Trump-Engineered Ceasefire Sends Stocks Toward All-Time Highs: June 24, 2025

A Trump-engineered ceasefire appears to be holding several hours after breaches from both Tel Aviv and Tehran angered the Commander in Chief. Peace in the Middle East, at least for now, has market participants rejoicing while they aggressively scoop up stocks and Treasuries. The geopolitical premium is plunging, as crude oil and gold prices dive on a reduced need for safe-haven assets. Rates are moving south too, despite the risk-on posture, driven by depressed inflation expectations due to the paused conflict and Fed Chair Powell alluding to faster rate cuts if price pressures come in weaker than expected, or if labor conditions soften. A significant miss on US consumer confidence is also weighing on borrowing costs. Elsewhere, investors are dropping their exposures to volatility protection instruments, the greenback, bitcoins and all vital commodities. Every sector is advancing in equity land ex energy and the yield curve is shifting lower with similar declines across maturities. Traders have also been picking up forecast contracts consistent with a step down in July fed funds as well as bullish “Yes” positions in major equity benchmarks.

Shoppers’ Confidence Backtracks

Consumer Confidence retreated much of its gains in May this month amidst broad-based declines across categories. The headline June reading of 93 weakened from the previous period’s 98.4 and missed estimates calling for 98 badly. Both the indices for present situation and expectations dropped, the former falling from 135.5 to 129.1 and the latter slipping from 73.6 to 69. Tariffs and increasing expenses were top worries for households, while concerns regarding elevated borrowing costs mounted and recession angst increased modestly. Current business and labor conditions cooled and future prospects for income, employment and entrepreneurial possibilities also waned. But stock market bullishness and family financial situations remained bright spots within the publication.

Peace in the Middle East Precedes Trade Deals?

Peace in the Middle East is a terrific development at this juncture for equity and fixed-income bulls alike. Shall the truce hold, it has the potential to significantly boost confidence and trust in President Trump’s ability to quell violence around the world and may even offer Washington with leverage as we approach the July 9 deadline for trade deals. Furthermore, if the White House gets its way regarding cross-border levies with some nations, that would be a great first-year achievement for the new administration and supportive of higher stock and Treasury values. Finally, these international wins also bolster the odds of the GOP passing a taxation package soon, which will likely be criticized due to its lack of government spending cuts but will probably spark rallies in risk assets and cyclical commodities while being conducive to economic reacceleration because it will motivate capital expenditures, hiring and consumption. 

International Roundup

Canada’s May Prices Climb a Tad More than Expected

Canada’s Consumer Price Index climbed 0.6% month over month (m/m) in May, higher than the 0.5% forecast and a reversal from the 0.1% drop in April, according to Statistics Canada. The year over year (y/y) metric, at 1.7%, matched both the economist forecast and the preceding month’s print. The core indicator also climbed 0.6% m/m, up from 0.5% in April. Core prices y/y gained 2.5%, an unchanged pace from April. The release comes as concerns linger that tariffs may fuel inflation, but weak demand for housing has contributed to easing rent pressures while less lofty interest rates have had a similar impact on mortgage expenses. Additionally, Canada removed taxes on gasoline in April, helping to reduce pain at the pump with filling stations posting increases of only 1.9% m/m driven by higher refining margins resulting from a move to summer petro blends. Window stickers on electric vehicles also showed larger numbers.

While Decline in Sales of Manufactured Products Slows

Canada’s factory sales sank 1.3% m/m in May, easing from the 2.8% decline in April, according to an advance release of the data. Petroleum and coal products, transportation equipment and food led the decline.

UK Goods Production Contraction Continues

Manufacturing output in the UK during the quarter to June sank at a similar pace to the quarter to May but businesses expect the decline to ease this month, according to the Confederation of British Industry (CBI) Industrial Trends report. After dropping 25% in the preceding measurement time span, production sank another 23%. Of 17 sub-sectors, 14 experienced declines. Output inflation is also expected to ease. In the monthly release, the CBI maintains that goods producers are struggling with high energy costs, rising wages, a skills shortage and a volatile global economy.

ECB Economist Declares Victory on Inflation

European Central Bank Chief Economist Philip Lane says pockets of higher-than-desired price pressures exist, but the organization has won the battle to contain rising stickers. During a presentation this morning, he maintained that the process of dampening the pace of expense increases to 2% is almost over. Nevertheless, the economy still faces risks, including US tariffs, the Ukraine conflict and Middle East turmoil. In the meantime, the focus on fostering disinflation has been usurped by the need to maintain medium-term economic targets during a period of high uncertainty regarding geopolitics.

As Central Bank Leaders Offer Insights

As the July 9 deadline approaches for various countries to strike trade deals with the US before President Trump implements higher tariffs, Bank of England Governor Andrew Baily has warned that the unpredictable nature of geopolitics is a major headwind. During his testimony before the House of Lords Economic Affairs Committee, he added that tariffs could accelerate price pressures by disrupting supply chains. On the other hand, if they result in the UK importing more products from China, it could curtail price gains. In recent months, China’s exports ex US have grown 40%.

In another presentation, Bank of England Deputy Governor Dave Ramsden, who voted last week to lower the organization’s benchmark interest rate, said this morning that the UK’s easing job market is likely to help slow inflation. Demand for labor is slowing in a sustained, rather than abrupt nature. He said he currently thinks he will vote at the BoE’s August meeting for a rate cut. Last week, six members voted to keep the rate at 4.25%.

And Government Limits Steel Imports

UK Business Secretary Jonathan Reynolds has announced limits on steel imports in response to concerns that countries seeking alternative outlets to the US will flood the British market with their products, causing prices to drop. The decisions is likely to be supportive of the UK steel industry, which currently faces higher tariffs when shipping items to the US.

South Korea Sentiment Among Shoppers Improves

The South Korea Consumer Sentiment Index for June reached 108.7, up 6.9 points from May. Improvements increased by the stated amounts in the following categories:

• Current living standards, 2
• Future outlook, 4
• Future household income, 3
• Current domestic economic conditions 11

The report also showed a 2.4% expectation for price pressures in the upcoming year, down from 2.4% in May in the May report.