U.S. Indexes closed were mixed to end the week, with the NASDAQ 100 underperforming once again. The latest jitters were sparked following reports that OpenAI is leaning towards delaying its IPO until 2027 with CEO Altman insisting on a USD 1 Trillion valuation for the IPO. Adding the most pressure to the NDX included Broadcom (AVGO -3%), Nvidia (-0.7%), Micron (MU), and Qualcomm (QCOM.). Apple saw a bounce after seeing the biggest selloff in over a year, with the latest news being the Vision Pro and Smart glasses chief is to leave for OpenAI. In FX, Dollar strength took a pause, amid lower US yields as the continued drop in oil prices weighed. EUR/USD gains were limited by Trump threatening countries, particularly European, with 100% tariffs if they impose a Digital Services Tax on US companies. Precious metals benefited from the drop in US yields, allowing spot Gold to hit highs of 4097. At the Fed, Kashkari, a 2026 voter concerned on inflation as is in fitting with the broader committee, confirmed his view on rates, seeing one rate hike in 2026, then holding through 2027. Oil prices continued their march lower with WTI settling below USD 70/ barrel for the first time since the war began. The narrative driving price action remains the view that oil flows will return to pre-war levels undisturbed. A trilateral US-Israel-Lebanon agreement was announced, though Hezbollah reportedly rejected it. Meanwhile, the UAE sent a false missile alert; oil prices briefly spiked before paring as the alert was downplayed. US data included upward revisions to University of Michigan Sentiment and expectations while current conditions were revised lower; meanwhile, the US international trade deficit rose in May, notably above expectations as imports grew and exports declined. The international trade deficit rose to USD 105.8 billion (prev. 83 billion) in May, bigger than the USD 88.5 billion expected. Exports declined to USD 207.7 billion (prev. 219.5 billion) while imports grew to USD 313.4 billion (prev. 302.5 billion). Wholesale Inventories rose 0.3% M/M to USD 944 billion while retail inventories jumped 0.6% M/M to USD 832.2 billion. Oxford Economics notes that the data points to net trade imposing a larger drag on Q2 GDP growth. However, “strong business investment figures and an offsetting boost from inventory accumulation means GDP should remain above 2% in the quarter”. Fed Member Kashkari is concerned about inflation, especially in services; seeing some signs of life in the labour market. He adds that the inflation move up is not just about oil and the Middle East and is not seeing the all-clear sign in the Middle East. The Minneapolis Fed President sees rates on hold in 2027, and has one rate hike pencilled in for 2026, which is the same as the median SEP in the latest FOMC’s dot plot. Going to have to see how no forward guidance works, Kashkari noted. Lastly, he noted that the labour market is not causing inflation right now, but rather is being driven by supply issues, including the AI buildout, and that “AI is probably pushing up market interest rates”. Elsewhere, Oil closed lower by 4% while a softer Dollar saw Gold end Friday’s session with a gain of 1%.
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