Markets head into the week on firmer footing after a holiday-shortened rally, with investors weighing optimism around a U.S.-Iran peace agreement against a more hawkish first turn from Fed Chair Kevin Warsh. The next big test comes Thursday, when May Core PCE, the Fed’s preferred inflation gauge, lands alongside the latest personal income and spending data. Here’s what’s happening …
- It’s a light week for earnings, but there are still some important potential market movers reporting. This morning, numbers are due from FedEx, Cerebras Systems, Carnival, and KB Homes, followed Wednesday by the week’s big report from Micron Technology, as well as Paychex and Trip.com. Thursday earnings are expected from Darden Restaurants, McCormick, and BlackBerry, followed Friday by Biodexa Pharmaceuticals and Bluerock Homes. *
- On Thursday, we’ll get another read on inflation via the Fed’s go-to measure, core PCE. It’s expected to tick up 0.3% in May, a bit hotter than April’s 0.2%. With headline CPI already running at 4.2% year-over-year (the highest since April 2023) and core at 2.9%, any upside surprise could give more firepower to the Fed’s hawkish camp. That would likely support the U.S. dollar while adding some pressure on both stocks and bonds. **
- The U.S. is temporarily easing restrictions on Iranian oil sales as part of efforts to support a peace deal with Tehran. A new 60-day Treasury license lets Iran sell energy products through August 21, with payments allowed in U.S. dollars. The waiver could also allow the U.S. to import Iranian crude and petroleum products for the first time in decades. For markets, the big takeaway is supply: more Iranian oil could ease pressure from the Strait of Hormuz disruption and add to expectations of a near-term glut. Brent was trading near $77 a barrel on Monday, around its lowest levels since the war began in late February. ***
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