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Week at a Glance – Bouncing From the Wall of Worry

With most geopolitical and economic obstacles out of the way, we are likely set for a melt-up across cyclical assets over the summer - and fund managers are still yet to participate.
2025-06-24
<a href="https://stenoresearch.com/author/oskarvardal-4851/" target="_self">Oskar Vårdal</a>

Oskar Vårdal

0

Greetings from Europe.

The Israel-Iran conflict is effectively over after the past few days’ developments, which we’ve tracked closely. As expected, oil closed materially lower yesterday compared to the initial spike at the open. Judging by price action, the market is also declaring the conflict done—oil is no longer trading with a geopolitical premium.

Meanwhile, the doves are back in the FOMC. Goolsbee, Bowman, and Waller all left July open for a 25bp cut if tariff-driven inflation doesn’t materialize and the soft patch in inflation persists. Combined with the geopolitical truce, this supports easing financial conditions heading into July. With both tariff and Iran risks receding, the reflationary runway looks increasingly clear.

We’ve yet to see whether shipping disruption fears in the Strait of Hormuz will have second-order effects, but judging by this morning’s oil move, markets are assigning a low probability to a scenario where the strait operates at reduced capacity for long.

Chart 1a: We have yet to see the ramifications of the shipment stop in Hormuz

With most geopolitical and economic obstacles out of the way, we are likely set for a melt-up across cyclical assets over the summer – and fund managers are still yet to participate.

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