MARKET WRAPS
Watch For:
EU, U.K. CPI; U.K. PPI; no major corporate trading updates expected
Opening Call:
European stock futures traded lower early Wednesday. Asian stock benchmarks were mixed; the dollar was flat; Treasury yields were flat; while oil futures and gold weakened.
Equities:
Stock futures point to a lower open in Europe, as investors await clearer details about the memorandum of understanding struck between the U.S. and Iran, which both parties are expected to sign Friday.
The MOU sets up a new deadline, as it extends an existing ceasefire for 60 days while negotiators work on a more lasting deal that could cover Iran's nuclear program.
"For markets, the Strait [of Hormuz] is the only thing that matters, because its blockage was most pernicious for the global economy," said Thierry Wizman, a strategist at Macquarie Group.
Forex:
The dollar was flat ahead of the first decision by a Federal Open Market Committee led by Chairman Kevin Warsh. Warsh's "AI-is-disinflationary" credentials, lingering questions about his loyalty to President Trump, and "preference for a trimmed CPI target all raise questions about where he sits on the hawk-dove spectrum," Westpac Strategy Group's Richard Franulovich said.
"The risk has to be that he delivers a more even-handed tone than positioning assumes," the head of FX strategy said.
Bonds:
Artificial-intelligence companies hungry for cash are rushing into an arcane corner of the bond market. U.S.-listed companies have issued about $54 billion worth of convertible bonds so far this year, the highest year-to-date volume since the start of the Covid-19 pandemic, according to Dealogic data going back to 1995.
"Convertibles are growth capital for growth issuers, and I don't think you can think of a better growth opportunity than AI," said Joe Wysocki, senior co-portfolio manager at Calamos Investments.
Energy:
While the U.S.-Iran MOU to end the conflict is "clearly positive, we need to see evidence that it holds," members of HSBC Global Investment Research said.
"Even if traffic of navigation is restored, normalising flows [through Strait of Hormuz] will take time," they said. "Under an optimistic scenario, we would not expect meaningful normalization of [Strait of] Hormuz commercial traffic before late July, and near-full restoration of oil output before end-September," they added.
Metals:
Gold weakened, as investors remained cautious amid limited details on the U.S.-Iran agreement and uncertainty over how quickly shipping routes and commodity exports will return to normal.
Attention is shifting to central-bank meetings, with investors particularly focused on the Federal Reserve for fresh signals on the outlook for monetary policy.
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Iron ore lost ground following China's weak monthly economic data for May. China's crude steel output continued to fall as the property sector showed no signs of recovery, ANZ Research analysts said. However, India might offset some of this weakness as it increases infrastructure spending, they said.
TODAY'S TOP HEADLINES
Trump Picked Warsh to Cut Rates. His Committee Is Talking About Hikes.
Kevin Warsh walks into his first meeting as Federal Reserve chairman this week in an awkward spot. He argued last year for interest-rate cuts and was chosen to deliver them. But the conversation at the Fed has shifted the other way-toward raising rates, not cutting them.
When President Trump picked Warsh in January, the Fed looked headed for lower rates-and the cheaper mortgages and loans that come with them. Investors expected several cuts this year, on top of three in late 2025, thanks in part to a wobbly job market that left officials worried that high rates were doing more harm than good. Inflation, meanwhile, looked like it might resume a decline toward the Fed's 2% goal once the effects of tariffs faded.
The AI Boom's Hunt for Cash Hits a New Corner of the Bond Market
Artificial-intelligence companies hungry for cash are rushing into an arcane corner of the bond market.
As U.S. companies search to fund their AI ambitions, they are issuing near-record volumes of bonds that investors can convert into stocks if the shares rise to a designated price. Investors like that they get the relative stability of bonds, along with some of the upside if shares take off.
Iran Is Returning to Nuclear Talks No Longer Afraid of America
After more than three months of bombing and blockades, the U.S. and Iran are back to square one, preparing for what promises to be difficult negotiations over limits to Tehran's nuclear ambitions.
This time, the Iranians will come to the table armed with valuable knowledge: They can survive the worst the Americans can throw at them.
BMW Cuts Outlook as Middle East War, China Woes Weigh
BMW cut its outlook for the year as the Middle East conflict takes a heavier toll than expected and competition heats up in the key Chinese market.
The German carmaker said Tuesday that it now expects a slight fall in automotive sales over the course of 2026 compared with a year earlier, having previously guided for flat growth. The operating margin in the company's mainstay automotive division will meanwhile likely be within a range of 1%-3% for the year, a weaker estimate than the 4%-6% BMW had previously expected. The segment last year booked a margin of 5.3%.
Elon Musk Is Unleashing SpaceX's New War Chest to Solve His AI Problem
Elon Musk has admitted SpaceX lags behind rivals like OpenAI, Anthropic and even Google and Chinese open-source models in the race to build out artificial intelligence.
He now has an $86 billion war chest to help change that. And the first target is getting enterprise customers who Musk hopes are willing to pay large sums for access to SpaceX's tools and computing power.
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Expected Major Events for Wednesday
05:00/FIN: Apr Balance of Payments
06:00/UK: May Producer Price Index
06:00/UK: May CPI
06:00/SWE: 1Q Financial accounts
07:00/SVK: May Harmonized CPI
07:00/AUT: May CPI
07:30/SWE: Swedish repo rate announcement
08:00/FRA: Jun IEA Oil Market Report
08:30/UK: Apr UK House Price Index
09:00/CYP: May Harmonised CPI
09:00/MLT: May Harmonised CPI
09:00/EU: May Harmonised CPI
10:00/IRL: Apr Goods Exports and Imports
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(END) Dow Jones Newswires
June 17, 2026 00:00 ET (04:00 GMT)
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