One way a Prolonged Israel-Iran Conflict could Accelerate Fed Rate Cuts

Central Bank

Middle East Situation

Summary:

While the Fed can afford to be patient, Sweet said, "a significant and sustained increase in oil prices could bring forward the rate cut by a meeting because of the damage it will do to the economy.

A prolonged conflict between Israel and Iran may do more than rattle energy markets. One argument on Wall Street is that it could push the Federal Reserve to cut interest rates sooner than expected.

"A sustained rise in oil prices could cause the Fed to strike a more dovish tone," Oxford Economics chief US economist Ryan Sweet wrote in a recent note to clients, arguing that an extended oil shock could dent demand and potentially spill over into an otherwise resilient labor market.

That's because historically, sudden spikes in oil prices tend to cause only a temporary rise in inflation that the Fed usually overlooks. But with the economy already softening, a persistent surge could pose a bigger threat to growth and jobs than to inflation itself.

"The economy has slowed and is vulnerable to anything else going wrong, including a sudden and persistent increase in oil prices," Sweet said. "If the Fed views the hit to the economy and the labor market as greater than the temporary boost to inflation, the central bank could signal that it's open to cutting interest rates sooner."

On Monday, the Wall Street Journal reported that tensions between Iran and Israel had eased, sparking a rally in US equities and stabilizing crude oil prices to around $70 a barrel following last week's biggest price surge in three years.

Still, Sweet, whose baseline forecast is that the Fed will deliver its first rate cut in December, noted it may take weeks before markets gain a clearer sense of the direction of oil prices.

While the Fed can afford to be patient, Sweet said, "a significant and sustained increase in oil prices could bring forward the rate cut by a meeting because of the damage it will do to the economy, which is harder to fix than waiting out the temporary acceleration in headline inflation."

"This is a potential hot topic at a future Federal Open Market Committee meeting, but not next week's," Sweet added, echoing others on Wall Street who firmly believe the Fed will remain on pause for the foreseeable future.

That said, the inflationary impact is the other side of the coin.

Wall Street analysts have warned that a prolonged conflict and the potential closure of the critical Strait of Hormuz could drive oil prices as high as $130 a barrel, pushing US inflation back toward 6%.

This would likely lead to higher gas prices, which have been a key factor in the disinflationary trend over the past several months. According to the latest May CPI report, gas prices have fallen 12% over the past year. The government's energy index declined 1% month over month in the most recent reading.

Source: Yahoo Finance

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Manuel

Middle East Situation

Commodity

Oil fell on signs that the conflict in the Middle East may avoid disrupting crude production, with Iran seeking to deescalate hostilities with Israel.

West Texas Intermediate slid 1.7% to settle below $72 a barrel after spiking to start the session and swinging in an $8 throughout the day. US President Donald Trump said Iran wants to talk about deescalating the conflict, helping quell fears that a protracted war would engulf a region that produces around a third of the world’s crude.

“The question is — will Israel really be on board with that?” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “What this does suggest, though, is that the chatter about the Strait of Hormuz may have been overstating the threat.”

Still, oil markets remain on edge after Israel launched an attack on the South Pars gas field, forcing the halt of a production platform, following strikes on Iran’s nuclear sites and military leadership last week. However, critical crude oil-exporting infrastructure has so far been spared and there’s been no blockage of the vital Strait of Hormuz.

While an attack on Iran’s gas production is a concern, the biggest fear for the oil market centers on Hormuz. Middle East producers ship about a fifth of the world’s daily output through the narrow waterway, and prices could soar further if Tehran attempts to disrupt shipments through the route.

Oil prices remain significantly higher than where they were before the attacks began. Crude gained more than 7% in the session after air strikes began on Friday, leading to record volumes of producer hedging as well as futures and options changing hands. Wall Street analysts have been quick to highlight the risks the conflict could pose.

RBC Capital Markets said the fact both sides have targeted energy infrastructure shows a clear cause for concern, with the key export hub of Kharg Island and oilfields in Iraq potentially exposed. Morgan Stanley hiked its crude price forecasts by $10 a barrel, citing the increased risk from the conflict.

For now, the majority of the effects have been confined to the shipping market. Navigation signals in the Strait of Hormuz and the Persian Gulf are facing increasing interference at a level and intensity that is having a significant impact on positional reporting, the UK Navy said.

Some shipowners are reluctant to accept bookings in the region, citing safety concerns. Benchmark supertanker rates from the Middle East to China soared more than 20% on Friday.

Source: Bloomberg

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Cryptocurrency

Political

Crypto exchanges Coinbase and Gemini are close to securing regulatory approvals granting them access to operate across the EU, Reuters reported on June 16, citing people familiar with the matter.

According to the report, the expectation has intensified tensions among national regulators over the speed and oversight of new licensing under the bloc’s landmark crypto framework.

The EU’s Markets in Crypto-Assets (MiCA) regulation, in force since early this year, allows any member state to issue a license that unlocks the entire 27-nation market.

While hailed as a step toward aligning crypto oversight with traditional finance, some regulators privately warn that inconsistent enforcement risks creating regulatory blind spots for an industry valued at roughly $3.3 trillion.

Gemini looks for Malta approval

According to two sources, Gemini is close to receiving approval from Malta, which has already signed off on OKX and Crypto.com licenses within weeks of MiCA’s rollout. The country argues its quicker process stems from years of experience supervising crypto businesses.

A spokesperson for the Malta Financial Services Authority told the newswire that four crypto licenses have been issued to date, adding that stringent money-laundering checks remain in place.

Meanwhile, one source revealed that the European Securities and Markets Authority (ESMA) has examined Malta’s licensing procedures and is preparing an internal report.

ESMA declined to comment on the matter.

France’s financial markets regulator has publicly cautioned that ESMA’s lack of direct licensing power could spark a “race to the bottom,” as countries compete to attract lucrative crypto business.

Coinbase eyes Luxembourg license

Luxembourg is also expected to grant a license to Coinbase, marking the first approval for a US-listed crypto firm under MiCA.

Coinbase, now part of the S&P 500, employs around 200 staff across Europe and plans to expand its Luxembourg office by more than 20 people this year, a company spokesperson said.

Luxembourg’s financial supervisor did not comment on the pending application, but one official familiar with the matter rejected suggestions that the country’s standards were too lenient, arguing some critics are motivated by competition to lure crypto firms elsewhere.

The EU’s internal split over licensing comes as lawmakers debate expanding ESMA’s authority to ensure consistent enforcement of MiCA rules amid the risks posed by the US deregulating the industry.

While Brussels sets regulatory frameworks, national agencies retain licensing power, a system now under pressure in one of the world’s fastest-moving financial sectors.

The outcome of these approvals could shape how Europe balances investor safeguards with ambitions to be a global crypto hub, as memories of past industry scandals, such as FTX’s 2022 collapse, still loom large over regulators’ efforts to keep pace with innovation.

Source: Cryptoslate

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Political

China–U.S. Trade War

US trade and tariff talks with the European Union and Canada are in focus to start the week as President Trump attends the G7 summit in Canada.

A report in the German newspaper Handelsblatt on Monday hinted the EU could agree to a baseline 10% US tariff on all European Union exports, in exchange for avoiding higher tariffs on cars, medicines, and electronics. The European Commission denied that report.

Meanwhile, Trump said on the first day of the G7 gathering that a trade deal with Canada was possible.

"We have different concepts. I have a tariff concept. Mark has a different concept," Trump said, standing alongside Canadian Prime Minister Mark Carney. "We're going to see if we can get to the bottom of it today."

Canada's exports have been hit hard in Trump's trade salvos so far, as Trump has doubled duties on steel and aluminum imports to 50%. Meanwhile, Canada's auto exports to the US face 25% duties. Some products not included in the countries' existing trade agreement also face 25% levies.

Trump told reporters last week that he would soon send letters to trading partners setting unilateral tariff rates, raising questions about the status of negotiations — as well as fears of a possible escalation back to his "Liberation Day" tariffs that roiled markets. Trump instituted a pause on his most punishing duties that expires July 9.

The diverging signals came as the US made key progress with China, as the nations agreed to a framework and implementation plan to ease tariff and trade tensions.

Trump and other US officials indicated the deal should resolve issues between the two countries on rare earth mineral exports. Trump said the US would impose a total of 55% tariffs on Chinese goods. Yahoo Finance's Ben Werschkul reports, citing a White House official, that Trump arrived at that figure by adding together an array of preexisting duties and not any new tariffs.

Meanwhile last week, a federal appeals court held a decision saying his tariffs can temporarily stay in effect. The US Court of International Trade had blocked their implementation last month, deeming the method used to enact them "unlawful."

Source: Yahoo Finance

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

Middle East Situation

Global investors may be underpricing the impact of a conflict between Israel and Iran, market watchers warned on Monday, as stocks rallied despite escalating warfare in the Middle East.

The two regional powers continued trading fire on Monday, marking the fourth consecutive day of fighting since Israel launched airstrikes against Iran last week.

Despite the continued fighting — with hundreds reported dead — global stock markets sustained a positive momentum on Monday, seemingly shrugging off broader concerns about the conflict.

Russ Mould, investment director at AJ Bell, warned on Monday that there was a risk markets were underpricing “the risk of a major conflagration in the Middle East,” particularly when it comes to the energy market.

European shares opened broadly higher on Monday, with Asia-Pacific stocks and U.S. stock futures also trading in the green. Even Middle Eastern indexes saw gains on Monday, with the Tel Aviv 35 index last seen trading 1% higher after falling 1.5% last week.

“This is partly because there are so many moving parts and geopolitical considerations, and partly because the potential outcomes are so unthinkable,” Mould said. “In a worst case, oil and share prices would be the least of our worries.”

In a Monday morning note, David Roche, a strategist at Quantum Strategy, warned that the conflict between Israel and Iran “will last longer than the Israeli lightning-strikes that the market is used to.”

Torbjorn Soltvedtp, principal Middle East analyst at Verisk Maplecroft, agreed, saying an escalation remained of “huge concern.”

“What we have now is very different, and what we’re seeing is effectively a war and an open-ended one,” he told CNBC’s “Squawk Box Europe.”

“And of course, that is something that has huge implications, not just for the region, but also for energy markets and how they interpret what is happening. You know, minute by minute and day by day.”

Energy markets have moved the most on news of the attacks, as the Israel-Iran conflict stoked supply concerns.

While Friday marked the biggest single-day gain for crude since Russia’s full-scale invasion of Ukraine in 2022, however, global benchmark Brent crude futures — last seen at $73.75 a barrel — were still far below the prices seen in the aftermath of Moscow’s incursion into Ukrainian territory.

“A lull is the most likely outcome before later escalation when Iran rejects US Trump’s overtures,” Roche said. “The market is likely to mistake the lull for lasting peace. I would use the lull to buy into energy assets as a safe haven.”

‘Very modest’ market reaction

Some market watchers are taking a somewhat less pessimistic view, however.

In a note on Monday, Deutsche Bank’s Jim Reid noted that while both Iran and Israel had traded retaliatory blows, they had so far avoided “the most extreme escalatory steps.”

“As geopolitical shocks are becoming more frequent it seems it’s now at least a yearly occurrence that we refer to our equity strategists’ work on the impact of such shocks and how long it takes for the market to recover from them,” he said.

“The typical pattern is for the S&P 500

to pull back about -6% in 3 weeks after the shock but then rally all the way back in another 3,” Reid said. ”[Our strategists] believe this incident will likely be milder than this unless we get notable escalation as they highlight that equity positioning is already underweight … and a -6% selloff would need it to fall all the way to the bottom of its usual range.”

Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, told CNBC on Monday that he feels the market is correct in not pricing a huge escalation, such as the U.S. being drawn into the fray, or a blockade of the Strait of Hormuz.

The Strait of Hormuz, nestled between Iran and Oman, is a vital oil transit route through which millions of barrels of oil are transported every day.

“Still, the market reaction has been very modest, so there is room for disappointment if things were to escalate,” Gijsels conceded on Monday.

Source : cnbc

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Cryptocurrency

Trump Media & Technology Group (TMTG), the company behind the Truth Social platform, has filed to launch a new exchange-traded fund (ETF) that would track Bitcoin and Ethereum.

The filing, submitted to the US Securities and Exchange Commission (SEC) on June 16, marks a bold move in the firm’s shift toward digital finance.

According to the filing:

“The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the prices of bitcoin and ether and, to the extent the Trust engages in Staking (as defined herein), rewards earned from its staked ether.”

The proposed ETF will allocate 75% of its portfolio to Bitcoin and 25% to Ethereum.

TMTG has partnered with crypto exchange Crypto.com to handle custody, trading execution, staking, and liquidity support.

Yorkville America Digital is expected to sponsor the ETF. If the SEC approves the corresponding Form 19b-4, the fund will be listed on NYSE Arca.

Despite the announcement, TMTG shares showed little movement. According to Google Finance data, the stock was down about 2% to under $20, its lowest price since April.

Trump Media’s strategic shift towards crypto

This move represents a significant step in TMTG’s efforts to pivot from a social media-centric platform to a broader fintech player.

The firm has recently pursued this transition by partnering with Crypto.com and Yorkville America to develop a lineup of TMTG-branded ETFs blending digital and traditional assets.

One of the flagship offerings will be this Truth Social Bitcoin and Ethereum ETF, a product that builds on an earlier filing by NYSE Arca to list the Truth Social Bitcoin ETF.

In addition to its ETF ambitions, TMTG recently secured regulatory clearance for a $2.3 billion Bitcoin Treasury deal, signaling plans to bolster its crypto reserves.

These developments signal TMTG’s growing commitment to digital assets. By partnering with key industry players and entering the ETF market, the company aims to capitalize on rising crypto adoption and offer regulated exposure to major digital assets.

source : cryptoslate

Risk Warnings and Disclaimers

Add to Favorites

Thomas

Political

An Israeli strike hit Iran's state broadcaster on Monday as Iran called on U.S. President Donald Trump to force a ceasefire in the four-day-old aerial war, while Israel's prime minister said his country was on the "path to victory".

Israeli forces stepped up their bombardment of Iranian cities, while Iran proved capable of piercing Israeli air defences with one of its most successful volleys yet of retaliatory missile strikes.

"If President Trump is genuine about diplomacy and interested in stopping this war, next steps are consequential," Iran's Foreign Minister Abbas Araqchi said on X.

"Israel must halt its aggression, and absent a total cessation of military aggression against us, our responses will continue. It takes one phone call from Washington to muzzle someone like Netanyahu. That may pave the way for a return to diplomacy."

Sources told Reuters that Tehran had asked Qatar, Saudi Arabia and Oman to press Trump to use his influence on Israel to push for an immediate ceasefire. In return, Iran would show flexibility in nuclear negotiations, said the two Iranian and three regional sources.

Israeli Prime Minister Benjamin Netanyahu told troops at an air base that Israel was on its way to achieving its two main aims: wiping out Iran's nuclear programme and destroying its missiles.

"We are on the path to victory," he said. "We are telling the citizens of Tehran: ‘Evacuate’ — and we are taking action."

Late on Monday, Israel said it had hit Iran's broadcasting authority, and footage showed a newsreader hurrying from her seat as a blast struck. Iran's State News Agency also reported the strike.

Israel's defence minister said Israel had attacked the broadcaster after the evacuation of local residents.

Meanwhile, Iranian state media reported that Iran was preparing for the "largest and most intense missile attack" yet against Israel.

'DESPERATE'

Israel launched its air war on Friday with a surprise attack that killed nearly the entire top echelon of Iran's military commanders and its leading nuclear scientists. It says it now has control of Iranian airspace and intends to escalate the campaign in coming days.

Tehran's retaliation is the first time in decades of shadow war and proxy conflict that missiles fired from Iran have pierced Israeli defences in significant numbers and killed Israelis in their homes.

Iran says more than 224 Iranians have been killed, most of them civilians. Media published images of wounded children, women, and the elderly from cities across the country.

State TV broadcast scenes of collapsed presidential buildings, burned-out cars, and shattered streets in Tehran. Many residents were trying to flee the capital, describing queues for petrol and bank machines that were out of cash.

"I am desperate. My two children are scared and cannot sleep at night because of the sound of air defence and attacks, explosions. But we have nowhere to go. We hid under our dining table," Gholamreza Mohammadi, 48, a civil servant, told Reuters by phone from Tehran.

In Israel, 24 people have been killed so far in Iran's missile attacks, all of them civilians. Round-the-clock television images showed rescuers working in ruins of flattened homes.

Item 1 of 17 A drone photo shows the damage over residential homes and a school at the impact site following a missile attack from Iran on Israel, in Bnei Brak, Israel June 16, 2025. REUTERS/Chen Kalifa

[1/17]A drone photo shows the damage over residential homes and a school at the impact site following a missile attack from Iran on Israel, in Bnei Brak, Israel June 16, 2025. REUTERS/Chen Kalifa Purchase Licensing Rights, opens new tab

"It's terrifying because it's so unknown," said Guydo Tetelbaum, 31, a chef in Tel Aviv who was in his apartment when the alerts came in shortly after 4 a.m. (0100 GMT). He tried to reach a shelter but his door was blown in.

Trump has consistently said the Israeli assault could end quickly if Iran agrees to U.S. demands that it accept strict curbs to its nuclear programme.

Talks between the United States and Iran, hosted by Oman, had been scheduled for Sunday but were scrapped, with Tehran saying it could not negotiate while under attack.

On Monday, Iranian lawmakers floated the idea of quitting the nuclear non-proliferation treaty, a move bound to be seen as a setback for any negotiations.

'TEHRAN WILL PAY THE PRICE'

Before dawn on Monday, Iranian missiles struck Tel Aviv and Haifa, killing at least eight people and destroying homes. Israeli authorities said seven of the missiles fired overnight had landed in Israel. At least 100 people were wounded.

Iran's Revolutionary Guards said the latest attack employed a new method that caused Israel's multi-layered defence systems to target each other so missiles could get through.

"The arrogant dictator of Tehran has become a cowardly murderer who targets the civilian home front in Israel to deter the IDF," Israeli Defence Minister Israel Katz said.

"The residents of Tehran will pay the price, and soon."

Global oil prices shot up on Friday at the prospect of conflict disrupting supplies from the Gulf. Prices eased on Monday, suggesting traders think exports could be spared despite Israeli attacks that hit domestic Iranian oil and gas targets.

The sudden killing of so many Iranian military commanders and the apparent loss of control of airspace could prove to be the biggest test of the stability of Iran's system of clerical rule since the 1979 Islamic Revolution.

Iran's network of regional allies who could once have been expected to rain rockets on Israel - Hamas in Gaza and Hezbollah in Lebanon - have been decimated by Israeli forces since the start of the Gaza war.

Netanyahu has said that, while toppling the Iranian government is not Israel's primary aim, it believes that could be the outcome.

Iran's currency has lost at least 10% of its value against the U.S. dollar since the start of Israel's attack.

Art teacher Arshia, 29, told Reuters his family was leaving Tehran for the town of Damavand, around 50 km (30 miles) to the east, until the conflict was over.

"My parents are scared. Every night there are attacks. No air raid sirens, and no shelters to go to. Why are we paying the price for the Islamic Republic's hostile policies?" said Arshia, who withheld his surname for fear of reprisal from authorities.