In the global markets next week, the tension continues to climb in the Middle East, the NATO meeting and the annual presentation of Jerome Powell, President of the US Federal Reserve (FED), will be closely monitored at the Senate and House of Representatives.
Fear of supply in the Strait of Hürmüz
It has led to concerns in the supply of oil due to the war between Israel and Iran, which has been ongoing for a week and only air strikes. Brent crude oil has exceeded $ 75 for the first time since January.
For now, there is no indication that the oil supply will experience a problem. According to Reuters and LSEG’s calculations, Iran produces about 3.3 million barrels of oil per day, and exports about half. This level is far below the world’s 100 million barrels of daily consumption.
Other countries, who are members of the Organization of Petroleum Exporting Countries (OPEC), can export oil from their spare capacity to cover the deficit that may occur with the disruption of Iran’s oil supply.
The more frightening the markets is the possibility that Iran will close the Hormuz Strait, where 20 percent of the total daily crude oil supply passes. Analysts say this possibility is low.
Foreign ministers of European countries will meet with the Iranian Foreign Minister in Geneva today. While the US evaluates directly participating in Israeli attacks on Iran, European ministers aim to return to diplomacy with negotiations on the controversial nuclear program.
2. NATO expenses lips herbal
NATO; US President Donald aims to satisfy Trump, to keep the alliance together and to agree on the new and high target for defense expenditures in The Hague.
NATO hopes that the mutual attacks between Israel and Iran should not overshadow the summit of Wednesday.
Trump intimidated members, saying that if other NATO countries did not increase defense expenditures during the first presidency, the US would withdraw from the alliance.
NATO Secretary General Mark Rutte also wants members to adhere to the target set by raising the defense expenditures, as Trump suggested to 5 percent of gross domestic product (GDP).
NATO countries will more extensively discuss what will be counted within the scope of defense expenditure to achieve this goal.
In this respect, countries that spend 2 percent of GDPs on more traditional defense elements such as weapons and military expenditures will increase this level to 3.5 percent.
Countries, at least 1.5 percent of GDPs; They will spend more comprehensive activities such as making roads, bridges and ports in accordance with the use of military vehicles and protecting against cyber attacks.
Among the NATO countries, Spain only oppose this new goal.
Since one of the targets at the summit is to satisfy Trump, Ukrainian President Volodymyr Zelenskiy may have to settle for the collective meal that will be eaten before the summit rather than the summit itself.
3. Question
The processors will follow the presentation of the FED President Jerome Powell, who is expected to explain in more detail how the “meaningful” inflation expectations of inflation will affect interest decisions, at the Senate and House of Representatives.
Powell will answer the questions of the US Congress members at sessions in the United States on Tuesdays and Wednesdays.
Powell, Fed’s last week’s monetary policy meeting to journalists, said that additional customs duties began to reflect on consumers, said the inflation of goods increased.
Powell, which underlines that strong growth continues, can also be asked how further climbing tension in the Middle East will affect inflation.
The final data to be announced on Thursday is expected to confirm the pioneering data showing that the US gross domestic product narrows in the first quarter. The value of the Fed’s preferred inflation expenditures (PCE) price index in May will be evaluated with the decision to leave the interest rates announced on Wednesday, which foresees two interest rate cuts on Wednesday.
4. Japan State bonds
Last month, the return of Japanese state bonds after the investors stayed away from bond issuances and the Japanese prime minister’s incorrect metal of the country’s financial status to Greece rose to a record level.
However, the current situation is very different as a result of the skillful cooperation of the Central Bank of Japan (Boj) and the Ministry of Finance.
In the bond reduction plan with Boj’s harsh rise in bond returns, just a few days after the change to increase super long -term bond purchases, the Ministry of Finance presented the plan to reduce the longest term securities.
BOJ’s pro -relaxation statements on the future course of interest decisions also put pressure on the movement of bond returns this week. However, Boj President Kazuo Ueda underlined the risks of price pressure and left the door to tightening in policies this year.
The Tokyo Consumer Price Index, which will be announced on Friday next Friday, will give new clues about the steps taken by Boj.
5. Okay or continue?
Trump’s additional customs duties implemented within the scope of “reciprocity” to initially take the orders to the forward, and the support of the global purchasing managers index decreased global recession concerns.
Macroeconomic data has become more important for markets than ever, and many data will be announced in the coming days.
On the next Monday, the June Purchasing Managers Index (PMI) data of different regions such as Euro zone, UK and the USA will be announced.
May PMI index is expected to receive better news from the Euro zone, which decreased by 0.2 points compared to the previous month. In this data, more than 50 points grow, and the six points to narrowing.
The first contraction of the services sector in the Euro region for the first time in May after November caused concern in the markets. In the UK, May PMI data showed that the services sector is slowly recovering.
