Weekly Macro Note: War Footings Remain, Previous Israel/Iran Conflicts, Don't Forget About 'Global' Macro, & 30 Years of Warm Drums Reaches a Finale

In this Weekly Macro Note - we dive into the latest in the Israel/Iran conflict, discuss past Israel/Iran conflicts, cover other global macro to focus on in the upcoming week, and more.

War Footings Remain, Previous Israel/Iran Conflicts, Don’t Forget About ‘Global’ Macro, & More (MacroEdge Chief Economist)

Good Sunday evening MacroEdge Readers and Community. This evening I find myself in West Texas as we lay the groundwork for AlphaSights and CEO Macro Briefings in the third quarter. We’ll have much more on everything new for MacroEdge in our end of the first half ‘25 review at the end of the month — including both of these and more. In other exciting developments for us — we’ll have our first Weekly Macro Briefing videos arriving by the end of June — so don’t miss the first one.

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War Footings Remain

The conflict between Israel - Iran took no direction towards calming down since the Redeye Macro Note was released as Israel spent most of the day targeting Iran with airstrikes & Iran waited through the evening to strike back

An Israeli security source noted the escalation in the fact that they believe Iran used hypersonic missiles for the first time in the barrage that took place in the early morning hours. Several new targets were hit — including a power plant though Iran. Both countries seemed to avoid more critical energy infrastructure - though the situation will remain very fluid this week. The most antsy about energy prices will be the US President — who’s been on an inflation victory campaign of late - and clearly understands the implications of higher WTI/gasoline on the CPI figure. Another episode of the ‘technicals always know…’ Brent Crude is up about 30% from the tariff panic lows — when the majority were assuming the economy was on the verge of collapse while Central Banks embarked on their latest intervention campaigns.

Escalation matrix:

If we see a temporary ceasefire or move towards one - we’re likely to see a pretty sizeable pullback in energy after the first *initial* move — but there are technical and other additional forces working against the $75bbl break currently (WTI).

Don’t Forget About ‘Global’ Macro

While the conflict is at front of mind for everyone due to its obvious energy market implication (especially potential ones), there’s still plenty of other important global macro to focus on as well. This week is another FOMC week, where no policy change is expected, especially given the recent movements in energy prices. If the trend continues for these items in the CPI basket - the market-expected September rate cut will pushed back even further barring any ‘shocking’ employment data. As stated two weekends ago, the CPI print last week marked what will probably at least be a short term trough that started in April and is now increasing. Couple that with things like real-time food pricing pressures back on the up and up - and the Fed has another basket of problems on their hands.

Monday: Empire State Manufacturing

Tuesday: Retail Sales, Manufacturing Data

Wednesday: FOMC Meeting, Housing Starts, Homebuilder Sentiment, EIA Crude Inventories

Thursday: Claims

Friday: ACN Earnings, Philly Fed Data

Notably, economists are now expecting the BoJ to postpone a rate hike until Q1 2026, which will likely have significant implications, especially domestically — and even more so if energy prices begin to accelerate through the second half of the year. The Bank of England, Reserve Bank of NZ, Swiss National Bank, & Reserve Bank of Australia are all expected to hold rates this week. There’s just total headline deluge right now - and that will continue to play a role in equity & bond markets globally through the remainder of June. The Iran/Israel situation remains critical due to its potential impact on energy markets — and the ‘TACO’ theme also remains top of mind for many. Also keep an eye on movements in the 10Y with the latest trend in energy prices, and we’ll get more interesting data on Friday from the Philly Fed - and their leading prices paid indices. The Yen/USD pair has largely remained rangebound from the April lows - although it is slightly higher than the lows - and this remains another important correlation.