Tuesday Update -- Iran Launches Ballistic Missiles at Kuwait Airport (1 Dead), CENTCOM Strikes Qeshm Island, Oil Bounces 7% Off Lows as Ceasefire Disintegrates

Yesterday I said the situation was more dangerous, not less. Overnight it proved it. Iran fired ballistic missiles at Kuwait and Bahrain, hit Kuwait International Airport killing at least one person, and the IRGC claimed strikes on the US Fifth Fleet headquarters in Bahrain. CENTCOM responded with self-defense strikes on Qeshm Island. Day 96 of this war, and the ceasefire isn't just fraying -- it's being shredded in real time.

Brent ripped from $96 to $98.41 overnight, touching $99 intraday. That's a 7% bounce off last week's $92.05 lows. The 18% crash I covered yesterday? Half of it is already being clawed back.

What's New

Three developments since yesterday:

1. The most significant military exchange since the ceasefire began. Iran launched ballistic missiles at both Kuwait and Bahrain simultaneously -- the first time Iran has attacked two US-allied Gulf states in a single night. Two missiles aimed at Kuwait fell short or broke apart, but drone and missile fragments struck Kuwait International Airport's T1 terminal, killing at least one person and causing what Kuwait's civil aviation authority called "severe damage." Three missiles targeting Bahrain were intercepted by US and Bahraini air defenses. The IRGC then claimed it struck the US Fifth Fleet headquarters in Bahrain and a US air base with missiles and drones. CENTCOM's response: "FALSE. All Iranian attacks on American forces failed." US forces struck an Iranian military ground control station on Qeshm Island and shot down three attack drones targeting civilian shipping. A second wave of Iranian drones aimed at US forces in Kuwait also failed. No US personnel were injured.

2. Rubio's nuclear bombshell -- Washington will only offer sanctions relief for nuclear concessions, not Hormuz. Secretary of State Marco Rubio told the Senate Foreign Relations Committee that "there is the prospect" Iran "could negotiate aspects of their nuclear program" -- but that sanctions relief will ONLY come in exchange for nuclear concessions, not merely reopening the Strait of Hormuz. That's a massive escalation of US demands. Iran's position has been that nuclear talks happen after a permanent ceasefire, not before. Rubio also revealed that Iran's new supreme leader Mojtaba Khamenei -- who hasn't appeared publicly since his father was killed in US-Israeli strikes -- is "alive and increasingly engaged" in negotiations. The fact Washington felt the need to confirm he's alive tells you everything about the information vacuum around this conflict.

3. Crude inventories keep draining and labor data is hot. API data showed US crude stocks fell 6.8 million barrels last week -- the seventh consecutive weekly drawdown. If confirmed by EIA data later today, that's nearly 33 million barrels pulled out of commercial storage in less than two months heading into peak summer demand. Meanwhile, JOLTS job openings rose to their highest level in nearly two years with layoffs declining, reinforcing the "resilient economy + persistent inflation" narrative that keeps rate hike probability elevated. Friday's non-farm payrolls report is now the next major data catalyst.



Market Response

The overnight escalation reversed the oil collapse narrative from Monday:

• Brent: $98.41, up 2.5% on the day, touching $99 intraday. Third consecutive session of gains. Down 14% from May highs but now 7% off last week's $92.05 lows. Bloomberg reports both sides have agreed on a "rough framework" for a two-month truce extension and Hormuz reopening -- but final details are dragging, and the overnight strikes shredded whatever fragile momentum that framework had.
• WTI: $95.76, up 2.1%. Back above the psychological $95 level that broke last week.
• ES: 7,612, down 0.16% pre-market. S&P 500 closed at another record yesterday at 7,624. The equity-oil decoupling is now in week 15 -- ES up 4.9% in the past month while Brent is down 14%. That divergence is getting more extreme, not less.
• 10Y yield: 4.48%, up 4bp. Bloomberg calls it the biggest Treasury drop in two weeks, driven by oil pushing higher and rate hike expectations firming. The "oil up = inflation up = hikes up = yields up" transmission chain is alive and well.
• Gold: $4,489, essentially flat. Still trapped in the $4,383-$4,517 range from the past two weeks. The $4,500 level keeps acting as a ceiling. Yields win, war loses -- the gold dynamic I've flagged all month continues.

Data Deep Dive

The inventory picture is approaching critical. Seven consecutive weekly drawdowns in US crude stockpiles -- the longest streak since the war began. The API's 6.8 million barrel draw follows a stretch that's pulled roughly 33 million barrels out of commercial storage since late April.



Fitch Group published a comprehensive damage assessment on Tuesday, and the conclusion is staggering: the war has caused "widespread disruption across the Middle East's oil and gas sector, with exports collapsing, production shut in, and repeated strikes on infrastructure leaving behind billions of dollars in damage." Qatar, Bahrain, and Iraq have faced the heaviest exposure. The IEA's warning about critically low stockpiles ahead of peak summer demand isn't hypothetical anymore -- it's happening.

The labor market data compounds the inflation problem. JOLTS openings rising to a two-year high with falling layoffs means the economy is hotter than anyone expected going into the June 16-17 FOMC. Warsh inherits an economy that's too strong to cut, with inflation too high to ignore, and an oil market that just added a fresh risk premium overnight.





Updated Outlook

The ceasefire is ceasefire in name only. When one side is launching ballistic missiles at civilian airports and the other is striking island military bases, the word "ceasefire" has become diplomatic fiction. The overnight escalation adds risk premium back into oil just as the market was pricing in a deal. Rubio's nuclear demand escalation makes that deal harder, not easier.

This week's remaining catalysts are stacked:

• Today: EIA weekly inventory data -- if it confirms the 6.8M barrel API draw, that's the seventh straight week. Markets will focus on implied gasoline demand as summer driving season heats up.
• Today: ADP private payrolls -- preview for Friday's NFP. A hot print reinforces the rate hike narrative.
• Wednesday: Beige Book -- the last qualitative Fed input before June 16-17 FOMC. Inflation language is the tell.
• Friday: May non-farm payrolls -- the final major data point before Warsh's first FOMC. Hot number = rate hike probability spikes. Soft = relief rally in bonds.

Key levels: Brent $99 immediate resistance (today's high), $92 support (last week's low). ES 7,628 resistance (today's session high), 7,560 support (last week's close). Gold $4,520 resistance (June 1 high), $4,383 support (May 28 low). 10Y yield 4.52% resistance (May 19 high area), 4.42% support (last week's low).



The decoupling chart captures it all. From the April 8 ceasefire lows, ES has rallied 8% in a straight line while Brent has traced a round trip -- surging to $118, crashing to $92, and now bouncing back toward $100. Equities treated every oil spike as a buying opportunity and every oil crash as irrelevant. The S&P 500 at record highs with missiles hitting civilian airports 7,000 miles away is either the most rational market in history -- AI growth genuinely decoupled from energy -- or the most spectacular case of "this time is different" since 2008.

Friday's payrolls will tell us which one. A hot number means the rate hike machine keeps grinding, yields push back toward 4.55%, and the decoupling faces its real test. A miss gives Warsh cover to signal patience, and the whole complex breathes.

What's your read? Is oil's bounce the start of a rip back toward $110, or is this just another headline spike that fades by Thursday? Share below.

-- Fi

"Iran hit a civilian airport. CENTCOM struck Qeshm Island. Oil bounced 7% off the lows. And the S&P 500 closed at another record. Day 96 of a war that the equity market still refuses to price."

Monday/Tuesday Update -- The War Is Over (Maybe): US-Iran Deal Signed, Oil Crashes 20% From Highs to $78, SPR Hits 1983 Lows, FOMC Starts Today

Two weeks ago I wrote that the ceasefire was "diplomatic fiction" with missiles hitting Kuwait International Airport. Today I'm writing about a signed memorandum of understanding to end the war entirely. The speed of this reversal is staggering -- and the market's response has been even faster.

What's New

1. The US-Iran deal that actually happened. On Sunday June 15, Trump announced on Truth Social that "The Deal with the Islamic Republic of Iran is now complete." Pakistan's PM Sharif -- who mediated -- confirmed it separately. The MOU has been electronically signed by Trump, VP Vance, and Iran's parliamentary speaker Qalibaf. Official signing ceremony is Friday in Geneva. The framework calls for an "immediate and permanent termination of military operations on all fronts, including in Lebanon," a 60-day extension of the ceasefire, and reopening of the Strait of Hormuz. Iran's FM Araghchi said today that new negotiations start Friday in Switzerland for a final peace agreement. The nuclear program -- the hardest issue -- gets deferred to that second stage. Trump at the G7 today: "We have our deal done with Iran, and it should be successful. It goes to a second stage, which I think would be actually easier."

2. Oil is in freefall -- war premium evaporating in real time. Brent crashed $4.16 on Monday to $83.17 -- its lowest close since March 4. Today it's sliding further, hitting $81.00 intraday. WTI settled at $80.75 Monday, now trading at $78.41 -- that's down 32% from the May highs near $115. The entire war premium that took three months to build is being unwound in two weeks. Iran's National Oil Company slashed its July selling price to $7.15/bbl over Oman/Dubai, down from $13 -- they're aggressively repricing to recapture market share. Citi cut its Brent forecasts: $75 for Q3, $70 for Q4.



3. Ships are moving -- but slowly. Iranian media confirmed three oil tankers and two cargo ships passed through Hormuz. A sanctioned supertanker, the Tejas, is approaching the Gulf of Oman with its transponder on -- the first sanctioned vessel to broadcast its position since the deal. But the International Shipping Chamber says ~500 ships are still waiting to transit. Mine-clearing, insurance reassessment, and operational confidence will take weeks. This isn't a light switch -- it's a slow dimmer.



4. The SPR just hit its lowest level since 1983. DOE data released Monday: 340.3 million barrels, down 8.9 million in a single week -- the third-steepest draw on record. The US has burned through 75 million barrels of strategic reserves since March as part of the 172-million-barrel emergency release. Exxon's Neil Chapman warned last month that "we're approaching unheard of inventory levels." The deal came just in time -- Rapidan Energy's Bob McNally says "we don't think we're out of the woods in terms of upper pressure on prices" because drawdowns continue regardless.



Market Response

The cross-asset picture has completely flipped since my June 3 post:

• WTI: $78.41, down 18% from the $96 level I reported June 3. Down 32% from May highs. Lowest since March 10.
• Brent: $81.47, down 17% from $98.41 two weeks ago. Citi projects $70 by Q4 if Hormuz normalizes.
• ES: 7,628, essentially at all-time highs. The Dow closed at a record 51,671 Monday (+0.92%). S&P 500 at 7,554 (+1.65%). Nasdaq surged 3.07% in a single session.
• Gold: $4,369, down from $4,489 on June 3. War premium draining. But holding better than expected -- the safe-haven bid from rate uncertainty is partially replacing the geopolitical bid.
• 10Y Note (ZN): 109.86, yields easing as oil-driven inflation fears cool. The "oil up = inflation up = hikes up" chain I've been tracking all month just reversed.

Data Deep Dive

The decoupling I've covered for 15 weeks just resolved -- but not the way anyone expected. Equities didn't crash to meet oil. Oil crashed to meet equities. The S&P 500 was right all along: AI growth was genuinely decoupled from the war premium, and the equity market correctly priced a deal before anyone believed one was coming. Every oil spike was a buying opportunity. Every escalation headline was noise. The market wasn't complacent -- it was forward-looking.

Gas prices are already responding. The national average dropped to $4.06/gallon from May highs above $4.50. But full normalization will take months. More than 14 million barrels per day of production remains offline according to the IEA -- about 14% of world demand. Restoring pre-war output "is likely to take weeks, months or even years," per industry officials.





Updated Outlook

The FOMC meeting started today -- Warsh's first -- with the rate decision dropping tomorrow at 2:00 PM ET. Consensus is a hold at 3.50-3.75%, and this deal reinforces that. Lower oil = lower inflation pressure = less urgency to hike. CME FedWatch shows 42% probability of a year-end hike, down from 70% when I wrote two weeks ago. The dot plot is the real catalyst -- if the median shifts dovish, bonds rally hard.

But the risks haven't disappeared. The deal is a "very general document" per VP Vance. Nuclear talks haven't started. Lebanon is still active -- Iran's FM warned today that any Israeli attack on Lebanon violates the agreement. Netanyahu has already said Israel will remain in Lebanon. Friday's signing ceremony in Geneva is the next binary catalyst -- if it falls apart, oil rips back above $90 overnight.



Key levels: WTI $75 support (Citi's Q3 target), $85 resistance (Monday's open). ES 7,630 resistance (today's high), 7,550 support (Monday's close). Gold $4,300 support (June 10 low), $4,400 resistance (today's range cap). Brent $80 psychological floor, $85 resistance.

The war premium that dominated this thread for four months evaporated in 48 hours. Oil dropped 20% in two weeks. The SPR hit 1983 lows. The Dow hit a record high. And Warsh walks into his first FOMC tomorrow with a completely different inflation picture than existed when the committee last met.

For traders who rode the equity-oil decoupling -- congratulations. The market called it. For crude traders, the question shifts from "will the deal happen?" to "how fast can 14 million barrels per day come back online?" That answer determines whether WTI finds a floor at $75 or keeps falling.

What's your read on the deal? Are you fading the oil crash or riding it lower? Share below.

-- Fi

"Four months of war premium, gone in 48 hours. Oil crashed 20%. The SPR hit 1983 lows. The Dow hit a record. And somewhere between the missiles at Kuwait airport and the MOU signed in Geneva, the market proved what it believed all along -- the deal was always coming. The equity bulls were right. Now the question is whether the peace holds."

Wednesday Update -- The Deal's Guts Leak: $300B for Iran, Sanctions Waivers on Day One, First Tankers Break the Blockade, Oil Crashes to $75 as Warsh Takes the Mic

Yesterday I covered the deal announcement and the 20% crash from May highs. Overnight, the story accelerated in three directions at once -- the MOU details leaked, Iranian tankers started moving through the US Navy blockade, and oil crashed another 4% to levels not seen since before the war started. And at 2:00 PM ET today, Kevin Warsh delivers his first FOMC decision and press conference into a completely different inflation picture than existed 72 hours ago.

What's New

1. The 14-point MOU leaked -- and it's bigger than anyone expected. Saudi Arabia's Al Arabiya network published a near-final draft of the memorandum of understanding, and Bloomberg confirmed its authenticity. The key provisions: Iran pledges never to produce nuclear weapons. The US will immediately waive sanctions on Iranian crude, petrochemical products, and all related services -- banking, insurance, transportation -- the moment the deal is signed Friday at the Burgenstock resort near Luzern. Washington commits to facilitating the release of frozen Iranian assets and creating a $300 billion economic development plan for Iran contingent on progress in negotiations. The IAEA gets access back into Iran to help destroy highly enriched uranium stockpiles. VP Vance told NBC that inspectors would "absolutely" be allowed in, and that destroying the enriched stockpile is "spelled out very clearly." This is the most detailed framework for ending a US military conflict since the 2020 Afghanistan withdrawal agreement.

2. First Iranian tankers break the blockade -- but 580 ships are still waiting. CNBC reports three Iranian tankers carrying nearly 5 million barrels of crude have exited the US Navy blockade. Two NITC supertankers (Diona and Hero 2) carried 3.8 million barrels combined, with a third tanker adding another million. The first LNG carrier -- India's Disha, loaded with Qatari gas trapped since March -- also cleared the strait. But BBC Verify analysis of MarineTraffic data shows only 7 vessels total have passed through since the deal was announced, while 580 ships remain stranded in the Gulf -- 250+ tankers and 330+ cargo ships, 75% of them stationary near Saudi, Iraqi, and UAE oil terminals. BIMCO, the world's largest shipowner association, called it "extremely hazardous for vessels to start crossings at this moment." Mines, dual blockade legacy, insurance gaps, and zero confidence in security guarantees are keeping captains docked. HSBC's Kim Fustier says full normalization won't happen until September.

3. Lebanon just became the deal-breaker. Iran's FM Araghchi said today that the deal requires Israel to withdraw from Lebanon -- calling its occupation a violation of the agreement. Netanyahu immediately rejected this, saying Israel will remain "as long as necessary." A US official said the deal does NOT call for Israeli withdrawal. The fact that both sides are publicly contradicting each other on a core term two days before the signing ceremony should make every trader nervous. If this disagreement derails Friday's ceremony, oil rips back above $85 overnight.

4. Oil crashed to pre-war levels -- WTI at $75, the war premium fully vaporized. WTI is trading at $75.32 as I write this -- down from the $78.41 I reported yesterday and a staggering 35% below the May highs near $115. Brent dipped below $80, its lowest since the opening salvos in late February. The prompt spread on Brent collapsed from $9.65 in early April to just 29 cents -- that's the structural supply panic evaporating in real time. The IEA published a report today projecting a "significant 2027 oil surplus" if Hormuz normalizes. US gasoline prices have dropped for 25 consecutive days, approaching $4.00/gallon from the May peak above $4.56.



Market Response

The cross-asset picture continues to reprice at speed:

• WTI: $75.32, down 4% from yesterday's $78.41. Down 35% from May highs. Lowest since late February -- the entire war premium erased.
• Brent: ~$78.50, below $80 for the first time since the war began. Four straight sessions of decline -- longest losing streak of 2026.
• ES: 7,596, holding near all-time highs. The Dow hit another record Monday. Tech rotation pulling Nasdaq down 1.15% overnight, but financials and industrials carrying the broader market.
• Gold: $4,353, down from $4,369 yesterday. Geopolitical premium draining but rate uncertainty providing a floor. Down 12% from the April $4,920 peak.
• 10Y Note (ZN): 109.91, yields easing as oil-driven inflation fears cool. Bond yields across Asia also dropped -- Japan 10Y down 1.5bp, Australia 10Y down 5bp. The oil-inflation-yields transmission chain I've tracked all thread just shifted into reverse.

Data Deep Dive

The FOMC decision drops at 2:00 PM ET today, and here's why it matters more than usual despite the near-certain hold at 3.50-3.75%. Three things to watch:

The dot plot. March projections showed one 25bp cut in 2026. Since then, CPI hit 4.2% (three-year high), PPI surged to 6.5%, and payrolls came in hot at +172K. A majority of participants are expected to shift their dots to signal no cuts this year. A few hawks will likely pencil in a hike. The median dot is what moves markets.

The easing bias. April's meeting saw the most divided FOMC since 1992 -- 8-4 split with three members wanting to drop any hint of future cuts. That language is almost certainly gone today. Dropping the easing bias and shifting to neutral is the textbook definition of a hawkish hold.

Warsh's press conference. He hasn't spoken publicly since taking office on May 22. Markets hate vacuums, and they've filled his silence with 40% rate hike probability (per BofA's fund manager survey -- up from 16% last month). Pictet Wealth Management expects Warsh to "lean dovish relative to market pricing." TD Securities thinks he might not even submit his own dot -- a deliberate move to minimize the hawkish signal. Either way, how Warsh characterizes the oil crash changes the inflation narrative instantly.







Updated Outlook

The convergence of catalysts today is extraordinary. At 2:00 PM, Warsh's Fed delivers its first decision with oil 35% off the highs, CPI at a three-year peak of 4.2%, and a leaked peace deal promising immediate sanctions waivers on Iranian crude. The oil crash hands Warsh a gift -- lower energy prices mean the worst inflation fears are already fading. If he acknowledges that in his press conference, bonds rally hard and rate hike probability collapses. If he focuses on core CPI at 2.9% and hot labor data, the hawkish repricing accelerates.

But the Lebanon flashpoint is the wild card nobody is pricing. Iran and the US publicly disagree on whether the deal requires Israeli withdrawal. Netanyahu says no. Araghchi says it's a dealbreaker. If the Friday signing falls apart over this, CL rips back above $85 and the entire war premium rebuilds in a session.

Key levels: WTI $74 support (Citi's Q3 target area), $78 resistance (yesterday's level). ES 7,630 resistance (Monday's all-time high), 7,550 support. Gold $4,300 support, $4,400 resistance. Brent $77 support (today's intraday low), $80 psychological resistance (now overhead).



The 90-day comparison chart tells the full story of this thread. From the February war lows, equities marched steadily higher on AI momentum while crude traced a massive round trip -- surging to $115, crashing back to $75. The S&P 500 was right all along. AI growth was genuinely decoupled from the war premium. Every oil spike was a buying opportunity. The equity market wasn't complacent -- it was forward-looking.

For crude traders, the $75 WTI level is where the real question begins. Is this a floor -- or does oil have further to fall as Iranian barrels flood back? The IEA's 2027 surplus forecast and those 580 ships waiting to move suggest the supply side has months of normalization ahead. But one collapsed signing ceremony and it all reverses overnight.

What's your read on the FOMC today? Are you positioning for a dovish Warsh surprise or riding the oil crash lower into Friday? Share below.

-- Fi

"The MOU leaked: $300 billion for Iran, sanctions waived on day one, nuclear inspectors back in. Three tankers broke the blockade carrying 5 million barrels -- but 580 ships are still waiting. Oil hit $75. And at 2:00 PM, Warsh steps to the mic for the first time with CPI at a 3-year high and a peace deal that just rewrote the inflation math. The war premium is gone. Now the question is whether the peace holds."

Thursday Update -- Deal Signed at Versailles, Warsh Kills Forward Guidance, 18 of 19 Fed Officials Project Hikes, Oil Breaks Below $75, Gold Crashes 2%

Yesterday I said the convergence of catalysts was extraordinary. I wasn't wrong. Within six hours, Trump signed the MOU at Versailles making it immediately effective, Warsh delivered the most hawkish first press conference by a new Fed chair in modern history, and oil broke through the $75 WTI floor I'd been watching all week. Three simultaneous regime changes -- geopolitical, monetary, and energy -- in a single session.

What's New

1. Trump signed the MOU at Versailles -- it's now in effect. Not just electronically signed from Sunday. Trump physically signed a paper copy while sitting next to Macron at the Palace of Versailles on Wednesday afternoon, then handed the document and pen to Secretary Rubio. Iran's President Pezeshkian countersigned. A White House official confirmed to the BBC the agreement is "signed and now in effect." The formal ceremony Friday at Burgenstock in Switzerland is now ceremonial -- the deal is live. The 60-day negotiation clock has started. Per the full text released by Military Times: immediate termination of military operations on all fronts including Lebanon, US naval blockade removal within 30 days, toll-free passage through Hormuz for 60 days, Iran commits to never produce nuclear weapons, highly enriched uranium downblended on-site under IAEA supervision, and sanctions waivers taking immediate effect on oil, banking, insurance, and transportation.

2. Warsh rewrote the Fed's playbook in his first meeting. The FOMC held at 3.50-3.75% unanimously -- the first 12-0 vote in over a year. But that's where the dovish case ends. Warsh stripped the statement down to its bones, removing all forward guidance -- no hints about future rate direction whatsoever. He told reporters: "I can't give you any forward guidance about what we're going to do next." He didn't submit his own dot plot projection -- a deliberate choice consistent with his long-held skepticism of the SEP. The new statement simply states the rate decision and reaffirms ample reserves. It reads like Greenspan-era Fed communication, not Powell-era hand-holding. Fortune's headline captured the market reaction: "Warsh showed he's decisively not Trump's sock puppet."

3. The dot plot shifted hard hawkish. Of 19 participants, 18 projected at least one rate increase before year-end. Nine see at least one hike, six see two or more. Only Warsh himself refrained from submitting. The Fed raised its PCE inflation forecast to 3.6% for 2026 -- up from 2.7% in March. Inflation isn't expected to return to the 2% target until 2028. CME FedWatch now prices a bigger chance of a September hike than a hold. Bets on rates staying steady by year-end collapsed to 13% from 40% on Tuesday.

4. Oil punched through $75 WTI -- now $74.93 in overnight trade. WTI settled at $76.05 yesterday, down $4.70 on the session -- one of the largest daily drops in months. Brent settled at $78.96, down $4.21. Overnight, WTI dipped to $73.42 before recovering to $74.93 as I write. That puts crude 35%+ below May highs and solidly in pre-war territory. Goldman Sachs cut its Brent Q4 target to $80 from $90, projecting Brent at $75 in 2027. Citi's at $70 for Q4 2026. Gas prices broke below $4.00/gallon nationally for the first time since mid-April, per GasBuddy -- Americans have spent roughly $46 billion more on gasoline since the war started.



Market Response

The Fed's hawkish turn hit equities hard while the deal signing couldn't save them:

• S&P 500 (ES): Closed at 7,420 on Wednesday, down 1.21% (-91 points). That's 210 points below Monday's all-time high of 7,630. Overnight futures have bounced to 7,554 (+0.81%) as markets digest the deal being officially in effect.
• Nasdaq: Fell 1.34% on the session. Meta, Microsoft, and Amazon all dragged. But overnight NQ is up 1.45% -- the sharpest overnight reversal in two weeks. Tech buying the dip.
• Dow: Dropped 507 points (-0.98%) to 51,493, ending its streak of consecutive record closes.
• WTI: $74.93, down another 1.4% overnight after the $4.70 waterfall yesterday. Touched $73.42 intraday -- that's the first print below $74 since late February. The entire war trade has been completely unwound.
• Gold: Crashed to $4,283, down 2.3%. The dual hit of a hawkish Fed (higher real yields) and declining geopolitical risk (MOU in effect) stripped the last supports. Down 13% from the April $4,920 peak. That's a $640/oz decline during an active military conflict with nuclear negotiations underway.
• 10Y yield (ZN): Rose to 4.49% after the Fed statement. The "oil down = inflation down = yields down" chain I tracked all week just got overridden by the Fed signaling it might RAISE rates despite falling oil. That's the Warsh effect.

Data Deep Dive

Warsh's press conference transcript deserves a full breakdown because this is a fundamentally different Fed than what we had 30 days ago. Three things traders need to internalize:

Forward guidance is dead. Warsh explicitly killed it. "Financial markets perform best when they react to data," he said. No more parsing the statement for clues about what the Fed will do next. Markets now have to think for themselves. That's why the VIX spiked -- uncertainty went from managed to unmanaged in a single press conference.

"The Committee will deliver price stability." That single sentence in the statement is the tell. Not "seeks" or "aims for" or "is committed to pursuing" -- "will deliver." That's a promise. With PCE revised to 3.6% and inflation not expected at 2% until 2028, delivering price stability means rates go higher, not lower. BofA Securities now projects no rate reductions for all of 2026.

The supply-shock framing matters. Warsh attributed elevated inflation "in part" to "supply shocks that have driven price increases in certain sectors, including energy." That's the out. If the MOU holds and oil keeps falling, the supply shock reverses, inflation declines, and the urgency to hike fades. But if the deal collapses and oil rips back above $90? Warsh just told you what happens -- rate hike in September.



Updated Outlook

Three regime changes in 24 hours, and traders now face a market that looks completely different from Monday:

Geopolitical: The deal is signed and in effect -- not pending. The 60-day clock is ticking. Friday's Burgenstock ceremony is now symbolic. VP Vance leads the US delegation with Witkoff and Kushner. But the Lebanon issue remains unresolved. Hezbollah said Wednesday it doesn't believe Iran will sign the FINAL deal unless Israel withdraws. Iran's FM called Israeli presence in Lebanon a "violation." That's the spoiler risk for the next 60 days.

Monetary: Forward guidance is dead. The dot plot says hike. Warsh won't tell you when. The data decides. Watch the July CPI print (August release) -- if oil's collapse flows through to headline CPI quickly, the hike case weakens. If core stays sticky at 2.9%+, September becomes live.

Energy: The supply-shock unwind continues. Responsible Statecraft published an excellent analysis noting that even with the deal in effect, physical restoration faces three sequential constraints: mine clearance, provisioning and repair of 580+ stranded ships, and insurer confidence. Goldman projects flows at 70% of normal within three months, 90% within six months. The IEA's 2027 surplus forecast gets more plausible by the day.

Key levels: WTI $73.42 support (overnight low), $76 resistance (yesterday's close). ES 7,420 support (Wednesday close), 7,555 (overnight recovery level), 7,630 (Monday's all-time high). Gold $4,254 support (yesterday's session low), $4,350 (overnight high). Brent $77 support (today's intraday low), $79 resistance.





The 90-day comparison chart is the definitive visual for this entire thread. From the war's start, the S&P 500 climbed steadily on AI momentum while crude traced the most dramatic round trip in a decade -- surging 55% to $115 then crashing 35% back to $75. The equity market called it from day one. Oil was a war trade. AI was the secular story. The decoupling resolved exactly as equities predicted. Every dip was a buying opportunity.

But yesterday's sell-off introduces a new risk. The equity market weathered a 55% oil spike without flinching. Can it weather a Fed that just told you rates are going HIGHER? That's the test for the next six weeks. Falling oil is disinflationary. A hawkish Fed is contractionary. If Warsh's supply-shock framing proves right and inflation fades with oil, this sell-off is a gift. If core inflation stays sticky at 2.9% and the labor market keeps running hot, a rate hike becomes the next regime change -- and equities won't be immune to that one.



What's your read? Is Warsh's hawkish debut a buying opportunity or the start of a regime shift for equities? Are you positioned for the Friday ceremony or the 60-day negotiation grind? Share below.

-- Fi

"Trump signed the deal at Versailles. It's in effect. Warsh killed forward guidance and 18 of 19 Fed officials project a hike. Oil broke below $75. Gold crashed 2%. The war premium is gone. But a new premium just arrived -- the Fed premium. The question isn't whether the deal holds anymore. It's whether the Fed lets the peace dividend flow through to lower rates, or decides inflation needs a hammer regardless."

Friday Update -- Burgenstock Talks Postponed as Israeli Strikes Kill 18 in Lebanon, Gold Crashes Below $4,200, Equities Buy the Dip Led by a 6.4% Chip Rally

Yesterday I flagged Lebanon as the spoiler risk for the next 60 days. It took less than 24 hours. Israeli strikes overnight killed at least 18 people in southern Lebanon, Iran pulled its delegation, and the Burgenstock ceremony that was supposed to launch the technical negotiations just evaporated. The deal is signed and in effect -- but the talks required to implement it haven't started.

What's New

1. Burgenstock talks officially postponed -- no new date. The Swiss Foreign Ministry confirmed Friday morning that "the planned talks between the US, Iran, Qatar and Pakistan have been postponed." Vance canceled his Thursday night flight to Switzerland. Iran's chief negotiator Ghalibaf declared that any talks remain bound by Tehran's "red lines" and warned: "If the enemy seeks to be excessive, we have proven that our fingers are on the trigger." Al Jazeera reports Iran specifically delayed its delegation over Israeli strikes in Lebanon -- exactly the scenario I outlined yesterday. Mediators are pivoting to Egypt: Pakistan, Saudi Arabia, and Turkey have agreed to gather in Alamein on Sunday to salvage the diplomatic momentum.

2. Lebanon is the deal-breaker I said it was. Hezbollah reported intense fighting overnight in the south. The MOU's first clause calls for "immediate and permanent termination of military operations on all fronts, including in Lebanon." Israel is doing the opposite. Defense Minister Katz reiterated this week that the IDF will remain in Lebanon "for an unlimited period of time." Iran's position is clear: no final nuclear deal without Israeli withdrawal. The gap between what the MOU says and what's happening on the ground is widening, not narrowing.

3. Equities bounced hard Thursday -- chips led the charge. The S&P 500 gained 1.08% to 7,500.58, recovering most of Wednesday's 1.21% sell-off. But the real story was semiconductors. The Philadelphia SOX index surged 6.4%. Intel hit a record high, closing up 10.6% after Trump announced Apple would work with Intel on US chip design and manufacturing. Broadcom +4.7%, Applied Materials +4.1%, Micron +8.7%. The Nasdaq jumped 1.91% to 26,517.93. The Russell 2000 rose 2.0% to a record closing high. Markets close Friday for Juneteenth.



4. Gold collapsed below $4,200 -- third straight day of selling. Gold hit $4,151 Friday morning -- its lowest level in over a month. That's now $769 below the April $4,920 peak, a 15.6% crash. The dual hammer of a hawkish Fed (higher real yields, stronger dollar) and collapsing geopolitical risk premium (MOU in effect, oil falling) is crushing non-yielding bullion. Silver dropped to $64.82, down 1.3%. The DXY hit its highest since May 2025. CME FedWatch now shows 70% probability of a September rate hike -- and that's the gravitational force pulling gold down through every support level.



Market Response

Thursday's session and Friday's thin holiday trade paint a divergent picture:

• S&P 500 (ES): Closed 7,500 Thursday (+1.08%). Futures at 7,543 Friday (-0.36% in thin holiday trade). The Wednesday sell-off was a gift -- the buy-the-dip crowd stepped in immediately.
• Nasdaq (NQ): Closed 26,518 Thursday (+1.91%). Best day in two weeks. Tech and chips completely shrugged off the hawkish Fed. AI momentum remains the dominant force.
• Russell 2000: +2.0% Thursday to a record closing high. Small caps finally participating -- lower oil helps domestically-focused companies via lower input costs.
• WTI (CL): $75.93 -- essentially flat since Thursday's $76.60 close. Holding in the $74-77 range. Brent settled $79.85, bouncing 0.38% on Lebanon concerns. The Burgenstock postponement added modest risk premium back.
• Gold (GC): Crashed to $4,170 -- down another 1.8% Friday. Below $4,200 for the first time. Three straight down days. The war premium is gone and the Fed premium is killing it.
• 10Y yield (ZN): ZN at 109.39 -- yields steady near 4.49%. The front end is where the action is: the 2-year jumped to 4.19%, its highest since the Warsh swearing-in. Classic "Fed stays restrictive longer" pricing.

Data Deep Dive

The equity-gold divergence is the chart of the week. While the S&P bounced 1.08% Thursday and the Russell hit records, gold is in freefall. That divergence tells you exactly what the market is pricing: the hawkish Fed kills gold (higher opportunity cost for non-yielding assets) but equities don't care because AI earnings growth overwhelms the rate headwind. Tech traders are looking at Intel +10.6% and Micron +8.7% and saying "who needs rate cuts?"

The labor market data Thursday reinforced the bull case for both the economy and the Fed's hawkish tilt. Initial jobless claims fell last week -- layoffs remain low. That's the same "resilient economy + persistent inflation" cocktail that makes Warsh's rate hike more likely, not less. BofA and Goldman both project no rate reductions in 2026.

But here's what worries me about the Burgenstock collapse. Warsh explicitly attributed elevated inflation "in part" to "supply shocks that have driven price increases in certain sectors, including energy." That was his escape hatch -- if oil keeps falling, the supply shock reverses, and the urgency to hike fades. The Burgenstock postponement puts that entire narrative at risk. If the technical talks don't resume quickly and the deal unravels over Lebanon, oil reverses above $85, the supply shock rebuilds, and Warsh's September decision gets much harder.



Updated Outlook

The 90-day comparison chart continues to tell the definitive story of this thread. Equities climbed steadily on AI momentum. Oil traced the most dramatic round trip in a decade -- surging 55% then crashing 35%. Gold is the newest casualty, down 15.6% from the April peak despite an active military conflict with nuclear dimensions.

Three things to watch next week:

Monday: Markets reopen after Juneteenth. The Alamein talks Sunday between mediators (Pakistan, Saudi, Turkey, Egypt) will set the tone. If they produce a new date for US-Iran technical talks, oil drops further. If they collapse, oil rips.

Lebanon: The make-or-break variable for the entire deal. Israel isn't budging. Iran isn't bluffing. Every day the IDF stays in Lebanon, the probability of a final deal within 60 days decreases. The clock is ticking -- 58 days remaining.

Fed speakers: Warsh killed forward guidance, but individual FOMC members will start talking next week. Watch for any pushback on the September hike narrative. Nine of 19 penciled in a hike -- but 10 didn't. The dissent within the committee matters.

Key levels: ES 7,500 support (Thursday's close), 7,420 (Wednesday's low), 7,630 (Monday's all-time high). WTI $74.98 support (Friday's low), $77 resistance. Gold $4,138 (Friday's session low), $4,200 (now resistance). Brent $79-80 pivot.



The market is telling you two things simultaneously. One: AI doesn't need a dovish Fed or a peace deal to rally -- chips up 6.4% the day after the most hawkish FOMC in years. Two: gold is the canary -- the collapse below $4,200 says the safe-haven trade is unwinding fast, and if the Burgenstock talks don't resume soon, the only question is whether oil's risk premium rebuilds before gold finds a floor.

This thread started with missiles hitting Kuwait airport. It might end with a signed deal that nobody can implement. The MOU is in effect. The 60-day clock is ticking. And the first scheduled talks just got postponed because the war it's supposed to end is still actively killing people.

What's your read heading into the weekend? Are you riding the chip rally or watching the Lebanon situation for a reversal? Share below.

TGIF! Have a good weekend!

-- Fi

"The deal is signed. The ceremony was canceled. Israeli strikes killed 18 in Lebanon overnight. Iran pulled its delegation. Gold crashed below $4,200. And the S&P bounced on a 6.4% chip rally. Two markets, two completely different reads on what happens next. The 60-day clock is ticking -- 58 days left -- and the talks to implement the deal haven't started yet."

In Protest Against Trump’s Threat:

Iran Walks Out of the Bürgenstock Summit
Newspaper: "Blick" 29 Min ago.

While peace negotiations were underway, Trump issued new threats. The result: The Iranian delegation left in protest, according to Iranian state media.

Trump had once again threatened to take drastic measures against Iran. In a 20-minute phone call with Fox News, he stated: “We will take over the strait if necessary. If they don’t reach an agreement, we’ll impose tolls.”

And that’s not all. According to CNN, Trump also reportedly told Iranian officials: “If you close it (the Strait of Hormuz), you won’t have a country anymore.” “You won’t even be able to return to your damn country.”

So much to the negotiations and the goodwill between the US/Israel side and Iran diplomats in this conflict. A lot of media talks but nothing with real long term value, in specific from the US/Israel side.

Symple

Edit:

Well: 30 Min later, the media posted the following: In an earlier version, we reported that the delegation had already left. So far, there has been no official confirmation of this. . As seen: Even in Switzerland the media, which is directly on the scene, is not really able to tell what is going on. I guess in a few hours we will know more about what really happens and if they left the Bürgenstock Summit. For the moment I am sorry if this was some kind of fake news, but I thought it was important to know if it was not.