MNI US OPEN - Israel-Iran Truce Shows Signs of Early Fragility
EXECUTIVE SUMMARY
- ISRAEL AGREES TO TRUCE WITH IRAN AFTER TRUMP PUSH TO END WAR
- CEASEFIRE AT RISK AS ISRAEL DEF MIN ORDERS RETALIATORY TEHRAN STRIKES
- POWELL HEADED FOR CONGRESSIONAL GRILLING OVER FED’S RATE HOLD
- GERMAN CABINET BACKS DRAFT 2025 BUDGET, MID-TERM FINANCE PLAN
Figure 1: ifo Business Cycle Clock (balances adjusted for mean value, seasonally adjusted)
Source: ifo Institute
NEWS
MIDEAST (BBG): Israel Agrees to Truce With Iran After Trump Push to End War
US President Donald Trump said a ceasefire is now in place between Iran and Israel, moments after Israeli emergency services said at least three people were killed by Iranian strikes. “THE CEASEFIRE IS NOW IN EFFECT,” Trump said at around 9:10 a.m. Dubai time on Truth Social. “PLEASE DO NOT VIOLATE IT!” Prime Minister Benjamin Netanyahu confirmed a short while later Israel’s agreed to a truce and said his country’s achieved its war goals in Iran. The comments came after Tehran fired several waves of missiles on Israel on Tuesday morning. Israel also further attacked Iran. The truce followed an extraordinary night in which Tehran retaliated against a US attack over the weekend by launching missiles at an American air base in Qatar. The Islamic Republic’s move was telegraphed — with Qatar and the US being forewarned — and there were no casualties.
MIDEAST (MNI): Ceasefire at Risk as Israel Def Min Orders Retaliatory Tehran Strikes
Ynet reports comments from Israeli Defence Minister Israel Katz: "I instructed the IDF to respond forcefully to Iran's violation of the ceasefire with powerful strikes against regime targets in the heart of Tehran." The longevity of the ceasefire could depend on whether any upcoming Israeli strike proves the last action of the conflict, or whether Iran in turn again fires missiles at Israel. Despite Trump's assurances overnight and the apparent acceptance of the terms by both Israel and Iran, the situation remains febrile and at risk of further deterioration.
MIDEAST (NYT): Trump’s Cease-Fire Announcement Catches His Own Top Officials by Surprise
President Trump abruptly announced a cease-fire agreement between Israel and Iran after speaking to Prime Minister Benjamin Netanyahu of Israel and Iranian officials, with Qatar helping to mediate, a senior White House official said Monday. The official, who was granted anonymity because they weren’t authorized to discuss the negotiations publicly, said Sheikh Tamim bin Hamad Al Thani, the emir of Qatar, played a role in the cease-fire discussions. The announcement, made minutes after 6 p.m. Eastern time, caught even some of Mr. Trump’s own top administration officials by surprise. The official did not say what conditions Iran may have agreed to, including whether it answered questions about the whereabouts of its stockpile of enriched uranium.
FED (BBG): Powell Headed for Congressional Grilling Over Fed’s Rate Hold
Federal Reserve Chair Jerome Powell will have two chances this week to explain to lawmakers why he and most of his fellow policymakers seem resolved to continue holding interest rates steady at least until September, ignoring President Donald Trump’s persistent calls to lower borrowing costs. The Fed chair will testify before the House Financial Services Committee at 10 a.m. Tuesday, and at the same time on Wednesday before the Senate Banking Committee.
FED (MNI): Trump Continues to Criticise Powell
U.S. President Trump continues critique of Fed Chair Powell on Truth Social, writing ""Too Late" Jerome Powell, of the Fed, will be in Congress today in order to explain, among other things, why he is refusing to lower the Rate. Europe has had 10 cuts, we have had ZERO. No inflation, great economy - We should be at least two to three points lower. Would save the USA 800 Billion Dollars Per Year, plus. What a difference this would make. If things later change to the negative, increase the Rate. I hope Congress really works this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come. THE BOARD SHOULD ACTIVATE. MAKE AMERICA GREAT AGAIN!"
US/JAPAN (BBG): Japan’s Akazawa Says Still Working on Date for Next Trade Talks
Japan and the US are still working on setting the timing for the next round of cabinet-level trade talks, Japan’s point person for the negotiations said, as the deadline for a deal to avert another hike in tariffs nears. “We’re still in the process of setting a date for the next ministerial meeting,” Ryosei Akazawa, Japan’s chief trade negotiator, said Tuesday at a post-cabinet meeting press conference, as he again played down the importance of the July 9 date for tariffs to rise. “We’re not going to put a deadline on the discussions.”
US (WSJ): New York to Build One of First U.S. Nuclear-Power Plants in Generation
New York intends to build a large nuclear-power facility, the first major new U.S. plant undertaken in more than 15 years and a big test of President Trump’s promise to expedite permitting for such projects. Gov. Kathy Hochul said in an interview that she has directed the state’s public electric utility to add at least 1 gigawatt of new nuclear-power generation to its aging fleet of reactors. A gigawatt is roughly enough to power about a million homes.
GERMANY (BBG): German Cabinet Backs Draft 2025 Budget, Mid-Term Finance Plan
German Chancellor Friedrich Merz’s cabinet approved the government’s 2025 budget and medium-term finance plan, including a big increase in net new borrowing to help finance the country’s military buildup. This year’s budget includes net new debt of €82 billion ($95 billion), which will rise progressively to just over €126 billion in 2029, according to a document distributed Monday by the government in Berlin. Over the five years through 2029, net new borrowing will total about €500 billion.
FRANCE (BBG): French Government Under Pressure as Pension Talks Stumble
Negotiations over France’s contentious retirement reform ended in deadlock late Monday, raising the chances of government collapse should opposition parties unite in a no-confidence vote. Prime Minister Francois Bayrou had tasked labor unions and business groups with tweaking President Emmanuel Macron’s 2023 law that raises the minimum retirement age to 64 from 62. After four months of talks broke down, the premier said he would meet with negotiators on Tuesday morning to try to find a solution.
UK (FT): UK Defence Funding Will Hit 5% of GDP by 2035, Starmer to Tell NATO Summit
Sir Keir Starmer will pledge to Nato that the UK will raise spending on national security to 5 per cent of GDP within a decade, as members attempt to convince US President Donald Trump to stick with the alliance. The pledge would raise core defence spending to 3.5 per cent of GDP by 2035, with an additional 1.5 per cent on security related infrastructure such as cyber security and border protection. The UK prime minister had already pledged to raise defence spending from around 2.3 per cent currently to 2.6 per cent by 2027, with an ambition to increase it to 3 per cent in the next parliament.
BOJ (MNI EXCLUSIVE): BOJ Mindful of Overreaction to JGB Stock-Effect
MNI discusses the BOJ's JGB market concerns. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
CHINA (MNI): China Strongly Opposed EU Trade Barriers
MNI (Beijing) Beijing is opposed to the EU’s imposition of barriers against Chinese enterprises in areas such as public procurement and investment, a spokesperson for the Ministry of Commerce said on Tuesday. "The EU has ignored the China’s goodwill and sincerity given at bilateral dialogues and went its own way, using unilateral tools to build new protectionist barriers," the spokesperson said, answering a reporter’s question regarding the European Commission’s decision to restrict Chinese enterprises from participating in the EU's public procurement of medical devices.
CHINA (BBG): China On Target to Launch National Power Market by End of Year
China is on target to launch a unified national power trading market by the end of this year, according to its main electricity grid operator. State Grid Corp. of China’s President Pang Xiaogang is confident the platform will be ready by then, he said Tuesday during a panel at the World Economic Forum conference in Tianjin, known as Summer Davos. The utility, whose network covers more than 80% of the country, is currently working to design the market, Pang said. Once active, it would facilitate electricity being traded in near real-time and across provinces, and should favor the take-up of increasingly inexpensive renewable power.
DATA
GERMANY DATA (MNI): IFO Suggests Further Improvement But Levels Still Subdued
- GERMANY JUN IFO BUSINESS CLIMATE INDEX 88.4
Germany's IFO Business Climate Index continued its upward grind in June seen since January, at 88.4 (87.5 prior), surpassing consensus of 88.0. The print broadly mirrors yesterday's flash PMI release, with its improvements for both manufacturing and in particular services. Overall, the print suggests that firms are looking more favourably ahead. Highest expectations since April 2023 at 90.7 (vs 89.9 cons; 88.9 prior) drove overall outperformance, while the current assessment remained largely unchanged, at 86.2 (vs 86.5 cons; 86.1 prior).
JAPAN DATA (MNI): Japan's May Trimmed Mean Rises 2.5% vs. 2.4%
Japan’s trimmed mean measure of underlying inflation rose to 2.5% y/y in May, up from 2.4% in April, staying above the Bank of Japan’s 2% target for the fifth consecutive month, BOJ data showed Tuesday. The data indicate continued pass-through of cost pressures, particularly from high rice prices and rising labour costs. The release follows Friday’s figures showing annual core consumer inflation climbing to 3.7% y/y in May, the highest since January 2023's 4.2%, and marking the 38th straight month above the BOJ’s 2% target.
FOREX: USD/JPY Holds Bearish Reversal Pattern
- USD/JPY's reversal off the weekly high has held well, with spot returning to well within range of the Y145.00 handle having traded Y148 at the high yesterday. The remarkable about-turn, triggered by the announcement of a Israel-Iran ceasefire, has looked through early signs of fragility. Israel detected inbound missile strikes, which have been denied via state-run Iranian media.
- This keeps the USD weaker on the day, buoying GBP/USD and EUR/USD through 1.36 and 1.16 respectively, as rallies remain shallow. Geopolitical risk remains the primary focus, however markets seem to be of the view that we're through the worst of the Middle-east tensions and there's a relatively minimal risk of an oil price spike hereon.
- Becalmed commodities markets are allowing risk proxy currencies to outperform. As such, AUD and NZD are easily the best performers in G10, tipping both AUD/USD and NZD/USD back into the uptrend channel dtrawn off the May lows.
- Canadian CPI data is a calendar highlight Tuesday - particularly as USD/CAD reversed hard off highs on the challenge of the 50-dma this week. This brings today's CPI release into sharper focus, particularly given the partial pricing for a July 30 rate cut (OIS sees just over 1:3 probability of a 25bps cut) as well as the now-prolonged trade talks with the US, on which Carney stated yesterday his government are still focused on after an overnight call with Trump.
EGBS: German Curve Steepens as Finance Ministry Mulls 50-year Bund
The German 10s30s extended earlier steepening after the German Finance Agency, DFA, noted that “internal conditions” had been created for a 50-year Bund in its Q3 issuance plan press conference. The curve is almost 4bps steeper at 48.5bps at typing with 2s10s also up almost 4bps to 70.5bps. Meanwhile, long end ASWs have come under fresh pressure.
- The Q3 issuance plan itself was in line with MNI’s expectations, with a E15bln increase in overall bond issuance, skewed towards the new 7-year maturity bucket.
- Meanwhile, the German 2025 budget and 2026-29 key figures appear in line with yesterday’s media reports. 2025 net borrowing is seen at E82bln, rising to E89bln in 2026 and E126bln by 2029.
- Bund futures are -64 ticks at 130.43, with initial support at 130.17 (Jun 16 low) and 130.07 (2.60% 10-year yield level).
- Early price action was dictated by developments in the Middle East, with oil and natural gas futures selling off sharply on reports of a ceasefire between Israel and Iran. Latest headline flow suggests this ceasefire may be fragile.
- Germany sold E4bln of the 1.7% Jun-27 Schatz today.
- 10-year EGB spreads to Bunds are biased tighter, led by BTPs (-5bps to 92bps). Although reports of the Iranian strike on Israel dented risk sentiment somewhat, European equities remain up 1.7% todays. Latest Bund underperformance has supported narrowing momentum.
- The German June IFO Business Climate and Expectations components were stronger-than-expected, while the Current Assessment was a touch weaker.
- Several ECB speakers (de Guindos, Kazimir, Lagarde and Lane) are scheduled to speak today.
GILTS: Curve Bear Steepens on Macro Cues
Gilts under pressure as the German curve bear steepens.
- Futures stick within yesterday’s range, last -33 at 92.78 (trading 92.64-93.21 today).
- Bulls remain in technical control.
- Key short-term support defined at the Jun 16 low (92.23).
- The bull trigger & June 13 high (93.68) presents the major area of upside interest.
- Yields little changed to 5bp higher, curve steeper.
- 2s10s and 5s30s held above 60bp & 120bp in respective closing terms on Monday.
- Lower oil prices (linked to the already breached Iranian-Israeli ceasefire & lack of meaningful Iranian reaction to the U.S. bombing of its nuclear facilities) anchor the front end.
- BoE-dated OIS across ’25 meetings 0.5-1.5bp more dovish on the day, showing 19.5bp of easing for August (our base case is for a cut), 25.5bp through September, 42.5bp through November and 50bp through year-end.
- SONIA futures +2.0 to -4.0, twist steepening given cues from further out the curve.
- We think that comments from BoE’s Greene suggest that she is probably on board with another cut in August but she doesn't think that uncertainty will recede anytime soon {potentially raising the bar when it comes to her supporting sequential cuts).
- Comments from BoE’s Bailey, Ramsden, Pill & Breeden due through the remainder of the day (the latter 2 may not touch on monetary policy).
EQUITIES: Trend Condition in E-Mini S&P Unchanged and Bullish
A short-term bear cycle in Eurostoxx 50 futures remains intact, however, the recovery from Monday’s low appears to be a potential reversal. The contract has traded above the 20- and 50-day EMAs. A clear break of both averages would strengthen a reversal theme and signal scope for a stronger recovery. This would open 5486.00, the May 20 high and bull trigger. On the downside, a break of yesterday’s 5194.00 low would reinstate a bearish theme. The trend condition in S&P E-Minis is unchanged, it remains bullish and this week’s strong start reinforces current conditions. Short-term resistance and a bull trigger at 6128.75, the Jun 11 high, has been pierced. A clear break of this level would confirm a resumption of the uptrend that started Apr 7. This would open the 6200.00 handle, a Fibonacci projection. Key support remains at the 50-day EMA - at 5913.50. A clear break of it would signal a reversal.
- Japan's NIKKEI closed higher by 436.47 pts or +1.14% at 38790.56 and the TOPIX ended 20.17 pts higher or +0.73% at 2781.35.
- Elsewhere, in China the SHANGHAI closed higher by 38.984 pts or +1.15% at 3420.566 and the HANG SENG ended 487.94 pts higher or +2.06% at 24177.07.
- Across Europe, Germany's DAX trades higher by 452.91 pts or +1.95% at 23723.86, FTSE 100 higher by 29.18 pts or +0.33% at 8787.32, CAC 40 up 95.5 pts or +1.27% at 7631.03 and Euro Stoxx 50 up 81.14 pts or +1.55% at 5301.36.
- Dow Jones mini up 303 pts or +0.71% at 43204, S&P 500 mini up 49 pts or +0.81% at 6126, NASDAQ mini up 231.75 pts or +1.05% at 22306.
Time: 10:00 BST
COMMODITIES: WTI Futures Reverse Sharply From Monday's Highs
WTI futures have reversed sharply from Monday’s session high. For now, the sell-off is considered corrective and the pullback has allowed a recent overbought condition to unwind. Support to watch is at the 50-day EMA, at $64.51. It has been pierced, a clear break of it would signal scope for a deeper retracement. On the upside, initial resistance to watch is $71.39, the 50.0% retracement of the Jun 23 - 24 high-low range. A bullish theme in Gold remains intact and the latest pullback is considered corrective. Medium-term trend signals are bullish too - moving average studies are in a bull-mode position, highlighting a dominant uptrend. Resistance at $3435.6, the May 7 high, has recently been pierced. A clear break of this level would strengthen the uptrend and open $3500.1, the Apr 22 all-time high. Initial key support to monitor is $3286.2, the 50-day EMA.
- WTI Crude down $2.33 or -3.4% at $66.25
- Natural Gas down $0.07 or -1.95% at $3.626
- Gold spot down $40.29 or -1.2% at $3327.18
- Copper up $4.05 or +0.83% at $494.3
- Silver up $0.05 or +0.13% at $36.1372
- Platinum up $16.94 or +1.31% at $1314.21
Time: 10:00 BST
| Date | GMT/Local | Impact | Country | Event |
| 24/06/2025 | 1000/1100 | ** |  GB | CBI Industrial Trends |
| 24/06/2025 | 1115/1315 |  EU | ECB de Guindos At XLII APIE seminar | |
| 24/06/2025 | 1230/0830 | *** |  CA | CPI |
| 24/06/2025 | 1230/0830 | * |  US | Current Account Balance |
| 24/06/2025 | 1230/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 24/06/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 24/06/2025 | 1300/1500 | ** |  BE | BNB Business Confidence |
| 24/06/2025 | 1300/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 24/06/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 24/06/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 24/06/2025 | 1300/1500 | EU | ECB Lagarde Accepts De Sanctis Award "Europa" | |
| 24/06/2025 | 1315/0915 | US | Cleveland Fed's Beth Hammack | |
| 24/06/2025 | 1335/1435 | GB | BOE Ramsden At Barclays-CEPR MonPol Forum | |
| 24/06/2025 | 1355/1555 | EU | ECB Lane Keynote At Barclays-CEPR MonPol Forum | |
| 24/06/2025 | 1400/1000 | *** | US | Conference Board Consumer Confidence |
| 24/06/2025 | 1400/1000 | ** | US | Richmond Fed Survey |
| 24/06/2025 | 1400/1000 | US | Fed Chair Jay Powell | |
| 24/06/2025 | 1400/1500 | GB | BOE Bailey At Lords Econ Affairs Committee | |
| 24/06/2025 | 1540/1640 | GB | BOE Pill At Gold Standard Conference | |
| 24/06/2025 | 1550/1650 | GB | BOE Breeden At UK Finance Digital Innovation Summit | |
| 24/06/2025 | 1630/1230 | US | New York Fed's John Williams | |
| 24/06/2025 | 1700/1300 | * | US | US Treasury Auction Result for 2 Year Note |
| 24/06/2025 | 1805/1405 | US | Boston Fed's Susan Collins | |
| 24/06/2025 | 2000/1600 | US | Fed Governor Michael Barr | |
| 25/06/2025 | 2301/0001 | * | GB | Brightmine pay deals for whole economy |
| 24/06/2025 | 0015/2015 | US | Kansas City Fed's Jeff Schmid | |
| 25/06/2025 | 0130/1130 | *** |  AU | CPI Inflation Monthly |
| 25/06/2025 | 0600/1400 | ** |  CN | MNI China Money Market Index (MMI) |
| 25/06/2025 | 0645/0845 | ** |  FR | Consumer Sentiment |
| 25/06/2025 | 0700/0900 | ** |  ES | PPI |
| 25/06/2025 | 0700/0900 | *** | ES | GDP (f) |
| 25/06/2025 | 0845/0945 | GB | BOE Lombardelli At BOE MonPol Conference | |
| 25/06/2025 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 25/06/2025 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 25/06/2025 | 0900/1000 | GB | BOE Pill On Panel At BOE MonPol Conference | |
| 25/06/2025 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 25/06/2025 | 1230/1330 | GB | BOE Lombardelli Chairs Riksbank's Breman Speech At BOE MonPol Conf | |
| 25/06/2025 | 1400/1000 | *** | US | New Home Sales |
| 25/06/2025 | 1400/1000 | *** | US | New Home Sales |
| 25/06/2025 | 1400/1000 | US | Fed Chair Jay Powell | |
| 25/06/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 25/06/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 25/06/2025 | 1700/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 25/06/2025 | 1800/1400 | US | Federal Reserve Board Meeting |
