Morning Brew June 23 2025

Good morning,

The US Struck 3 sites in Iran over the weekend and the looming question now it the degree of escalation.

A blockage of the straight of Hormuz is the economic worstcase scenario and that has so far not come to be.

The overall market reaction seem too complacent, Oil rose a moderate 1,5%, the USD Index is calm at 98.90, EURUSD 1.1520, GBPUSD 1.3440 and USDJPY 147.

Gold and Silver are calm at 3360 and 36.

Equity Indexes are app 0.3% lower, the GER40 is 23230, Switzerland 20 11780, US 500 5960 and the US Tech 100 21600.

The S&P 500 Index his almost 30 sessions since coming within 5% of the all time high not yet reached it iseems to be lacking the strength to follow through.

Looking ahead, the key topics are :

How will Iran react to the US attack? Will they block the straight of Hormuz, attach US facilities or will they negotiate after the clear proof they have zero chance militarily against the US. Oil is the most sensitive here. The fact that Donald Trump chose to act so swiftly took many by surprise and we can expect political fallout in the US. Large parts of Trump supporters elected him because he was against US Military activities, this may weigh on his approval ratings. Charu tried to assess the implications for investors, I am linking the article below. IT also seems to be the end of the TACO trade which may be the main driver of the decision to act so soon. 

Data this week is somewhat slow and likely secondary or even tertiary, the PCE on Friday is the most important but as it is clear the tariffs have not made it into the data, it is not really that relevant.

Trade negotiations have lost the focus somewhat but we are approaching the end of the 90 day reprieve and this will be the center of attention again soon.

Trade Safely.

Making sense of the US–Iran conflict for investors

What to watch next

• Iran’s response: A direct strike on U.S. forces or the Strait of Hormuz would be a major inflection point for markets. If shipping through the strait becomes prohibitively risky or expensive, it could disrupt global energy flows, freight costs, and broader supply chains.
• Oil price trajectory: A sustained break above $100/barrel could trigger renewed inflation shock trades and delay monetary easing.
• US bond market reaction: Whether yields fall on haven demand or rise on inflation fears will shape broader asset flows.
• Dollar dynamics: A short squeeze in the USD (sharp gains driven by investors unwinding bearish bets) could tighten global financial conditions, especially in emerging markets with external vulnerabilities.
• Global equity rotation: Asian and European markets, especially energy importers, may struggle. Defense and energy sectors are likely to be more resilient.
• US domestic gridlock: The lack of Congressional approval for military action could deepen political divisions, complicate fiscal policymaking, and raise concerns over institutional stability.
• Geopolitical spillovers: While the conflict is centered on the U.S. and Iran, investors should remain alert to potential diplomatic or strategic responses from Russia and China, both of which have significant energy and regional interests.

Monday

• Global PMI Indexes

  Tuesday

• Germany IFO
• Canada CPI
• US Consumer Confidence

  Powell speaks
  Wednesday

• Australia CPI
  Powell speaks

  Thursday

• US Durable Goods, GDP, Initial Jobless Claims
• Switzerland, Sweden UK, Turkey Rate decisions

   

  Friday

• Japan CPI
• France CPI
• EU Consumer Confidence
• US PCE