June 17, 2025

The Pulse: Global Economic and Market News for Tuesday, June 17, 2025

Key Developments

Geopolitical Tensions and Market Reaction

• Headlines about the U.S. potentially entering the Israel-Iran conflict drove a risk-off mood across global markets. The possibility of the U.S. being involved in a conflict in the Middle East is a significant geopolitical event that could disrupt global trade and oil supply, hence intensifying market anxiety over possible escalation in the region.

• Oil prices rallied by $3.50, with the energy commodity trading around $75 per barrel, regaining ground lost the previous day as war headlines dominated sentiment.

• The CBOE Volatility Index (VIX) jumped 10%, and major equity indices declined by nearly 0.5%. The S&P 500 fell back below the 6,000 mark, reflecting heightened uncertainty.

U.S. Economic Data

• U.S. retail sales dropped 0.9% in May, a sharper decline than expected, primarily due to lower motor vehicle purchases as the rush to buy before tariff hikes faded. This followed a downwardly revised 0.1% drop in April.

• Retail sales, excluding autos, gasoline, building materials, and food services, rose 0.4% in May, indicating some resilience in core consumer spending. This resilience can be attributed to factors such as steady wage growth and low unemployment rates, which have bolstered consumer confidence and spending power.

• The labor market showed signs of slowing, and household wealth was impacted by recent market volatility, raising concerns about the outlook for consumer spending.

Global Equity and Currency Markets

• In North America, equity indices finished the day lower, with risk aversion dominating as investors sought safety in bonds and the U.S. dollar.

• Gold prices finished nearly unchanged despite the dramatic market mood, while the U.S. 30-year Treasury bond rose close to 1% on the day.

• The U.S. dollar strengthened against major currencies, with the Japanese yen and Swiss franc also gaining as traditional safe havens. The British pound was the weakest performer, falling 1.14% ahead of key inflation data.

Asia-Pacific and Europe

• Asian markets traded mixed as investors assessed the evolving Middle East situation and awaited the Bank of Japan’s policy decision, with expectations for rates to remain unchanged.

• European markets mirrored the global risk-off tone, with futures falling and oil prices climbing as traders braced for further developments in the conflict.

Central Bank Watch

• The Federal Reserve began its two-day policy meeting with no change to monetary policy expected. However, markets are focused on the Fed’s updated economic projections and Chair Powell’s press conference for clues on future rate moves.

• The economic calendar for tomorrow is packed, including the UK inflation report and numerous central bank speakers. The UK inflation report could provide insights into the Bank of England's future monetary policy, while the central bank speakers could offer clues about their respective banks' policy directions. These events could add to market volatility as investors react to the new information.

Disclosure

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Market conditions can change rapidly, and readers should consult with financial professionals before making any investment decisions. The information presented is based on publicly available sources as of June 17, 2025.

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The Pulse: Global Economic and Market News for Tuesday, June 17, 2025

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