The Iran war may finally be over but questions remain about elements of the MOU and whether the 60-day negotiating window can truly meet its goals. Ongoing hostilities in Lebanon led to a supposed reclosure of the Strait of Hormuz over the weekend and public criticism—particularly from Israel, the U.S. media, and national security hawks—have cast doubt on the nascent negotiations.
Against that backdrop, oil prices have significantly retreated but the shock of the last three months now raises concerns in the opposite direction: a global oil glut in 2027. U.S. inflation hit a three-year high of 4.2% and the European Central Bank (ECB) became the first major central bank to raise rates. Just how quickly the roughly 600 ships trapped in the Persian Gulf can be cleared and production restarted will have a material impact on renewing consumers’ purchasing power and providing sustainable global growth heading into the final two quarters of the year.
Beneath the war, three slower developing stories advance: the AI buildout, which is turning from an earnings story into a financing one; the durability of the American trade regime hardening through legal decisions; and a Western Hemispheric policy tapping into new methods to pressure realignment. All issues converged at last week’s G7 summit and turned Fed Chair Kevin Warsh’s first FOMC meeting into a more hawkish posture than expected.
Full analysis can be found here.
THE FOUR TAKEAWAYS
TAKEAWAY 1: Iran MOU signed; negotiation window stalls then starts. From escalating ceasefire hostilities to a “complete” deal, the logistics of reopening of the Strait are just one of a number of unknowns as the 60-day negotiating window kicks off. Lebanon is the most immediate impediment to the negotiations, but congressional criticism is worth watching.
TAKEAWAY 2: The oil shock is an institutional fact but prices retreat. CPI hit a three-year high with energy representing more than 60% of the gain. The World Bank cut global growth to 2.5% and both the ECB and BoJ hiked. Chair Kevin Warsh’s first FOMC set the tone for a more cautious approach to the post-war global recovery.
TAKEAWAY 3: AI buildout hits payday but financing creates leverage risk. Roughly $4 trillion of private AI listings culminated in SpaceX’s record-breaking IPO, ending two decades of U.S. equity scarcity. The five hyper-scalers have raised $255 billion collectively in 2026, but the market penalized Oracle for its larger-than-expected capex bill. AI leverage will be watched closely as U.S. private debt finances a Western AI stack against an accelerating Chinese sovereign-funded effort.
TAKEAWAY 4: Trade and foreign policy agendas harden. As expected, President Trump has threatened to let USMCA lapse, but formal negotiations remain on track. Meanwhile, the Administration won a symbolic Section 122 tariffs appeal and IEEPA duties continue to be both refunded and contested. The Donroe Doctrine gained a win in Cuban reforms and continues to shower political endorsements throughout Latin America while escalating military operations against drug traffickers. The President’s request for $350 billion in defense supplemental funds via a third reconciliation bill will give Congress a seat at the foreign policy table.
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KEY DATES AHEAD
The headline news of the week will be U.S. first-quarter GDP, providing more data on the Iran war’s economic impact. Below is the full schedule of what to expect around the globe.
WEEK OF JUNE 21
- Tuesday: S&P Global PMI data (Eurozone, France, Germany, India, Japan, UK, U.S.); U.S. May State Employment and Unemployment figures; Fed’s Fifth Conference on the International Roles of the U.S. Dollar (day two); MD, NY, UT primaries and SC Governor GOP runoff; NBA draft; 4th China International Supply Chain Expo in Beijing (thru Friday); China World Economic Forum’s 17th annual meeting, “Summer Davos,” (thru Thursday); Japanese Emperor Naruhito and Empress Masako state visit to Belgium; UK CBI Industrial Trends Survey
- Wednesday: U.S. new-home sales data; President Trump attends Senate GOP Steering lunch; President Trump meets with NATO chief Mark Rutte; Fed announces annual bank stress test results; Australia May CPI inflation rate data; Canada minutes from last Monetary Policy Committee meeting; Germany ifo Business Climate Index; Japan May PPI data
- Thursday: U.S. Q1 GDP third estimate and PCE data (inflation measure closely watched by Fed); SCOTUS opinion day (Lisa Cook decision TBD); U.S. vs. Turkey (World Cup); Australia May labor force statistics; ECB General Council meeting and Economic Report; Mexican central bank (Banxico) decision; 2026 Ukraine Recovery Conference begins two-day conference (Gdañsk, Poland); UK ONS housing statistics and BRC Consumer Sentiment Monitor survey
- Friday: University of Michigan June Index of Consumer Sentiment; ECB Consumer Expectations Survey; UK Financial Policy Committee meeting
- Saturday: Louisiana primary run-off election
LOOK AHEAD
- June 28–29: China Minister of Commerce Wang Wentao visit to Brussels
- June 29: CBP CAPE phase-two refund system deploys
- July 1: USMCA mandatory joint review
- July 4: America 250; Republican Planned Parenthood funding restrictions expire
- July 7-8: NATO summit
- July 14-15: Chair Warsh testimony on the Fed’s “Semi-Annual Monetary Policy Report” before the House Financial Services Committee and Senate Banking Committee, respectively
- July 15: Likely Peru presidential election certification
- July 15-16: Senate Judiciary Committee confirmation hearings for Todd Blanche (GOP Leadership hopes to have Blanche confirmed as AG by the August Recess)
- July (TBD): Senate Finance Committee hearing with USTR Greer (before a third round of negotiations in Mexico City)
- July 20: Next round of USMCA negotiations between the U.S. and Mexico (Mexico City)
- July 23: House departs for the August Recess
- August 7: Senate departs for the August Recess
- Note: FISA Section 702 remains expired (Trump pushing for inclusion of the SAVE America Act)
- September (TBD): President Xi Jinping state visit to Washington, D.C.
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SECTION BOTTOM LINES
GEOPOLITICAL UPDATE
The Iran war may be ending but the reopening of the Strait hangs most immediately on the Lebanon question as Israel remains outside the negotiating room. Also outside the room is the U.S. Congress which is now being asked to carry a $350 billion defense supplemental request with razor-thin Republican majorities in the House and Senate while Iran receives sanctions relief.
ECONOMIC OUTLOOK
The U.S. economy is doing well by output and poorly by prices. The latter is driven by energy while core CPI remains contained. The global economy diverges from that of the U.S., however, and each central bank is making decisions reflective of its own constituency’s exposure to energy and fiscal credibility. The World Bank’s macro view shows a supply shock with a 1.3% downside if the Strait does not reopen as planned in the next 30 days. The leverage of AI-buildout financing is the next big question for investors and policy makers alike.
OIL SHOCK
The oil market reset will square off with the immediate need to refill 500 million barrels against a coming oversupply. Saudi and OPEC-free UAE may be able to ramp up fast to help address the former while solar may overtake coal in the long term to quench the AI power thirst. Both the Iran war and the AI surge are remaking the global energy supply and demand in real time.
SHIPPING
Throughput has recovered to roughly half pre-war levels on a U.S.-coordinated dark lane the President has claimed and the press has now confirmed. But even as the MOU declares safe passage, Iranian whims make shipping uncertain. Efficiencies born out of crisis have helped solve the supply problem and will now harden into durable workarounds to future conflicts while also bringing about an over-supply problem for industry as solar continues its ascent.
TRADE UPDATE
The Trump Administration’s trade regime is finally reaching long-term durability following two important legal rulings and the EU’s ratification of its U.S. ART. Meanwhile, President Trump threatened to let USMCA lapse while Ottawa moved toward accommodation. Friction points remain in the slow-walking of IEEPA refunds, Ambassador Greer’s focus on EU non-tariff barriers, and simmering tensions over Mexican sovereignty.
DONROE DOCTRINE
The Donroe Doctrine has run a full spectrum of methods this month, from sanctioning Cuba’s state oil monopoly, to endorsing Colombia’s challenger and courting Paraguay at the expense of Brazil and China. The partnership with Venezuela has expanded from oil production to security, marking a liberalization of Latin sovereignty that threatens President Claudia Sheinbaum’s domestic politics. Whether Brazil and Mexico can continue to hold out against American influence remains to be seen.
CHINA
The post-summit story is in the hedging, not the deliverables. Beijing codified a $295 billion sovereign-funded AI buildout designed to engineer American chips out, Taiwan moved to criminalize the diversion feeding it, and Congress hunted for an NDAA vehicle to tighten controls on chips China refuses to buy. Meanwhile, China gained a backdoor to Europe while its member states continue to vacillate between confrontation and appeasement.
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OUTLOOK / ANALYSIS
The gap between the MOU’s terms and the four commitments Israel was promised for the final deal is, quite literally, the remaining war. Whatever comes of the 60-day negotiation, the Strait has already changed the world’s plumbing and future flows are re-routing. The World Bank’s 1.3% downside is unlikely to materialize, but the world economy will continue to diverge. Central banks have shown that the same shock refracted through each economy’s oil position and fiscal credibility differently. Expect the gaps to widen, not close, as the war’s inflation proves stickier for some than any single policy can fix.
Europe is the case study worth watching. If the Eurozone tips into recession, the reflexive explanation will be to blame President Trump. Both the Administration’s trade agenda and the decision to attack Iran are real accelerants to downward EU growth, but the structural drags are self-imposed and predate both: a regulatory regime that withholds frontier technology from European consumers, a digital-sovereignty push that targets the U.S. services surplus while raising European costs, capital directed away from strategic sectors by rule, and a defense-funding gap that cost Britain its defense secretary and the continent its U.S. armaments. The war merely triggered Europe’s fragility; it did not build it.
Beneath the war, AI, trade, and the Donroe Doctrine continue to dominate. The AI buildout has quietly become a credit story. Roughly $4 trillion in private AI valuation is now arriving on public markets as hyperscalers continue to fund spending that consumes nearly all of their operating cash flow. Set that against China’s $295 billion sovereign-funded buildout engineered to design American chips out, and the contest clarifies into a U.S. private debt versus Chinese state debt bet. Washington’s export controls are a depreciating asset every quarter that Beijing’s self-sufficiency advances.
The Trump Administration trade regime now looks durable. Section 122 tariffs have been essentially blessed on appeal while the struck IEEPA duties move slowly forward. The EU’s non-tariff barriers and fate of USMCA remain outstanding. The Donroe Doctrine revealed more tools: escalating sanctions leading to economic reforms, an endorsement of Colombia’s challenger, newfound leverage in Paraguay, and a military partner in Venezuela in addition to rising economic ties. As Brazil and Mexico assemble a counterweight, China’s investment influence continues to wane.
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