Copper July : HGN25

Silver : Bearish Reversal

Jerome Powell Talking Points

It's been slow going from the Fed chair thus far:

Markets have been digesting an unusually challenging set of circumstances

• Enormous benefits of having the dollar as the reserve currency
• Asked about recent USD weakness, says markets have been digesting an unusually challenging set of circumstances
• He is open to possibility that tariff translation to inflation could be more or less than anticipated
• The bond market is functioning well
• Waiting to see what shows up in measured inflation
• Tariffs might well be a one-time inflation event
• If we make a mistake on tariff inflation, people will pay the cost for a long time
• Not seeing stagflation now, it's not the base case
• If there were stagflation it would put the Fed in a tough place
• Does not want to give a lot of forward guidance
• Makes sense to move slowly when there is more uncertainty, in most cases
• Economy growing, inflation is in a pretty good place
• Watching labor market very carefully

Powell's comments haven't had any market impact today. 

The market is pricing in 60.6 bps of easing into year end.

This article was written by Adam Button at www.forexlive.com

Size of Bitcoin

Uranium Explained

WTI Extends Price Fall on Trump Cease Fire Talks

WTI crude oil futures tumbled 7.2% to settle at $68.50 per barrel on Monday, after Iran's missile strike on a US airbase in Qatar resulted in no reported casualties, easing fears of an immediate escalation in Middle East tensions.

The attack, launched in retaliation for US strikes on Iran's nuclear facilities, was intercepted by Qatari defenses, prompting a sharp retreat from $74.30—the highest level since January. 

While markets are now pricing in a potential de-escalation, significant risks remain—chief among them the threat of Iran attempting to close the Strait of Hormuz, a vital chokepoint for about 20% of global oil flows. 

Although Iran's parliament reportedly backed the move, the final decision rests with the country's national security council. 

US officials, including Secretary of State Marco Rubio, warned that such a step would be "economic suicide" for Iran and urged China—its largest oil customer—to intervene.

DATA : Raw Steel Production

WTI Crude Oil : Update

WTI crude oil futures tumbled 7.2% to settle at $68.50 per barrel on Monday, after Iran's missile strike on a US airbase in Qatar resulted in no reported casualties, easing fears of an immediate escalation in Middle East tensions. 

The attack, launched in retaliation for US strikes on Iran's nuclear facilities, was intercepted by Qatari defenses, prompting a sharp retreat from $74.30—the highest level since January. 

While markets are now pricing in a potential de-escalation, significant risks remain—chief among them the threat of Iran attempting to close the Strait of Hormuz, a vital chokepoint for about 20% of global oil flows. 

Although Iran's parliament reportedly backed the move, the final decision rests with the country's national security council. 

US officials, including Secretary of State Marco Rubio, warned that such a step would be "economic suicide" for Iran and urged China—its largest oil customer—to intervene.

Key Maritime Choke Points

Maritime transport is an essential part of international trade—approximately 80% of global merchandise is shipped via sea.

Because of its importance, commercial shipping relies on strategic trade routes to move goods efficiently. 

These waterways are used by thousands of vessels a year—but it's not always smooth sailing. 

In fact, there are certain points along these routes that pose a risk to the whole system.

Here's a look at the world's most vulnerable maritime bottlenecks—also known as choke points—as identified by GIS.

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What's a Choke Point?

Choke points are strategic, narrow passages that connect two larger areas to one another. When it comes to maritime trade, these are typically straits or canals that see high volumes of traffic because of their optimal location.

Despite their convenience, these vital points pose several risks:

Structural risks: As demonstrated in the recent Suez Canal blockage, ships can crash along the shore of a canal if the passage is too narrow, causing traffic jams that can last for days.

Geopolitical risks: Because of their high traffic, choke points are particularly vulnerable to blockades or deliberate disruptions during times of political unrest.

The type and degree of risk varies, depending on location. Here's a look at some of the biggest threats, at eight of the world's major choke points.

Because of their high risk, alternatives for some of these key routes have been proposed in the past—for instance, in 2013 Nicaraguan Congress approved a $40 billion dollar project proposal to build a canal that was meant to rival the Panama Canal.

As of today, it has yet to materialize.

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A Closer Look:

Despite their vulnerabilities, these choke points remain critical waterways that facilitate international trade. Below, we dive into a few of the key areas to provide some context on just how important they are to global trade.

The Panama Canal

The Panama Canal is a lock-type canal that provides a shortcut for ships traveling between the Pacific and Atlantic oceans. Ships sailing between the east and west coasts of the U.S. save over 8,000 nautical miles by using the canal—which roughly shortens their trip by 21 days.

In 2019, 252 million long tons of goods were transported through the Panama Canal, which generated over $2.6 billion in tolls.

The Suez Canal

The Suez Canal is an Egyptian waterway that connects Europe to Asia. Without this route, ships would need to sail around Africa, which would add approximately seven days to their trips. In 2019, nearly 19,000 vessels, and 1 billion tons of cargo, traveled through the Suez Canal.

In an effort to mitigate risk, the Egyptian government embarked on a major expansion project for the canal back in 2015. 

But, given the recent blockage caused by a Taiwanese container ship, it's clear that the waterway is still vulnerable to obstruction.

The Strait of Malacca

At its smallest point, the Strait of Malacca is approximately 1.5 nautical miles, making it one of the world's narrowest choke points. 

Despite its size, it's one of Asia's most critical waterways, since it provides a critical connection between China, India, and Southeast Asia. 

This choke point creates a risky situation for the 130,000 or so ships that visit the Port of Singapore each year.

The area is also known to have problems with piracy—in 2019, there were 30 piracy incidents, according to private information group ReCAAP ISC.

The Strait of Hormuz

Controlled by Iran, the Strait of Hormuz links the Persian Gulf to the Gulf of Oman, ultimately draining into the Arabian Sea. 

It's a primary vein for the world's oil supply, transporting approximately 21 million barrels per day.

Historically, it's also been a site of regional conflict. For instance, tankers and commercial ships were attacked in that area during the Iran-Iraq war in the 1980s.

The Bab el-Mandeb Strait

The Bab el-Mandeb Strait is another primary waterway for the world's oil and natural gas. 

Nestled between Africa and the Middle East, the critical route connects the Mediterranean Sea (via the Suez Canal) to the Indian Ocean.

Like the Strait of Malacca, it's well known as a high-risk area for pirate attacks. 

In May 2020, a UK chemical tanker was attacked off the coast of Yemen–the ninth pirate attack in the area that year.

Due to the strategic nature of the region, there is a strong military presence in nearby Djibouti, including China's first ever foreign military base.

https://www.visualcapitalist.com/mapping-the-worlds-key-maritime-choke-points/

US Fed's Daly

Fed's Daly: Things are in balance

• So far the economy is in a good place and so is policy
• Concerns about tariff impact on inflation aren't as large as they were when they were first announced
• Many possibilities on how much of tariffs pass through to customers
• Fundamentals of economy are moving to where an interest rate cut may be necessary
• CEOs have cautious optimism on tariffs
• I look more to the autumn rather than July for a rate cut
• Unless we see a faltering labor market, autumn looks more appropriate
• This is a pushback against Waller from earlier but it's not a surprise to the market, which is pricing a 15% chancee of a July cut.

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