Market Report.
Let’s start by going over what took place last Friday.
💼 U.S. jobs report sent a shock through financial markets. Nonfarm payrolls for May came in at 172,000, far exceeding the forecast of 88,000.
🏦 Federal Reserve official Beth Hammack said she prefers to hold rates steady for now, but could act against inflation if current trends persist. White House adviser Hassett argued that there is no inflation risk yet.
📈 Looking ahead, BNP Paribas expects three Fed rate hikes, starting in December. Markets are now pivoting toward a tighter monetary policy stance.
🌍 Since this report, we have maintained that a ceasefire in the Middle East was a pipe dream, given that the positions of Israel and Iran are irreconcilable. Unfortunately, recent events are proving us right.
✈️ Yesterday, Israeli airstrikes hit Beirut’s southern suburbs for the first time since the ceasefire was renewed last week. Multiple explosions were reported; Israel confirmed it targeted Hezbollah infrastructure.
🇺🇸 President Trump distanced the United States from Israel’s latest military action in Beirut, saying the operation was carried out without Washington’s knowledge or approval.
🗣️ “Israel’s attack on Beirut was not coordinated with us and I’m not happy about it,” Trump said.
🚀 Iran responded by launching roughly 10 ballistic missiles toward northern Israel. Sirens sounded across the country; projectiles were visible in the night sky. Tehran explicitly called it retaliation for the Beirut strikes, which it said “crossed all red lines.”
⚠️ Iran’s Khatam Al-Anbiyaa Central Command issued an overnight statement demanding an immediate halt to Israeli military operations in Beirut and southern Lebanon. The command warned of a sharp escalation if the strikes continue.
📢 “The Zionist occupation army must immediately stop its attacks on Beirut and southern Lebanon. If the Zionist regime continues to expand its aggression, it will face a much more severe response,” the statement read.
🤝 Following Iranian ballistic missile strikes on Israel, President Trump urged Tehran to stand down and return to negotiations. “What I would suggest to Iran: You’ve shot your missiles, that’s enough. Get back to the table and make a deal,” Trump said.
🗞️ A senior Israeli official told Israeli Army Radio that the recent launches from Iran toward Israeli territory amount to a renewal of hostilities. “Declaration of the renewal of war,” the official said.
🔥 A few hours ago, Israel struck a petrochemical plant in Iran’s southwest and other military targets. The strike on the Mahshahr petrochemical complex marks the first hit on an energy site inside Iran since the April 8 ceasefire. A provincial official confirmed parts of the plant were damaged.
📰 Hours before the strike, President Trump told the Financial Times that new attacks by Israel and Iran would not affect peace talks with Tehran. He stated bluntly that he calls all the shots and that Netanyahu does not call the shots.
🕊️ According to a U.S. official quoted by Axios, Trump told Netanyahu to refrain from further strikes because they are close to doing something good in terms of a deal.
💰 According to Reuters, the U.S. is reportedly considering making frozen Iranian assets available to Gulf neighbors to repair war damage, which Iran’s deputy foreign minister called illegal and promised a response.
An unjustified war?
🧭 Carl Bildt, former Swedish prime minister and foreign minister, told CNBC on a March interview, that the U.S.-Israeli military action against Iran was a “war of choice,” not a necessity.
📋 Bildt listed three factors behind Trump’s decision. Significant pressure came from Israeli Prime Minister Netanyahu, who wanted the war. The Iranian regime was weak after internal protests and June 2025 strikes. Trump also developed a taste for using military power after his campaign rhetoric.
⚖️ He stressed there was no immediate cost or reason triggering the war, calling it an avoidable escalation driven by choice rather than an imminent threat.
⏳ The interview took place just days after the conflict began in late February 2026. The war has passed 100 days and there is still no resolution in sight.
Spying between Israel and the US?
📰 According to New York Times, The Pentagon’s Defense Intelligence Agency raised Israel’s counterintelligence threat level from “high” to “critical,” the highest designation, based on intelligence assessments.
🔎 The alleged spying aimed to uncover U.S. negotiating positions and internal deliberations with Iran amid efforts to broker a peace deal to end the war that began in February 2026. The report states that an intensified Israeli effort to learn about U.S. positions in talks with Iran has “crossed a line,” according to some American officials.
👥 Targeted officials include Steve Witkoff, the president’s top negotiator on Iran talks, Elbridge A. Colby, Undersecretary of Defense for Policy, and Michael P. DiMino IV, one of Colby’s main deputies.
😳 One senior U.S. official described the aggressiveness of Israeli intelligence collection on top U.S. officials during Trump’s second administration as “unhinged.” Secondary reporting paraphrases the espionage as having “spiraled out of control.”
🏛️ The Israeli Embassy in Washington called the allegations “completely false,” stating that Israel does not spy on the U.S. government or American officials. The White House rejected the report as “false” and sourced to someone without knowledge of the situation. The Pentagon declined to comment.
A brief trip for the World Cup.
🛂 Iran’s national team faces strict U.S. visa conditions for the 2026 World Cup. The ambassador to Mexico confirmed that players and essential staff must enter the United States only on match days and leave the same day, preventing overnight stays or basing themselves on U.S. soil.
🏟️ The team has relocated its base camp to Tijuana, Mexico, just across the border, after FIFA approved the move from a planned site in Arizona due to the visa complications.
🔒 The U.S. will not allow anyone with ties to the Islamic Revolutionary Guard Corps, designated a terrorist organization, to exploit the tournament for entry.
🚫 Those reportedly excluded include the federation president, other executives, technical staff, and media officials, which Iran has called discriminatory and politically motivated.
India seems to be growing unstoppably.
🇮🇳 India’s economy grew at 7.8% from January to March, exceeding expectations of 7.2%. This growth occurred despite challenges from conflict in the Middle East, which could hurt future growth and raise inflation.
🤝 Positive trade developments included a significant deal with the European Union and reduced tariffs from the U.S. However, the Iran war has led to increased energy costs, affecting the rupee and causing inflation concerns.
📊 The Reserve Bank of India raised its inflation forecast to 5.1% for the year and adjusted the growth forecast down to 6.6%.
China’s surplus also continues to rise.
🇨🇳 China’s export growth likely strengthened in May, expected to rise 15% year-on-year, as indicated by a Reuters poll of 32 economists.
🔋 This increase is driven by pre-emptive overseas orders to avoid energy price pressures from the Gulf war and ongoing demand for semiconductors and AI components.
⚠️ However, as foreign buyers approach stockpiling limits, input costs increase, leading to concerns about a potential downturn in exports.
🔮 Forecasts for growth vary, with estimates ranging from 10% to 19.5%. Imports are also expected to rise by 25%. China’s trade surplus is projected to reach $92.1 billion in May, up from $84.8 billion the previous month.
Meanwhile, Japan’s figures do not appear promising.
🇯🇵 Japan’s economy showed slower growth in the first quarter, with annualized GDP rising 1.8 percent, down from 2.1 percent. Capital expenditure decreased by 0.7 percent, revising from a 0.3 percent increase, due to reduced spending on technology.
🛍️ Private consumption rose 0.3 percent, and both external and domestic demand remained stable.
🏦 The Bank of Japan may raise interest rates due to inflation risks, while energy costs from the Iran war are straining household finances. The government has created a $19 billion budget to address rising energy costs, but ongoing tensions could cause economic stagnation.
Optimism at the BoE?
🏛️ Bank of England policymaker Alan Taylor stated that current interest rates are restrictive for the economy.
🧾 He sees no need to increase rates to address inflation caused by the Iran war. He expressed comfort with the situation unless faced with a worst-case scenario.
Market View.
📈 Friday’s strong US non-farm payrolls (NFP) data upended the markets, as a robust economy dispels complacency towards Wall Street.
📉 S&P 500 futures fell by around 2.8% and have rebounded slightly, currently standing at 7,400 points. Nasdaq 100 futures dropped 4.8% and have bounced to the current 29,080 points.
💵 The US Dollar Index (DXY) aggressively broke through its resistance at 99.50 points and approached 100.20 points. This sank the pairs against the dollar. EUR/USD fell to 1.1510, a decline of more than 1% from pre-data levels. GBP/USD’s drop exceeded 1.25%, taking it to around 1.3310.
🇪🇺 European futures fell and are continuing to fall at the opening this Monday. DAX 40 futures are trading at 24,400 points, and Euro Stoxx 50 futures at 5,968 points.
🛢️ Crude oil prices rose again due to the clashes in the Middle East, and its charts are beginning to trace bullish patterns once more. Spot Brent crude is trading at $97.75 per barrel.
🥇 Gold futures slumped with the impressive dollar rally, falling from $4,500 per ounce to $4,300 per ounce, marking a drop of more than 4.5% on Friday.
🪙 Bitcoin lost the $60,000 level on Friday, then rebounded to the current $62,815.
