Global News Summary 16 - 20 June 2025

Written By Larry Lim

Global markets were rocked by escalating Middle East tensions, with Trump wavering on U.S. military action against Iran, sending oil prices surging midweek before easing. Central banks held rates steady but hinted at cuts (Fed, BOE, SNB), while inflation remained elevated in the UK (3.4%) and Japan (3.7%) but turned negative in Switzerland. U.S. retail sales fell 0.9%, and Microsoft announced job cuts amid heavy AI spending. Trade friction deepened with looming chip export restrictions and tariff threats, while global equities dipped and bond yields fell on renewed recession and policy uncertainty.

United States (USD)

  • Middle East Crisis: Escalation between Israel and Iran triggered market volatility. Trump warned of a possible U.S. strike but later signaled potential talks “within two weeks”.

  • Fed Policy: Held rates at 4.25%. Cut growth forecasts and raised inflation projections. Fed Gov. Waller suggested cuts could begin as early as July, pulling 2Y yields to ~3.9%.

  • Retail Sales: Fell –0.9% in May, showing distortion from prior stockpiling amid tariff fears.

  • Trade: Trump signed a UK trade deal benefiting autos/aerospace; potential new Canada deal discussed at G7. U.S. may revoke chip plant export waivers, hitting semis (SOX –0.8%).

  • Dollar Index: Had its best week since February, ending up +0.1%.

United Kingdom (GBP)

  • Growth Plan: Chancellor Reeves announced a £725bn 10-year infrastructure plan, starting with critical transport repairs.

  • GDP & Housing: April GDP fell –0.3%; house prices down –2.8% YoY — worst in nearly 4 years.

  • Inflation: Remained high at 3.4% in May, driven by food.

  • BOE Policy: Held rates at 4.25% but hinted at a possible August cut.

  • Trade: UK actively pursued deals with Canada and the U.S.; Starmer sent business envoys to Washington.

Euro Area (EUR)

  • ECB Outlook: Still expected to cut rates once more to 1.75% in Sep despite rising oil risks.

  • Trade Tensions: EU refused key trade talks with China; pursuing UK-style deal with U.S.

  • Germany: Investor confidence rose on anticipated public spending, but ECB flagged "substantial" risks to growth from war and tariffs.

Switzerland (CHF)

  • SNB: Cut rates to 0% amid falling inflation (–0.1% YoY in May); franc surged due to safe-haven flows and trade war jitters.

Japan (JPY)

  • Trade Pain: Exports –1.7% YoY in May (cars, steel), though volumes +1.8%; risk of technical recession looms.

  • BOJ Policy: Slowed bond tapering; held rates steady to protect financial stability.

  • Inflation: Core CPI rose to +3.7% YoY in May.

  • Trade Talks: No breakthrough in G7 discussions with Trump; Ishiba prioritised sovereignty.

China (CNY)

  • Retail Sales: Rose +6.4% YoY in May, giving a temporary boost.

  • Challenges: Industrial output and fixed-asset investment slowed; housing market weakened.

  • Tariff Impact: Economy facing deflationary pressures; Beijing’s leverage on Europe appears limited.

Canada (CAD)

  • Tariff Shielding: Announced 100% duties on non-U.S. steel/aluminium, with room to hike U.S. levies.

  • Trade Talks: Trump and PM Carney aimed to reach a US–Canada deal within a month.

Australia (AUD)

  • Jobs: Employment fell by 2,500, all part-time; jobless rate steady at 4.1%. Slight softening supports RBA rate cut case.

New Zealand (NZD)

  • GDP: Rose +0.8% in Q1 (Q4: +0.5%) beating consensus, as exports surged and rate cuts took effect.

Economic Growth

  • Positive: China (+6.4% retail sales), New Zealand (+0.8% GDP Q1), German sentiment improved.

  • Negative: UK GDP –0.3%, Japan exports falling, U.S. retail sales down –0.9%.

Jobs

  • UK: April saw job losses, and Reeves won't boost defence spending beyond 2.6% of GDP this parliament.

  • US: Microsoft announced new layoffs amid AI investment ramp-up.

  • Australia: Labour market loosening with part-time losses.

Debt Securities

  • Yields:

    • U.S. 2Y: Dropped to ~3.9%

    • U.S. 10Y: Ended at 4.38%

    • Germany 10Y: 2.52%

    • UK 10Y: 4.54%

  • Investor Holdings: Foreign ownership of Treasuries slipped to $9tn.

  • Options Impact: Massive $6.5 trillion expiry added bond market volatility.

AI

  • OpenAI: Won $200M Pentagon pilot contract.

  • Meta: Finalised $14.3B Scale AI deal, dropped Scale as partner days later.

  • Musk’s xAI: Raised $5B debt despite funding strain; burning $1B/month.

  • SoftBank: Plans $1 trillion AI-robotics hub in Arizona with TSMC.

  • Big Tech: Backing 10-year federal ban on state-level AI regulation; OpenAI accused Meta of poaching talent with $100M+ bonuses.

ESG

  • No major green policy shifts reported, but concern rising over:

    • Middle East-driven oil shocks,

    • SoftBank’s large-scale energy/resource project in Arizona.

Inflation

  • Oil: Surged +7.5% to $73.17 on 14 June, but dipped –0.3% to $74.93 by 21 June.

  • Gold: Peaked $3,432/oz, ending slightly lower at $3,365/oz.

  • UK CPI: 3.4% (above BOE’s 2% target).

  • Japan Core CPI: Accelerated to +3.7% YoY.

  • SNB Inflation: Turned –0.1% YoY, prompting rate cut.

Recession Risks

  • Japan: Technical recession looms as exports weaken and tariffs bite.

  • UK: Falling house prices (–2.8%), shrinking GDP, and elevated inflation signal stagflation concerns.

  • Global: ECB, Fed, and investors flag “substantial downside risks” from oil shocks, tariffs, and Middle East instability.

  • VIX: Surged past 20 on 14 June, indicating market fear.

Larry Lim
Next

Global News Summary 9-13 June 2025