US Fed's Barkin

• He is in no rush to cut interest rates.
• Not ready to dismiss inflation risk from tariffs.
• Can't ignore a spike in inflation if it comes, price indices is still above target.
• Nothing urgent in data warranting a rate cut at this point.
• Job market, consumption holding up.
• Firms say they expect to raise prices later in the year as more expensive imported goods work into their inventories.
• Firms not impacted by tariffs see confusion over trade policy as a moment to raise prices for other reasons.
• No conviction on where trade policy will settle or on how it will impact prices or jobs.
• Firms still in wait and see mode on capital spending, hiring plans.

Comments are in contrast to FOMC member Christopher Waller who is not all that concerned about inflationary impact from tariffs.

US Fed's Waller

Fed's Waller: I'm all in favor of saying 'maybe we should think about cutting' in July.

• I'm all in favor of saying 'maybe we should think about cutting at the next meeting'
• Tariffs 'are not going to cause persistent inflation'
• Tariffs will be a one-time factor
• The Fed should not wait for the job market to crash in order to cut rates
• The job market is solid but starting to see things like high unemployment for recent grads
• The Fed has been on pause for six months waiting for an inflation shock that has not arrived
• The Fed has room to bring rates down and then can see what happens with inflation
• The Fed is in a position as early as July for cuts
• Tariffs will not be completely passed through, a 10% tariff on all imports would not have much impact on overall inflation
• I'm not sure if the committee would go along

Stock Index Update

The S&P 500 slipped 0.2% on Friday, its third straight loss, while the Nasdaq fell 0.5% and the Dow added 35 points as investors weighed the prospects of Federal Reserve rate cuts against rising geopolitical tensions in the Middle East. 

Fed Governor Waller's suggestion that rate cuts could arrive as early as July contrasted sharply with Chair Powell's more cautious, data-dependent stance. Semiconductor stocks like Nvidia and TSMC, dropped over 1% following reports that the US may revoke export waivers, raising concerns over global chip supply chains. 

Geopolitical uncertainty deepened after President Trump delayed a decision on potential US military involvement in the Israel-Iran conflict, even as Israel intensified its strikes on key Iranian targets. 

Friday's "triple witching" expiration added volatility, prompting a rebound in shorter-dated Treasuries and driving two-year yields down four basis points. 

On the week, the S&P 500 fell 0.2%, while the Dow was flat and Nasdaq added 0.2%.

US Housing Starts

US housing starts dropped sharply by 9.8% month-over-month in May 2025 to a seasonally adjusted annual rate of 1.256 million units, down from an upwardly revised 1.392 million in April and well below market expectations of 1.36 million. 

This marked the weakest level since May 2020, in the early aftermath of the COVID-19 pandemic, as high mortgage rates and an elevated supply of homes for sale dampened builder sentiment and construction activity. 

Starts for multi-family buildings with five or more units plummeted 30.4% to 316,000 units, while single-family starts—the largest segment of homebuilding—edged up just 0.4% to 924,000 units. 

Regionally, housing starts declined sharply in the Northeast (-40.0% to 105,000 units), Midwest (-10.2% to 184,000), and South (-10.5% to 693,000), but rose in the West (+15.1% to 274,000). 

source: U.S. Census Bureau

US 30 Year Mortgage Rate

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) in the US fell by 9bps to 6.84% in the week ended June 13th, according to the Mortgage Bankers Association. 

This marks the lowest level in six weeks, tracking a decline in Treasury yields as the conflict between Israel and Iran triggered a flight to safety. 

"Mortgage rates decreased last week, driven by financial market volatility caused by current geopolitical conflict and ongoing tariff uncertainties. 

Even with lower average mortgage rates, applications declined over the week as ongoing economic uncertainty weighed on potential homebuyers' purchase decisions", said Joel Kan, MBA's vice president. 

Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) decreased to 6.81% from 6.93%. 

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.57% from 6.6%. 

source: Mortgage Bankers Association of America

FOMC Dot Plot

The US Federal Reserve left rates unchanged, as anticipated, at 4.5% today.

Here is the updated FOMC dot plot.

US Fed Funds Interest Rate

The Federal Reserve left the federal funds rate unchanged at 4.25%–4.50% for a fourth consecutive meeting in June 2025, in line with expectations, as policymakers take a cautious stance to fully evaluate the economic impact of President Trump's policies, particularly those related to tariffs, immigration, and taxation. 

Officials also noted that uncertainty about the economic outlook has diminished but remains elevated. 

Despite this, the Fed continues to project two rate cuts later this year, though it anticipates only one quarter-percentage-point in 2026 and 2027. 

In its updated projections, the Fed downgraded its GDP growth forecast for 2025 to 1.4% (vs 1.7% in March) and for 2026 to 1.6% (vs 1.8%), while leaving the 2027 estimate unchanged at 1.8%. 

The unemployment rate is now expected at 4.5% in both 2025 and 2026 (vs 4.4% and 4.3%, respectively). 

As for inflation, the Fed sees the PCE rate at 3.0% in 2025 (vs 2.7%), easing to 2.4% in 2026 (vs 2.2%), and 2.1% in 2027 (vs 2.0%). 

source: Federal Reserve

US Retail Sales

Retail sales in the US declined 0.9% month-over-month in May 2025, following a downwardly revised 0.1% drop in April and worse than market forecast of a 0.7% fall. 

It is the biggest decrease in four months, as consumers pulled back ahead of expected tariffs. 

Sales at motor vehicle & parts dealers recorded the largest decline (-3.5%), followed by building material & garden equipment suppliers (-2.7%) and gasoline stations (-2%). 

source: U.S. Census Bureau

WTI Crude Oil Update

WTI crude oil futures hovered near $75 per barrel on Wednesday, its highest level since January, as escalating conflict in the Middle East fueled fears of supply disruptions. 

President Trump met with his national security team after warning on social media of a possible strike on Iran's leader and demanding the country's unconditional surrender. 

Simultaneously, Israel's military confirmed it had launched strikes near Tehran and detected missile launches from Iran, with interception efforts underway. 

Nevertheless, Iran's crude-exporting infrastructure has been spared, with most of the fallout limited to shipping. 

The oil market has also remained relatively stable, supported by ample global supply, including rising OPEC+ output and record-high US production. 

Meanwhile, US industry data showed crude inventories dropped by over 10 million barrels last week, potentially marking the largest draw since last summer if confirmed by official figures.

Japan Exports

Japan's exports fell 1.7% yoy to a four-month low of JPY 8,134.99 billion in May 2025, reversing a 2.0% gain in April and marking the first decline since last September. amid the impact of sweeping U.S. tariffs. 

Still, the drop was milder than the market consensus of a 3.8% fall. 

Shipments to the U.S. slumped 11.1%, the second straight monthly drop, due to weaker demand for cars, auto parts, and chip-making machinery. 

Meantime, exports to China shrank 8.8%. 

In contrast, sales rose to the EU (4.9%), Russia (5.2%), and ASEAN countries (0.1%). 

PM Shigeru Ishiba and U.S. President Trump agreed to extend trade talks after failing to reach a breakthrough recently. 

Tokyo continues to seek an exemption from the 25% U.S. auto tariffs, while Trump doubled duties on steel and aluminum to 50% in early June. 

A 24% reciprocal tariff is set to take effect on July 9 unless a deal is reached, posing a risk to Japan's fragile recovery, which is already struggling due to weak private consumption. 

source: Ministry of Finance, Japan

US & China GDP

Auto Insurance Rates

Auto insurance rates in the US have increased by 84% over the past 5 years. That's the biggest 5-year spike on record.

Update : US Dollar

US dollar as a % of global reserve has fallen from 67% to 57% in just the last decade.

China's Gold Holdings

China's central bank increased its gold holdings by 2 tonnes in April, posting their 6th consecutive monthly purchase.

This brings China's gold reserves to a record 2,295 tonnes, or 6.8% of total reserve assets.

According to Goldman Sachs, China actually purchased 27 tonnes of gold in April, or 13 times more than officially reported.

As a result, central bank and other institutional gold demand, excluding the US, hit 68 tonnes.

Year-to-date, central bank demand has reached an average of 88 tonnes per month.

World central banks can't get enough gold.

Update : August WTI Crude Oil

Update : August Gold

The Week Ahead - June 16

Geopolitical tensions in the Middle East will remain in focus next week following Israel's strike on Iran's nuclear facilities, heightening fears of a broader regional conflict. 

Markets will also be closely watching any progress on trade negotiations between the US and its key partners. 

Meanwhile, attention shifts to the G7 Summit in Canada, where leaders of the world's largest economies will meet to discuss major global challenges. 

It's also a busy week for monetary policy decisions. The Federal Reserve, People's Bank of China, Bank of Japan, and Bank of England are all expected to keep interest rates unchanged. 

Decisions are also due from central banks in Switzerland, Sweden, Norway, Turkey, Brazil, Indonesia, the Philippines, and Taiwan. 

On the data front, key releases include US retail sales and industrial production, UK inflation, Germany's ZEW economic sentiment index, China's industrial production and retail sales, and Japan's trade data.

UPDATE : US Dollar

The dollar index extended its decline on Thursday, falling below 97.8 to reach its lowest level since 2022, as renewed trade tensions and geopolitical risks weighed on sentiment. 

President Trump announced plans to send formal letters to major trading partners within the next one to two weeks, outlining unilateral tariff measures aimed at pressuring countries into new trade agreements. 

This comes as the current 90-day pause on reciprocal tariffs is set to expire next month. 

Adding to market unease, geopolitical tensions intensified after Iran threatened to strike US bases if nuclear talks collapse. 

Meanwhile, softer-than-expected US consumer and producer inflation data added to the downward pressure on the greenback. 

The weaker inflation prints bolstered expectations that the Federal Reserve will deliver two interest rate cuts this year. 

The dollar posted its steepest losses against the euro, Swiss franc, and Japanese yen.

US Tariff Receipts Collected

$22.172 Billion USD

US Inflation Rate

The annual inflation rate in the US rose for the first time in four months to 2.4% in May 2025 from April's 2.3%, the lowest since 2021, but came in below expectations of 2.5%. 

Prices rose more for food (2.9% vs 2.8% in April), transportation services (2.8% vs 2.5%), used cars and trucks (1.8% vs 1.5%) and new vehicles (0.4% vs 0.3%). 

On the other hand, inflation fell slightly for shelter (3.9% vs 4%). 

Meanwhile, energy cost declined 3.5%, following a 3.7% fall in April. 

Prices for gasoline (-12% vs -11.8%) and fuel oil (-8.6% vs -9.6%) continued to decrease while the rise for natural gas prices remained elevated (15.3% vs 15.7%).

On a monthly basis, the CPI edged up 0.1%, below 0.2% in the previous month and forecasts of 0.2%. 

In addition, annual core inflation which excludes volatile food and energy prices, remained at 2.8%, holding at 2021-lows, while expectations were pointing to a rise to 2.9%. 

The monthly core CPI also edged up 0.1%, below 0.2% in April and expectations of 0.3%. 

source: U.S. Bureau of Labor Statistics

Update : July WTI Crude Oil CLN25

> gap up on ETH open

> US embassy evacuating non-essential personnel on elevated tensions with Iran

Update : August Gold GCQ25

> still an inside week

> opened ETH in a congestion zone

Main Bank Instruments for Commodity Traders

Crude Oil to Petrol Process

Update: August Gold GCQ25

AUGUST GOLD GCQ25 : nothing significant yet. So far it has an Inside Week, as it has yet to break beyond last week's range.

Tomorrow (Wednesday) is inflation day. Maybe that will be the catalyst.

Update: July WTI Crude Oil

WTI CRUDE OIL CLN25 : sold down & settled near last week's high & into a significant $65 options strike.

Seasonal Price Patterns of December Corn

Gold's Share of Global Reserves

Gold's share of global reserves reached 23% in Q2 2025, the highest level in 30 years.

Over the last 6 years, the percentage has DOUBLED.

At the same time, the US Dollar's share of international reserves has declined 10 percentage points, to 44%, the lowest since 1993.

By comparison, the Euro's share has decreased 2 percentage points, to 16%, the lowest in 22 years.

Gold is quickly replacing fiat currencies as a reserve currency.

Top 1% of US Earners

US $1.8 Trillion Deficit