Trump Faces Uproar From MAGA Base Over Possible Iran Strike

Political

Summary:

MAGA supporters fear US involvement in a new Middle East war; Bannon says let Israel 'finish what they started' Trump says his backers love him.

The prospect of a U.S. strike against Iran has exposed divisions in the coalition of supporters that brought President Donald Trump to power, with some of his base urging him not to get the country involved in a new Middle East war.

Some ofTrump'smost prominent Republican allies, including top lieutenant Steve Bannon, have found themselves in the unusual position of being at odds with a president who largely shares their isolationist tendencies.

Bannon, one of many influential voices from Trump's "America First" coalition, on Wednesday urged caution about the U.S. military joining Israel in trying to destroy Iran's nuclear program in the absence of a diplomatic deal.

"We can't do this again," Bannon told reporters at an event sponsored by the Christian Science Monitor in Washington. "We'll tear the country apart. We can't have another Iraq."

The anti-interventionist part of the Republican Party is watching with alarm as Trump has moved swiftly from seeking a peaceful diplomatic settlement with Iran to possibly having the United States supportIsrael's military campaign, including the use of a 30,000-pound "bunker buster" bomb.

The criticism shows the opposition Trump could face from his right-leaning "Make America Great Again" flank should he join the fight, a step that Iran has warned would have big consequences for Americans without specifying what that might be.

A decision by Trump to enter the conflict would be a sharp departure from his usual caution about foreign entanglements. It could impact his campaign to foster good relations in the Gulf and could be a distraction from his efforts to negotiate an end to the war in Ukraine and make tariff deals with countries around the world.

The MAGA coalition propelled Trump into office in the 2016 and 2024 elections and remains critically important to him even though he is prevented by the U.S. Constitution from running for a third term.

Upsetting that base could erode Trump's popularity and factor into whether Republicans hang on to control of Congress in the 2026 midterm elections.

IRAN CANNOT HAVE A 'NUCLEAR WEAPON'

Asked about the rift on Wednesday, Trump appeared unconcerned that some in his base could be turning its back on him, at least on this issue.

"My supporters are more in love with me today, and I'm in love with them more than they were even at election time," Trump told reporters at the White House. "I only want one thing: Iran cannot have a nuclear weapon."

He said some of his supporters "are a little bit unhappy now" but that others agree with him that Iran cannot become a nuclear power.

"I'm not looking to fight. But if it's a choice between them fighting or having a nuclear weapon, you have to do what you have to do," Trump said.

Marc Short, an ally of former Vice President Mike Pence who served as Trump's legislative director during his first term, called the division over Iran within Trump's party a "pretty large rift." He said he thought Trump's base would stay with him despite the differences, however.

"The divisions are obviously coming out in the open in this moment, but ultimately I think that most of the president's followers are loyal to him more so than any worldview," he said.

Short said standing with Israel could help Trump politically, too. Traditionally conservative voters favor standing by Israel. In a Reuters/Ipsos poll conducted in March, 48% of Republicans agreed with a statement that the U.S. should use its military power to defend Israel from threats no matter where the threats come from, compared to 28% who disagreed. Among Democrats, 25% agreed and 52% disagreed.

International experts believe Iran has been intent on developing a nuclear weapon, despite Tehran's denials, and Israel believes it would be at risk as a result. U.S. officials believe if Iran possessed an atomic weapon it would trigger an nuclear arms race in the Middle East.

ISRAELIS NEED TO GET JOB DONE

Bannon, host of the popular "War Room" podcast, said "the Israelis need to finish what they started" and that Trump should slow down deliberations over U.S. involvement and explain his decision-making.

"This is one of the most ancient civilizations in the world, okay, with 92 million people. This is not something you play around with. You have to think this through at this level, and the American people have to be on board. You can't just dump this on them," he said.

Other influential MAGA voices with similar messages of worry include former Fox News Channel host Tucker Carlson and U.S. Representative Marjorie Taylor Greene, a Georgia Republican and long-time Trump ally.

"Anyone slobbering for the U.S. to become fully involved in the Israel/Iran war is not America First/MAGA," Greene said in a social media post on Sunday. "We are sick and tired of foreign wars. All of them."

But another Trump ally, Republican Senator Lindsey Graham of South Carolina, said on Fox News on Tuesday that he hopes Trump will help Israel "finish the job" because Iran represents "an existential threat to our friends in Israel."

The rift was on full display when Carlson, on his streaming program, clashed with Republican Senator Ted Cruz of Texas late on Tuesday.

A clip from Carlson's interview with Cruz went viral with Carlson strongly criticizing the senator for seeking regime change in Iran, and Cruz expressing support for the president.

"You don’t know anything about Iran!" Carlson told Cruz.

"I am not the Tucker Carlson expert on Iran," Cruz fired back.

"You're a senator who's calling for the overthrow of the government," Carlson retorted.

Vice President JD Vance tried to tamp down talk of a rift on Monday with a social media post defending the president.

"People are right to be worried about foreign entanglement after the last 25 years of idiotic foreign policy. But I believe the president has earned some trust on this issue," he said.

Now allies and opponents are waiting on Trump's decision-making process. The president said on Wednesday afternoon he had some ideas on how to proceed but had not made a final decision.

Source: TradingView

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Gerik

Economic

Bleak Forecasts Undermine Hopes of a 2025 Hike

The Bank of Japan’s (BOJ) decision to maintain its current interest rate policy despite gradually rising inflation is a direct reflection of its subdued economic projections released in May. According to Seisaku Kameda, former top BOJ economist, the central bank's outlook was surprisingly dovish, with lowered growth and inflation expectations for both FY2025 and FY2026, largely due to the anticipated drag from U.S. tariffs.

The BOJ forecast core consumer inflation to reach 2.2% by March 2026, but then slow to 1.7% in FY2026, signaling that price pressures would not be sustained long enough to warrant aggressive monetary tightening. This forecast positions Japan at odds with other global central banks, which are either holding or hiking rates in response to persistent inflation.

Tariff Uncertainty Ties BOJ’s Hands

The central impediment to policy action remains unresolved trade tensions with the United States, notably sweeping tariffs targeting Japan's crucial auto export sector. With May’s exports falling for the first time in eight months, the negative impact of tariffs is becoming evident.

Kameda suggests that unless there is a “very big, positive change” in U.S.-Japan tariff negotiations, the BOJ will stick to its cautious trajectory. The next critical window for reassessment is the July 31 quarterly outlook, but given the current lack of progress in trade talks, few analysts expect a dramatic shift in projections that could justify a hike.

Corporate Sentiment and Wage Momentum in Focus

Beyond tariffs and exports, the BOJ is also closely watching corporate capital expenditure and wage growth trends. According to Kameda, these factors will weigh heavily on the bank’s decision-making. If Japanese firms hold back on investments or waver on continued wage hikes — key to sustained inflation — a rate increase could be pushed to Q1 2026 at the earliest.

The labour market, long a weak spot in Japan’s economic engine, has shown signs of tightening, but structural constraints and demographic pressures continue to dilute upward wage momentum.

BOJ Walking a Cautious Line

Despite ending its ultra-loose policy last year and raising short-term rates to 0.5% in January, the BOJ remains cautious. At its most recent policy meeting on Tuesday, it decided to slow the pace of balance sheet reduction in 2026, acknowledging external risks such as Middle East tensions and persistent U.S. protectionism.

Governor Kazuo Ueda has indicated readiness to raise rates again if inflation proves sticky, but the risk of derailing a fragile recovery keeps the bank firmly on a “wait-and-see” course.

Market Implications and Forward Guidance

The prevailing sentiment in financial markets, echoed by a Reuters poll, is that the next 25-basis-point hike is most likely in early 2026. Kameda’s insight aligns with this expectation, reinforcing the view that 2025 may pass without further tightening unless trade or inflation dynamics shift dramatically.

Investors and policymakers are likely to pay close attention to upcoming wage negotiation results, the BOJ’s July 31 forecast revisions, and the evolving geopolitical climate, particularly regarding energy prices and tariff developments. Until then, the BOJ appears committed to stability over speculation, anchoring Japan’s monetary policy in a sea of global uncertainty.

Source: Reuters

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Gerik

Commodity

Middle East Situation

Geopolitical Uncertainty Overshadows Inventory Draws

After a week of heightened volatility, global oil markets entered a holding pattern, reacting cautiously to the possibility of U.S. military escalation in the Middle East. Brent crude hovered just under $76 per barrel, while WTI slipped below $75, despite a significant 11.5 million-barrel drop in U.S. crude inventories — the sharpest draw in nearly a year. Yet, the bullish supply-side data was largely overshadowed by geopolitical anxiety.

The spotlight remains on President Donald Trump, who continues to send mixed signals about a potential strike on Iran. While he confirmed on Wednesday that he might proceed with an attack, he stopped short of issuing a final order. Reports suggest that a military plan has been approved but is being held in reserve pending further developments. This indecision has injected heightened risk premiums into energy markets, particularly with traders eyeing the Strait of Hormuz, the chokepoint for nearly 20% of global oil flows.

Volatility Spikes as Options Turn Bullish

Market behavior this week has been marked by elevated volatility and widening backwardation, indicating tightening near-term supply expectations. Option traders have increasingly positioned themselves for bullish price moves, pricing in a potential supply shock if military tensions boil over.

Still, no immediate signs have emerged of disruption in shipping through the Strait of Hormuz, keeping the market balanced between fear and fundamentals. Mike Sommers, head of the American Petroleum Institute, remarked on Bloomberg TV that while a blockade isn’t currently expected, “everybody should be watching” closely given the fragile position of Iran’s regime.

Goldman Sachs and Analysts See Risk-Weighted Outlook

Analysts at Goldman Sachs estimate a $10 geopolitical premium embedded in Brent due to the current standoff. However, the bank’s base-case remains bearish in the absence of direct supply disruption, forecasting Brent at $60 per barrel in Q4 if diplomatic containment holds.

Likewise, Chinese energy analyst Gao Jian from Qisheng Futures notes that the oil market has now entered a “high-level consolidation phase”, suggesting that traders are reluctant to take major directional positions without a clearer resolution or escalation of the conflict.

Inventory Trends Offer Limited Relief

Even as Middle East risks dominate headlines, domestic U.S. oil fundamentals remain influential. Last week’s drawdown in crude stockpiles, particularly at the Cushing, Oklahoma hub, reflects strong refining activity and possibly higher seasonal demand. However, an uptick in gasoline inventories adds nuance, indicating that downstream fuel demand may not be accelerating as fast as crude drawdowns suggest.

The current oil price trajectory reflects a market straddling two countervailing forces: one driven by geopolitical fear, the other by softening demand signals and bearish fourth-quarter outlooks. Until the White House clarifies its stance on Iran, or Tehran provokes a tangible supply shock, traders will remain in risk-management mode, bracing for sudden turns in either direction.

For now, the Strait of Hormuz remains the critical pressure point, and oil’s short-term fate hinges as much on political decisions in Washington as on economic signals in global energy data.

Source: Bloomberg

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Glendon

Economic

Forex

US President Donald Trump’s administration urged the US Supreme Court to turn away a request for fast-track review of his sweeping tariffs, saying the justices should give lower courts more time to weigh in.

The filing comes a day after two family-owned businesses asked the court to hear their challenge on an unusually quick schedule, without waiting for a federal appeals court to rule. The companies suggested the justices decide before their summer recess starts in about two weeks whether to hear the case.

In a seven-page response on Wednesday, US Solicitor General D John Sauer said the companies “have not justified such a stark departure from established practice”.

The request by educational-toy makers Learning Resources Inc and hand2mind Inc put Trump’s tariffs, which have worldwide economic implications, before the justices for the first time. A federal district judge agreed with the companies that Trump lacked authority under the 1977 International Emergency Economic Powers Act to issue the import taxes.

A federal appeals court in a separate case has said the tariffs could stay in effect at least until that panel hears arguments on July 31. In the new filing, the Trump administration said the Supreme Court should let that court hold arguments and rule before getting involved.

Both court clashes cover Trump’s April 2 “Liberation Day” tariffs — which combine a universal baseline levy of 10% with potentially much bigger rates for various trading partners. Each suit also concerns at least some of Trump’s separate import taxes over fentanyl trafficking.

The case is Learning Resources v Trump, 24-1287.

Source: Theedgemarkets

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Glendon

Forex

Economic

Australia’s economy surprisingly shed jobs in May, though unemployment held steady as fewer people sought work, suggesting a loosening labor market and bolstering the case for the Reserve Bank to reduce interest rates further.

Employment fell 2,500, driven completely by part-time roles as full-time gained, against economists’ expectations for a 21,200 increase, data from the Australian Bureau of Statistics showed Thursday. The jobless rate held at 4.1% as the participation rate edged down to 67%.

While unemployment remains low, it has steadily inched up since December 2024 to stay at or above 4%, having hit a low of 3.4% in the aftermath of the Covid-19 pandemic.

The currency and the yield on policy-sensitive three-year government bonds were little changed. Money market pricing implies an 80% chance the RBA will cut its key rate to 3.6% on July 8, from 3.85% now, and then follow that up with two more reductions.

Since the RBA’s May meeting, when it lowered borrowing costs for a second time this year and surprisingly adopted a dovish stance, data has suggested only tepid momentum in the economy. Global uncertainty has further intensified with a surge in oil prices following Israel’s strike on Iran’s nuclear sites and Tehran’s retaliation.

The conflict in the Middle East is yet another headwind for nations already navigating higher US tariffs, a slowdown in China and fallout from the Ukraine-Russia war. Treasurer Jim Chalmers this week described the global economy as a “pretty dangerous place,” adding that while Australia is well-placed to deal with the volatility, it “won’t be immune” from it.

Source: Bloomberg Europe

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Manuel

China–U.S. Trade War

Economic

President Donald Trump's tariffs within expectations and have not found it necessary to change investment plans, a Reuters survey showed on Thursday.

The United States has imposed a 10% tariff on goods from most countries along with additional tariffs for many big trading partners including Japan, which could face a 24% tariff from July unless it can negotiate a deal.

There is also a 25% tariff on cars, a particular sore point for Japan whose economy relies heavily on automobile exports to the United States.

About 71% of respondents to Reuters' survey said the impact of U.S. tariffs is within initial expectations, and 84% said they plan to stick to their investment plans for the current business year - typically April-March in Japan.

"After all, the Trump administration ends in four years. If we don't carry on with our long-term investments, we'll lose out in competition with other Asian countries," a manager at a machinery manufacturer wrote in the poll.

The survey was conducted by Nikkei Research for Reuters from June 4-13. Nikkei Research reached out to 504 companies and 220 responded on condition of anonymity.

SALES TAX CUT

On Japan's sales tax, four out of 10 respondents said they oppose any tax reduction, whereas the remainder said there should be some form of cut, the survey showed.

Cutting the tax to help the public cope with rising prices has become a major issue ahead of upper house elections scheduled for July.

A 10% tax is applied to most goods and services. The tax for food and newspapers is 8%.

The largest opposition Constitutional Democratic Party of Japan has proposed cutting the 8% rate on food items to zero for one year. Prime Minister Shigeru Ishiba, head of the ruling Liberal Democratic Party, is opposed as sales tax revenue funds social security.

"Opposition parties are oblivious to what the sales tax is for. It is the tax that ought to be raised," said an official at a metal and machinery maker.

With three out of 10 people aged 65 or above, Japan is the world's most advanced ageing society.

A manager at a transportation company favoured a temporary, across-the-board sales tax cut "to fight inflation and stimulate consumption".

About 63% of respondents said the government should not rely on bond issuance to fill revenue shortfall in the event of a sales tax cut, whereas 37% were in favour, the survey showed.

"The ageing of the population will be advancing further and social security costs will be getting bigger. We should not turn to tax cuts or government bond issuance lightly," said a manager at a chemical company.

On the composition of the ruling coalition after the upper house elections, 32% of respondents favoured the current ruling bloc of the LDP and junior partner Komeito, while 20% wanted the Democratic Party for the People to be a third partner, the survey showed.

Last year, the LDP and Komeito lost their combined majority in the more powerful lower chamber, making it difficult for Ishiba to implement policies. The Democratic Party for the People quadrupled its lower house seats.

Source: Reuters

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Manuel

Central Bank

Economic

Federal Reserve Chair Jerome Powell made a plea on Wednesday for the government not to cut back too aggressively on its efforts to collect data on the economy because the information it collects strongly benefits the entire nation.

“The data we get right now, we can do our jobs. I'm not concerned that we can't do our jobs," Powell said at a press conference following the latest gathering of the central bank's interest-rate setting Federal Open Market Committee. But he suggested that at some point that may no longer be the case.

Powell said he worried that staff cuts and changes in government reports over time will degrade the information the government produces.

"From our standpoint, and I think the standpoint of businesses and governments and everyone: Having really good data on the state of the economy at any given time is a huge public good," Powell said. It does not just help the Fed, "it helps the government, it helps Congress, it helps the executive branch" and it helps private businesses.

Calling the United States a global leader in government-produced economic data, Powell said, "I hate to see us cutting back on that." This data "is a real benefit to the general public" because it ensures people "have the best possible understanding of what's happening in the economy, and hence, what's likely to happen."

Cutbacks have been an area of considerable focus as the Trump administration has targeted huge parts of the government for reductions amid a belief that it will save money. Many outsiders view the costs of these sorts of endeavors as relatively small while paying huge dividends.

Concerns over the issue flared after the Bureau of Labor Statistics earlier this month announced a pullback in the work to collect information for the closely-watched Consumer Price Index. A measure tracking wholesale prices is also to be changed.

Data like the CPI is of particular note because it helps set cost-of-living adjustments for things like Social Security retirement benefits, as well as union contracts. A CPI index based on reduced inputs is one that is less likely to capture what is really going on with price pressures, and that can have big real-world consequences.

Some in the Fed are less happy with the state of data integrity. In a recent interview, soon-to-retire Philadelphia Fed President Patrick Harker said, "We're increasingly flying blind, or at least half blind ... and I'm worried about that."

The numbers that central bankers rely upon to understand the economy are "not good" and they are not improving, Harker said. The issue, he said, goes beyond mere inflation numbers.