Gold and oil prices soared following an Israeli missile strike against Iran late last night. Israel carried out an apparent “pre-emptive strike” against Iranian nuclear facilities, which included targets in the capital city of Tehran. Renewed tensions in the Middle East are currently causing havoc among a number of markets. Bullion prices flew past $3,400 an ounce earlier in the day and remain volatile in light of developing events. Meanwhile, Brent Crude prices were sent flying to $75 a barrel from just $69 yesterday as market participants weigh the impact of potential supply disruptions through the Strait of Hormuz and surrounding areas. Asian stocks wasted no time reacting to the unfolding situation, as indices across the region fell sharply from the opening bell this morning. For the stock markets that have yet to open, futures are looking equally terrible as traders brace for impact later in the day. The reaction in cryptocurrencies has been predictably dreadful, with Bitcoin falling below $104k but the broader alt market is experiencing far greater woes, sometimes dipping into double-digit losses.
Taking a step back from the Middle East, markets faced another surprising development earlier in the week in the form of the latest US inflation data. On Wednesday, CPI figures revealed that inflation once again fell below expectations in May, with headline inflation rising to 2.4% and core remaining at 2.8%. The following day, PPI data also came in lower than expected at just 0.1% month-over-month. Despite repeated warnings to the contrary, the rate of inflation has fallen so far this year and the increased tariffs have not had the disastrous consequences that many economists were predicting. President Trump once again criticised Jerome Powell for not reducing rates on the Dollar, going so far as to say he may “have to force” an interest rate change. Strong words, but of limited impact to interest rate traders so far. The Fed is set to convene next Wednesday and the overwhelming consensus is for another rate hold at 4.5%.
Michigan Consumer Sentiment may provide some interest later today but the unfolding events between Israel and Iran will likely take priority for the time being.
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