Safe-Haven and Rate-Cut Sentiment Returns, Gold Eyes New Highs

Market Overview

Geopolitical tensions in the Middle East overshadowed the rate-cut optimism, triggering a pullback in U.S. equities. The S&P 500 and Nasdaq snapped their three-day winning streaks, while the Dow closed flat. Although U.S. CPI data showed signs of easing, it still came in hotter than expected. Treasury prices rose during the session, with the 2-year yield falling over 10 basis points from its intraday high. The U.S. Dollar Index weakened sharply, nearing a three-year low. In response, gold surged over 1% intraday, reaching a new daily high. Crude oil rebounded strongly, jumping over 5% at one point and hitting its highest level in more than two months.

Hot Topics to Watch

● Core CPI Rises Just 0.1% MoM, Undershooting Expectations for Fourth Straight Month

May's U.S. CPI data came in broadly below forecasts, with energy prices driving the overall slowdown. Prices for autos and apparel declined, while categories more directly affected by tariffs—such as toys and appliances—saw increases. Traders have ramped up their expectations for Fed rate cuts, now pricing in two cuts this year with a 75% chance of the first arriving by September. The series of softer inflation readings suggests consumers have yet to fully feel the impact of Trumps tariff policy.

● Iran Threatens U.S. Military Bases

Trump admitted that his confidence in reaching a new nuclear deal with Iran has waned compared to a few months ago, accusing Tehran of stalling. He reiterated that regardless of any agreement, Iran will not be allowed to obtain nuclear weapons. Iran's defense minister warned that if negotiations fail and conflict erupts, the country would target U.S. military bases across the Middle East. The head of Irans Islamic Revolutionary Guard Corps also stated that upgraded missiles are ready for any potential escalation.

Key Events Ahead (GMT+8)

• 20:30 — U.S. Initial Jobless Claims (week ending June 7), U.S. May PPI YoY and MoM

• 00:00 — Federal Reserve Releases U.S. Financial Accounts Report (Quarterly)