π June 28, 2025 (Friday) β Market Stabilizes as Middle East Risk Recedes; Focus Turns to PCE Inflation and Fed Rate Cut Outlook
π Market Sentiment:
Geopolitical tensions in the Middle East have eased following the ceasefire agreement, shifting the market from βrisk-offβ to βrisk-on.β
The Nasdaq has hit a new year-to-date high, with continued strength in equities, yen weakness, and broad dollar softness.
π Focus on U.S. Policy Outlook:
Trump is reportedly accelerating plans to appoint a successor to Fed Chair Powell, raising concerns over central bank independence.
The final Q1 GDP figure was revised downward, reviving rate cut expectations.
However, if inflation remains sticky, a July rate cut may be postponed.
π Key U.S. Economic Data Today
| Indicator | Focus |
|---|---|
| PCE Price Index (May) | Forecast: Core YoY +2.6% (Prev. +2.5%) β A higher reading could reignite USD buying |
| University of Michigan Consumer Sentiment (Final) | Watch the 1-year inflation expectation, forecast at +5.2% (Prev. +5.1%) |
π¬ Key Speeches & Events
| Speaker | Role | Focus |
|---|---|---|
| FranΓ§ois Villeroy de Galhau | Governor, Bank of France | Comments on ECBβs inflation outlook |
| Philip Lane | ECB Chief Economist | Potential guidance on monetary policy |
| John Williams | NY Fed President | May comment on inflation outlook and timing of rate cuts |
| Lisa Cook, Adriana Kugler, et al. | Fed officials | Key to either reinforcing or pushing back market expectations for rate cuts |
πΉ Traderβs Note: Todayβs Outlook & Strategy
| Asset | Outlook | Strategy |
|---|---|---|
| π΅ USD | If PCE confirms inflation β rate cut delay risk | Watch for continued dollar selling or a rebound depending on data |
| πͺ Gold / Bitcoin | Safe-haven unwind + rate cut bets β buying pressure | Look for dip buying; Bitcoin likely to outperform in risk-on mode |
| π’ Oil | Ceasefire continuation β risk premium fades | Sell on rallies; upside limited |
π Summary
With geopolitical tensions easing, market attention has fully shifted to U.S. monetary policy.
Todayβs PCE price index is a pivotal event that could shape the trend for the coming weeks.
Watch for the scenario:
- Stronger inflation β rate cut delay β USD rebound,
vs. - Weak PCE β deeper rate cut expectations β equities up, USD down, risk-on continues.
