In 30 seconds: A US-Iran memorandum of understanding to reopen the Strait of Hormuz is reshaping global oil markets, with Cushing crude stocks hitting decade lows, Gulf producers ramping output, and the IEA projecting a potential oil glut by 2027 if Middle Eastern supply is restored. Germany is joining France in pushing for new European trade instruments against China's mercantilist policies, as the CNY's depreciation, collapsing European exports to China, and BMW's profit warning deepen the continent's economic grievances. New Fed Chair Kevin Warsh delivered a hawkish first press conference, holding rates steady but signaling potential hikes, shifting dot plots toward tightening, announcing five internal task forces, and sending the S&P 500 to its worst first-Fed-Day performance since 1994. May US retail sales beat expectations at +0.9%, GDPNow ticked up to 3.0%, but mixed inflation signals—including a new BEA finding that top-income households faced higher pandemic-era inflation—complicate the Fed's policy path alongside softer UK CPI data.
The memorandum of understanding between US and Iran is, at its core, a narrow bargain. The deal comes down to two things: both sides want to end the war, and both want to reopen the strait — as long as Iran gets paid. There is nothing new on nukes, on missiles, on Iran's funding of proxies and terror. That is the deal. The oil market is trying to price two realities at once. Cushing crude stocks fell ~1.6 million barrels last week, leaving them sitting just above the oft-cited 20 million barrels "floor" — their lowest level since 2014. Broader US commercial petroleum inventories dropped 7.9 million barrels. US Midwest refineries are running above 100% of normal capacity, and the product mix is shifting: gasoline yields are down 1.5 percentage points while jet yields are up 1.5 percentage points. But look forward to 2027 and the picture inverts. Gulf states are already providing funds to Iran in service of regional stability and prepared to spend more, though they don't have any specifics on what the $300 billion Iran reconstruction fund is supposed to look like. China's oil buffer, meanwhile, clearly helped the entire world avoid a larger oil shock. The risk that Iran can close the strait whenever it wants is now priced into oil markets — and that premium isn't going away.
The yuan is down 10% against the euro in nominal terms over recent years, and much more in real (inflation-adjusted) terms. China has explicitly pursued import-substituting industrial policies. Made in China 2025 is only the most visible example. Those policies have worked: European exports have been squeezed out of the Chinese market. German exports to China have fallen by close to a percentage point of German GDP, a meaningful drag on an economy whose exports faltered, particularly after 2023, after the worst of the Russian gas shock. China has decided not to import anything any more, and to subsidise overcapacity, dumping products on our markets. That puts 50 percent of our industry, our companies, at risk... [and for] some member states this figure was 70 percent. That is the kind of language you use when you have stopped pretending the relationship is reciprocal. The auto sector is the sharpest illustration. China's approach to cars has been frankly protectionist. China's approach included high though WTO-consistent tariffs, local preference, cheap credit and local government support, and subsidies for batteries. The results are now arriving in European profit statements — BMW has issued a major profit warning implying a profit drop of more than 60%. CNY vs EUR: 10%. One argument holds that China will not accept being pressured into revaluing the yuan higher — not without a compensating adjustment, such as a large gold revaluation. If the G7 want the CNY to rise v. G7 currencies, all the G7 needs to do is let G7 currencies fall significantly v. gold. Gold slipped 1.31% on the day to $4,274.10. So it is reaching for new tools.
S&P 500 down 1.21% on the day.
Gold pulled back on the day, settling at $4,274.10 on June 17, 2026, down 1.31%.
Here is what your portfolio did this session.
S&P 500: 7,420.10, down 1.21% on the day
10-Year Treasury yield: 4.46%, down 2 bp on the day
30-Year Treasury yield: 4.93%, down 5 bp on the day
13-Week T-Bill yield: 3.65%, up 3 bp on the day
Gold: $4,274.10, down 1.31% on the day
Fed funds rate: 3.75%, flat 0.00% on the day
Long bonds (TLT): $86.33, up 0.16% on the day