First Light News: AI optimism and Middle East reality
I cannot believe how quickly this has come around, but the first full week of June is now upon us. Monday opened on a cautious footing following the weekend’s developments (or lack thereof). On the whole, it looks like it is shaping up to be another week of persistent unease between the AI trade and Middle East uncertainty.
Asian markets catch a bid
Asia-Pac equities caught a solid bid overnight, sending Japan’s Nikkei 225 and South Korea’s KOSPI to fresh records, adding nearly 1% and 4%, respectively.
Asia-Pac equities caught a solid bid overnight, sending Japan’s Nikkei 225 and South Korea’s KOSPI to fresh records, adding nearly 1% and 4%, respectively.
Sentiment received a further boost from Nvidia (NVDA) CEO Jensen Huang’s keynote in Taipei, where the world’s largest company confirmed its push into the Windows PC market with a new ARM-based chip developed alongside MediaTek and manufactured by TSMC.
Oil climbs as US-Iran talks stall
The primary macro driver remains the oil market. Both key benchmark prices – Brent and WTI – are up 1.5% and 2.5%, respectively, as hopes for a swifter resolution between the US and Iran were somewhat dashed over the weekend.
The primary macro driver remains the oil market. Both key benchmark prices – Brent and WTI – are up 1.5% and 2.5%, respectively, as hopes for a swifter resolution between the US and Iran were somewhat dashed over the weekend.
Both sides continued to exchange revisions to a draft agreement covering the truce extension and the reopening of the Strait of Hormuz, though concrete progress remained elusive. Tehran is pushing for exclusive authority over vessel transit and unconditional access to frozen funds – positions that the US appears unlikely to accept.
Is Trump’s electoral clock ticking?
President Trump took to social media to insist the deal squarely addresses Iran’s nuclear ambitions. I think there is an unequivocal urgency from Trump to get this over the line, with higher gasoline prices not sitting well with most Americans ahead of November’s congressional elections.
President Trump took to social media to insist the deal squarely addresses Iran’s nuclear ambitions. I think there is an unequivocal urgency from Trump to get this over the line, with higher gasoline prices not sitting well with most Americans ahead of November’s congressional elections.
Let’s be frank: markets have been (and continue to do so) confidently pricing in a near-term peaceful resolution in the Middle East that, in diplomatic reality, is not yet supported. Further escalation between the US and Iran – particularly in the Strait – would likely amplify market volatility, pushing oil and bond yields higher.
Powell draws a line in the sand
Jerome Powell – the now Fed governor after stepping down as Chairman recently – used a Boston award ceremony to deliver an unambiguous warning: any administration that removes Fed officials over policy disagreements sets a precedent others will exploit. The remarks are timely as the Supreme Court is expected to rule shortly on the administration’s attempt to remove Fed Governor Lisa Cook, the first such move in the Fed’s history, and a ruling that erodes those protections would, in my view, move both rates and the USD meaningfully.
Jerome Powell – the now Fed governor after stepping down as Chairman recently – used a Boston award ceremony to deliver an unambiguous warning: any administration that removes Fed officials over policy disagreements sets a precedent others will exploit. The remarks are timely as the Supreme Court is expected to rule shortly on the administration’s attempt to remove Fed Governor Lisa Cook, the first such move in the Fed’s history, and a ruling that erodes those protections would, in my view, move both rates and the USD meaningfully.
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