US-Iran Technical Talks to Resume at Month-End, Bessent Backs Scaling Back the Dot Plot

Daily News

Summary:

US-Iran technical negotiations are set to resume at the end of the month; Treasury Secretary Bessent supports the Federal Reserve's move to reduce forward guidance...

Highlights

1. US-Iran technical talks to resume at the end of the month

2. Iran accuses US officials of issuing contradictory statements regarding the memorandum of understanding

3. Netanyahu says Israeli forces will not withdraw from the security zone in southern Lebanon while he remains in office

4. Bank of Canada rejects the notion that economic weakness equals a recession

5. International Maritime Organization releases operational details for the Strait of Hormuz evacuation plan

6. Bessent supports the Fed's efforts to weaken policy guidance, saying the dot plot has become a market crutch that should be abandoned

7. Japan plans to improve its foreign reserve management, potentially signaling sales of US Treasuries

Details

US-Iran Technical Talks to Resume at Month-End

US Secretary of State Marco Rubio said in Kuwait City on June 24 that technical negotiations between the United States and Iran will resume later this month, likely in Switzerland. Speaking to reporters before departing Kuwait for Bahrain, Rubio stressed that US policy toward Iran would not compromise the security of its Gulf allies. "We will remain fully aligned with our partners in the Gulf region," he said.

Iran Accuses US Officials of Contradictory Statements on the Memorandum of Understanding

On June 24, Iranian Foreign Ministry spokesperson Esmaeil Baghaei stated on social media that the US government has never demonstrated genuine sincerity toward the Iranian people. He argued that contradictory remarks by US officials regarding the memorandum of understanding would not reduce the Iranian public's deep-rooted distrust but would instead revive memories of repeated US breaches of commitments.

Baghaei said Washington must recognize that the principle of reciprocity requires both sides to fulfill their obligations and refrain from interpretations of the memorandum that contradict its explicit provisions.

He added that despite having ample reasons for skepticism, Iran entered the diplomatic process in good faith and signed the memorandum aimed at ending what it considers an imposed war. While the agreement has been signed, Iran remains vigilant, drawing on lessons from the past five decades, particularly developments over the last eighteen months.

Netanyahu Says Israeli Forces Will Remain in Southern Lebanon Security Zone

On June 24, Israeli Prime Minister Benjamin Netanyahu addressed the Union of Local Authorities in Israel, discussing military operations and security policies on multiple fronts. He emphasized that as long as he remains prime minister, Israeli forces will not withdraw from the security zone in southern Lebanon and that Iran will never be allowed to acquire nuclear weapons.

Netanyahu stated that although Hezbollah remains active, the Israel Defense Forces have established a security zone in southern Lebanon and are systematically dismantling its underground infrastructure while preventing cross-border infiltration into the Galilee region. He reiterated that the security zone will be maintained indefinitely during his tenure.

Bank of Canada Rejects Claims That Economic Weakness Equals Recession

Officials at the Bank of Canada rejected suggestions that the Canadian economy is in recession, while acknowledging sluggish growth and excess capacity in the labor market. The central bank noted that although economic activity has weakened and labor supply exceeds demand, the economy does not exhibit the defining characteristics of a recession—namely a deep, broad-based, and sustained decline in overall activity.

Policymakers left the benchmark interest rate unchanged at 2.25%, citing a difficult policy trade-off: cutting rates could support growth but risk higher inflation through rising oil prices, while tighter policy could help contain inflation but further restrain economic activity.

IMO Releases Operational Details for Strait of Hormuz Evacuation Plan

On June 24, the International Maritime Organization (IMO) published operational guidelines for the Strait of Hormuz evacuation plan, stating that more than 11,000 crew members stranded aboard vessels in the Gulf region will be evacuated in phases under a coordinated mechanism.

According to the IMO document, vessels awaiting evacuation should remain in their current positions and must not proceed independently toward the Strait of Hormuz or designated waiting areas until further notice.

The IMO emphasized that the measures are intended to prevent congestion and reduce risks associated with naval mines and complex navigation conditions. The document states that the UK Maritime Trade Operations (UKMTO) office and the French-led Maritime Information Cooperation & Awareness Centre (MICA Centre) will contact vessels and direct them to designated holding areas. Ship operators may then choose either a northern route through Iranian waters or a southern route through Omani and US-coordinated waters based on their own risk assessments.

Bessent Supports Reducing Fed Forward Guidance, Calls Dot Plot a Market Crutch

US Treasury Secretary Scott Bessent praised Federal Reserve Chair Kevin Warsh's plan to reduce forward guidance on interest rates, while arguing that policymakers should remain open-minded regarding both the inflationary impact of the Iran conflict and productivity gains driven by artificial intelligence.

"I do appreciate Chairman Warsh's decision to eliminate forward guidance. I think it has become a crutch that market participants have come to rely on," Bessent said in an interview with CNBC.

Echoing comments made by President Trump, Bessent maintained that a significant portion of Iran's unfrozen assets would be used to purchase American food and medicine, despite Iranian officials stating that Tehran would determine the use of those funds independently.

Japan Considers Changes to Foreign Reserve Management, Potentially Signaling US Treasury Sales

According to a draft of Japan's economic growth strategy cited by Reuters, the government plans to review the management of its approximately $1.3 trillion in foreign exchange reserves to enhance investment returns and support public finances. Some analysts believe the move could imply future sales of US Treasury holdings.

Japan's vast foreign reserves are widely viewed as a key resource for potential intervention in currency markets to support the yen.

Against the backdrop of Prime Minister Sanae Takaichi's pledge to support the world's fourth-largest economy through proactive fiscal spending, the government is seeking ways to improve returns on foreign reserve assets and strengthen its fiscal position. The draft strategy proposes examining more effective management of public-sector assets, including the Foreign Exchange Fund Special Account, while preserving the original purpose of those assets.

Saisuke Sakai, a senior economist at Mizuho Research & Technologies, noted that making more effective use of foreign exchange reserves could imply selling US Treasuries, raising concerns about large-scale reductions in Japanese holdings. Japan remains the largest foreign holder of US government debt.

Today's Focus

17:00 (UTC+8) ECB Governing Council member François Villeroy de Galhau speaks

18:00 (UTC+8) ECB Chief Economist Philip Lane speaks

20:30 (UTC+8) US May PCE Price Index

03:40 (UTC+8) New York Fed President John Williams speaks

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