US: Trump Appointees' Involvement In Fed Renovation Degrades Case Against Powell

Bullet continued: When asked to define “unconditional surrender”, per his Truth Social message, Trump says it involves Tehran submitting to having all their “nuclear stuff... blown up”, which appears unlikely considering comments from senior Iranian officials this week. 

• Trump says, “nothing is finished until it’s finished… I wouldn’t say we’ve won anything yet, but we’ve made a lot of progress.” Adds: “The next week is going to be very big, maybe less than a week.”
• Trump more hawkishly warns of the threat from Iran’s nuclear programme. Says he’s been saying “Iran can’t have a nuclear weapon” for more than 15 years.
• On what he shared with Israeli Prime Minister Benjamin Netanyahu during yesterday’s call, Trump said: “Keep going. What do I say? I speak to him every day. Good man...”
• He says he gave no indication to Netanyahu that he seeks to aid Israel more than he is already: “So far he’s doing a good job.”
• Trump downplays the suggestion that the Iran response could divide his base. “Some people outside of the base can’t believe this is happening; they are so happy.”
• He also downplays the prospect that the US could become embroiled in a long-term war: “I only want one thing… Iran cannot have a nuclear weapon.” This comment does not preclude a US strike, in fact key members of his base have explicitly made a distinction between a limited strike on nuclear facilities and a long-term conflict.
• Meanwhile, Defense Secretary Pete Hegseth said in testimony to Congress that he would not disclose in a public forum whether he has provided options to Trump on a strike against Iran, but said the Pentagon "stands ready to execute" whatever Trump decides.

US President Donald Trump, speaking to reporters about flagpoles he is having installed at the White House, has continued to send mixed signals on his pending decision to authorise or rule out US military action against Iran’s nuclear facilities. The primary takeaway is that Trump has maintained his 'strategic ambiguity'. Markets appear receptive to comments stating that Iran reached out, but Trump reiterated his primary goal that Iran cannot have a nuclear weapon, which cannot be easily achieved without a US strike or a complete Iranian surrender. 

• When asked whether the US plans to join Israel in striking Iranian nuclear facilities, Trump says: “You can’t expect me to answer that.” He adds dismissively: “I may do it. I may not do it. I mean, nobody knows what I’m going to do.”
• He says: “Iran’s got a lot of trouble and they want to negotiate… Why didn’t you negotiate two weeks ago…”
• Trump says “it’s never too late” to negotiate, but his tone appears to suggest that the window for diplomacy with Iran may have closed:  “I said it’s very late to be talking… There’s a big difference between now and a week ago.”
• Trump adds that the Iranians "suggested" coming to the White House for talks, which may feed into Trump’s desire for media-friendly set-piece events.
• Trump says he has a lot of compassion for the Iranian people, “they can be difficult, but so can you,” he says to a reporter. He later adds that they were “schoolyard bullies” for 40 years. 

BOC Gov Macklem gives his first commentary today since the June 4 BOC hold, in a speech on "Tariffs, trade, employment and inflation" due to be released 11:15ET  (link). A press conference will follow at around 12:40ET. 

• Rate cut expectations have pulled back slightly since the June meeting, with OIS-dated implieds eyeing just 1 cut for the rest of the year (26bp through Dec, 4 meetings away), and only a remote chance of a July 30th cut (around 1-in-4).
• Rate markets have gotten used to the idea that the next rate cut was at least a few meetings off, given less-weak-than-expected activity and firmer-than-anticipated inflation, so there was little reaction to the deliberations of the June meeting out Wednesday reinforcing the notion that another easing would be very conditional: "The weaker the economy and the more downward pressure on inflation, the more there would be a need to lower the policy interest rate further. However, if the recent firmness in underlying inflation were to persist, it would be more difficult to cut the policy rate...Overall, members agreed there could be a need for a further reduction in the policy interest rate if the effects of U.S. tariffs and uncertainty continued to spread through the economy and cost pressures on inflation were contained."
• A similar message is likely from Macklem today though we will be paying attention to any "updates" versus the relatively stale meeting deliberations, particularly on how Q2 activity and US-Canada trade developments are seen by the BOC to be playing out so far.