June 23, 2025

• Posted By : Editorial Team

The Iran-Israel conflict continued this week with both countries launching attacks on each other. President Trump resolved to take a stance on the U.S. interceding in the conflict within two weeks, even as he warned the residents of Tehran to leave the city. Iran’s Parliament approved the blockade of the Strait of Hormuz which would drastically impact the global energy trade, while Iran was in the process of transporting oil stocks out of Tehran. Major central banks across the world chose to keep their policy rates unchanged this week citing global uncertainties and inflation risks. President Trump left the G7 summit in Canada early, citing the ongoing Iran-Israel conflict. Canada increased pressure on President Trump to arrive at a trade deal. On the sidelines of the G7 summit, Canada and India agreed to renew the diplomatic relations between the two countries. President Trump’s crackdown on illegal immigration at workplaces has increased economic stress for American businesses.

Global Updates

• The MSCI All Country World Index was lower this week due to the escalating Iran-Israel conflict.
• In the United Kingdom consumer confidence rose by 2 points in June, indicating greater optimism of consumers in the economy. This marked the third consecutive month of gains in confidence and the highest confidence levels since December 2024.
• Canada’s Prime Minister Carney has suggested higher counter-tariffs on steel and aluminum from the U.S. if the two countries are unable to arrive at a trade deal in 30 days.
• The Bank of England kept its policy rate unchanged at 4.25%, citing rising global uncertainty and inflation risks.
• Japan’s core inflation rose to 3.7% in May, the highest in more than two years. This may force the Bank of Japan to raise interest rates despite the economic uncertainty from U.S. tariffs.
• The People’s Bank of China kept its key lending rates unchanged in line with market expectations due to rising retail sales and the country’s economic growth continuing to be on track to its growth targets.
• China’s retail sales growth rate of 6.4% in May, driven by the “618” ecommerce event for consumer goods, was the fastest in 18 months. However, China’s growth in industrial production and fixed-asset investments slowed down to 5.8% and 3.7% respectively in the same period.
• China’s exports of rare earth minerals fell by 53% to a five-year low in May due. China had placed export restrictions citing concerns for its national security and supply chain stability.
• Global oil prices touched a five-month high this week due to fears of global supply bottlenecks due to the escalation in the Iran-Israel conflict.

U.S. Equity

• The S&P 500, Dow Jones and Nasdaq were weighed down by the escalating tensions in the middle east and the uncertainty regarding rate cuts by the fed. However, the redeployment of U.S. military assets to the Middle East has indicated a greater likelihood of U.S. involvement in the conflict.
• On the economic front the U.S. industrial production slowed down by 0.20% in May, declining for the second time in the second quarter, due to cooling in demand. The NAHB housing market index which measures homebuilder sentiment also dropped to the lowest in 30 months, weighed down by the higher mortgage rates and economic uncertainty.
• President Trump’s use of workplace raids to reign in illegal immigration has triggered workplace avoidance by workers in New York, Colorado, Texas and California leading to stress on businesses and farms.
• The Fed chose to hold interest rates steady this week. Fed Chair Jerome Powell reiterated the importance of Fed’s data driven approach to its interest rate policy. However, Fed Governor Christopher Waller anticipated an earlier rate cut, as early as July. He downplayed the inflation risk from tariffs and prioritized tackling unemployment and the economic slowdown by lowering the borrowing costs.
• Chip stocks declined this week due to the possible change in U.S. policy permitting use of American technology by Multinational semiconductor companies in their manufacturing units in China. The policy change to limit China’s access to advanced technologies affected the stock prices of Broadcom, TSMC, Nvidia and other companies.
• J.P. Morgan announced its plans to launch a stablecoin which will only be available to its institutional clients. J.P. Morgan CEO Jamie Dimon initially expressed significant skepticism about the long-term viability of cryptocurrencies.
• The Trump administration has extended ByteDance’s deadline for selling its U.S. division of TikTok by 90 days.

Fixed Income

• The Bloomberg U.S. Aggregate Bond Index dipped slightly this week.
• The U.S. 10-year Treasury yield fell to 4.375% and the yield on the 2-year note also lagged to 3.908% over the week.
• The U.S. Dollar Index rose slightly to 98.71 this week due to safe haven demand for the currency.

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