm is coming… a storm the world has never seen before.” He described the Turkish military as the strongest army in the Middle East and warned that future fighting “won’t be as easy” as operations against Iran.
ℹ️ These are Pollard’s personal opinions as a private citizen and political activist. The Israeli government has not endorsed them. However, comments made by the former Israeli prime minister recently went viral, in which he claimed that after Iran, the next enemy would be Turkey.
The new US macro data:
📉 New York Fed President John Williams said he expects near-term inflation around 4% and core inflation near 3%, citing the shock from the Middle East war and tariffs, and stressed the importance of anchoring inflation expectations—short-term expectations are elevated while long-term expectations remain stable.
🤖 He said AI will boost productivity but is unlikely to cause long-term structural unemployment, and warned that without investment in AI U.S. demand would be weaker.
📈 April PCE data showed core PCE year-over-year 3.29% (vs. 3.3% est.), core monthly +0.2% (vs. +0.3% est.), headline PCE y/y 3.8% (in line), headline monthly +0.4% (vs. +0.5% est.); consumer spending rose 0.5% month-over-month (in line) but lower thna hte previous period 0.9%, and the GDP price index was confirmed at 3.5%.
Warsh prefers other inflation indicators.
📐 New Federal Reserve Chair Kevin Warsh prefers “trimmed averages” to measure inflation rather than the traditional core PCE index. The Dallas Fed’s trimmed mean measure, the best-known of these gauges, showed year-over-year inflation at 2.3 percent in April, down from 2.4 percent in March.
🌡️ ‘Trimmed averages’ are like measuring the temperature of a house by taking several readings and discarding the most extreme ones to determine the typical temperature in most rooms, whereas the PCE is like calculating the average temperature of the whole house by adding up all the readings and weighting them by the size of each room, so that changes in larger spaces have a greater influence on the result.
🏛️ At his confirmation hearing, Warsh told lawmakers he believes inflation has improved somewhat in the last year, basing his view on trimmed averages. Analysts at Standard Chartered argued it is difficult to claim the disinflation signaled by the trimmed mean is real, noting it has historically been worse at predicting future inflation than core PCE.
📊 The Dallas Fed has no plans to change its methodology. If tariff-induced price pressures recede as expected, the measurement problem should resolve itself in coming months, but until then other guides to underlying inflation deserve more attention.
📰 According to Reuters, Harvard economist Jason Furman noted the Cleveland Fed’s separate measure of median PCE inflation has also declined, though at 2.8 percent it is higher than the Dallas measure. He said the worry is that Warsh’s preferred gauge was picked for ex post reasons and suggested the Fed should conduct a formal study of the best signal extraction and then stick with the chosen measure.
US Labour markert.
📉 New claims for unemployment benefits rose by five thousand to a seasonally adjusted 215,000 for the week ending May 23. This was slightly above the forecast of 211,000, but claims have remained within a stable range this year.
⚖️ The unemployment rate is expected to remain steady at 4.3 percent in May. While continuing claims have declined from higher levels last year, part of that decline may be due to people exhausting their 26-week benefit eligibility.
📋 A separate Conference Board survey showed mixed household views on the labor market. The share of people seeing jobs as plentiful fell to its lowest since February 2021, while the share reporting that jobs are hard to get hit a seven-month low.
Japanese inflation cooling down?
📉 Core inflation in Tokyo rose 1.3 percent in May from a year earlier, slowing from a 1.5 percent gain in April and remaining below the Bank of Japan’s 2 percent target for a fourth straight month. The reading fell short of market expectations for a 1.5 percent rise.
🛡️ The slowdown was largely due to government subsidies that curb utility bills, water bills, and tuition costs. These subsidies are masking the impact of rising raw material costs driven by the Middle East conflict.
🔮 Inflation is expected to re-accelerate in the coming months. Surging oil prices and higher import costs from a weak yen are expected to push up prices not just for energy but for a wide range of goods. Government steps may mitigate some upward pressure but not all, potentially pushing real wages back into negative territory.
🏭 Separate data showed factory output rebounded in April, rising 0.8 percent from the previous month and confounding forecasts for a 0.9 percent drop. Production of industrial and electric machinery rose, with chip inspection equipment surging over 44 percent, while naphtha shipments fell sharply.
🏦 The BOJ kept rates steady in April but dropped strong signals about a near-term hike. Markets expect a rise in the short-term policy rate to 1 percent from 0.75 percent at the next meeting.
China orders more credit, but demand remains weak:
🏦 China’s central bank has instructed major state-owned banks to boost lending in May, issuing informal “window guidance” as household and corporate loan demand remains weak. This follows similar guidance in April, which failed to prevent a contraction in new yuan loans that month.
🏚️ The property market downturn and fragile private-sector investment appetite continue to erode credit demand. Higher energy costs from the Iran war have added external pressure on an economy already struggling with weak domestic consumption and household confidence.
🔒 Banks are simultaneously tightening lending standards to small and midsize private firms and to households, as rising loan defaults force a focus on risk controls. This further constrains the flow of credit to parts of the real economy.
⚖️ However, do not expect the People’s Bank of China to rush into policy easing because inflationary pressures are building.
🏘️ China’s home prices are expected to fall 3.5 percent in 2026, a slower decline than the 4.0 percent drop forecast in March. Prices are then seen edging up 0.3 percent in 2027 and rising 1.8 percent in 2028, suggesting the market might be moving toward a slower adjustment phase.
🔧 The home building industry is likely to remain in contraction this year, but the pace of decline should gradually ease as policy support continues, default contagion risks diminish, and new home sales volumes approach more sustainable levels.
🎁 Several cities have introduced buyer incentives including subsidies.
Europe: Italy slowing down?
📉 The mixed data arrives as the government cut its economic growth outlook to 0.6 percent for this year and next, reflecting surging energy prices and turmoil in the Middle East. The government forecast 0.8 percent growth for 2028, marking six consecutive years of sub-1 percent expansion.
🙂 Italian consumer confidence rose to 93.4 in May from 90.8 the previous month, recovering against expectations and well above the median forecast of 90.1.
🏭 Business morale moved in the opposite direction. The composite business morale index, covering manufacturing, retail, construction, and services, fell to 94.1 from 95.1 in April, the lowest level since September of last year. The sub-index for manufacturing was stable at 87.9.
Is one of the US tech magnates leaving?
✈️ Peter Thiel has temporarily relocated his family to Buenos Aires, enrolling his children in a local school and purchasing a 12 million dollar mansion in the exclusive Barrio Parque neighborhood. The move is described as a strategic foothold in Argentina.
🔁 The move is described as temporary rather than a permanent exit. Thiel maintains major U.S. business interests and has not sold his primary homes in Los Angeles or Miami.
🏛️ Thiel’s motivations include concerns about the future of the United States, particularly its political and economic direction. A proposed California billionaire tax on the November 2026 ballot that could target net worth over 1 billion dollars is cited as one factor. He is also ideologically aligned with Argentina’s libertarian President Javier Milei, sharing views on austerity, deregulation, and cultural issues.
🤝 Over the past two months, Thiel has met multiple times with Milei and his ministers, hosted dinners with local economists, and participated in a chess tournament where he placed third. Argentina’s government has reportedly discussed offering him citizenship or permanent residency as a signal to investors.
Market View.
📈 US futures are back at all-time highs: mini S&P 500 futures are approaching 7,600 points, while Nasdaq 100 futures have surpassed 30,325 points.
💱 The US Dollar Index (DXY) underwent a sharp correction yesterday, remaining within the range it has respected since mid‑May, pulling back from the 99.40 area toward the 99.00 zone. EUR/USD moved higher accordingly, approaching 1.1660 before retreating to about 1.1650.
🪙 Gold futures also adjusted with the dollar’s movement, surging strongly and reclaiming $4,500 per ounce, currently trading around $4,545 per ounce.
📉 In Europe, DAX 40 futures retreated from Monday’s highs and are now at about 25,195 points; Euro Stoxx 50 futures are following a similar pattern and are trading near 6,065 points.
🛢️ Crude oil continues to cool as an understanding between Iran and the US is increasingly assumed despite obstacles; spot Brent falls to $91.50 per barrel and trades around that level.
฿ Bitcoin posted another bearish move yesterday, dipping below $74,000 and currently trading near $73,680.
