Edward Meir's week in review and thoughts for the week of June 22, 2026

A fragile MOU

With regard to the US/Iran MOU, the main tenets of the deal include a stipulation that Iranian forces would clear any mines in the Persian Gulf during the next 30 days so that ships trapped there could leave — without paying tolls at least for the next 60 days. In addition, the US would lift its naval blockade on Iranian ports. Iran would reaffirm that it would not procure or develop nuclear weapons while talks will be held on how to dispose of Iran’s stockpile of enriched uranium. Sanctions relief for Iran would be phased in and depend on the progress of the nuclear talks. The US would also grant Iran a waiver to sell oil for the duration of the 60-day cease-fire extension and would assist in establishing a reconstruction fund, presumably financed by some of Iran’s neighbors. The MOU also calls for a halt to the fighting in Lebanon, something that neither the Israelis or Hezbollah have signed onto. Importantly, there was no mention of restrictions on Iran’s drone or missile programs.

From this list of broad generalities, it is clear that things could easily go wrong. Moreover, failure to implement one part of the deal could easily torpedo the whole package. In fact, on Saturday, fighting flared up between Israel and Hezbollah, prompting the Iranians to declare they would now consider the Strait of Hormuz to be closed, although it is not clear they have done so. Both sides are attempting to keep things from disintegrating further. An Iranian delegation is in Geneva and holding talks with Vice President JD Vance, Steve Witkoff and Jared Kushner. As of this writing, we don’t know how things are going, but the atmosphere remains tense as the Iranian delegation refused to appear for a photo opportunity with their US counterparts. If the two parties do not make tangible progress over the next several days and stop the name calling, we could see a wholly different energy market going into the next few weeks.

Metals

We saw lower moves in metals. In the LME space, aluminum prices retreated by about 3.9% for the week, shadowing crude prices lower on perceptions that metal exports in the Persian Gulf could get back on track. Copper fell by a more modest 0.75% ahead of possible tariff news that could come out of the White House over the next few weeks. Nickel shed 1.4%, while tin, lead and zinc were all down by less than 1%. US ferrous markets were firmer as steel prices inched higher over the course of the week.

The general dollar index was stronger this past week, especially after Chair Kevin Warsh’s press conference — perceived to be more hawkish than expected (more on that later). Gold ended at $4,173/ounce on Thursday, down about $60 on the week, while silver lost about $1.60/ounce to finish at just under $65. Year-to-date, both metals are down, rolling back all their earlier gains ever since the war began.

Wall Street

US treasury yields ended the week on a lower note. The 2-year yield settled down seven basis points at 4.09%, the 10-year note yield ended down five at 4.49%, while 30-year yields finished down six basis points to end Thursday at 4.901%, a two-month low.

The US stock market navigated a holiday-shortened week with heightened volatility, selling off sharply after Warsh’s rather hawkish press conference only for equities to regroup the next day. By week’s end, all three indices ended higher. The S&P 500 ended up +0.9%, NASDAQ tacked on 2.4%, while the Dow added 0.7%, as easing geopolitical tensions and sliding oil prices helped offset concerns about a “higher-for-longer” interest rate environment the Fed was hinting at.

The Fed

With respect to the Fed’s policy statement, the committee left the federal funds range unchanged, but its updated projections have inflation running above target for the balance of the year, postponing any chances of any ease for now. Current Fed projections imply no cuts at all in 2026, although other private forecasts we have seen show high probabilities of at least one rate increase later this year.

In his news conference, Warsh made it clear the Fed is going to be sticking with its 2% target. He noted the central bank had failed in its mission to get inflation back under control over the past five years. We think Warsh’s contention that the Fed could somehow vanquish inflation is misguided as there are a host of variables that are outside the Fed’s control. In this regard, we have seen how geopolitical variables like the Iran and Ukraine wars have played havoc with inflation readings, as have other variables such as tariffs and the COVID-19 pandemic. And of course, the red ink generated by the federal budget does not help, as massive deficits are being generated year in and year out, with no political will – or interest – in Congress to bring these down.

Warsh also spent considerable time re-examining every facet of Fed policy and data inputs. The Fed chairman noted US data collection is losing its relevance in a world where real-time information is much more useful and one the private sector harvests rather successfully. Warsh also stated some macro indicators were not relevant to policy making as they seem to either be structurally wrong or too dated. He specifically cited the Michigan consumer sentiment reading as being suspect as its readings are hovering around record lows despite the fact that labor markets strong while growth and business investment are respectable. The index of leading economic indicators was another report Warsh found lacking.

In an attempt to come to grips with these and various shortcomings, Warsh wants to appoint five independent task forces to examine, among other things:

• The central bank’s $6.7 trillion balance sheet and how to better reduce it from its record peak of nearly $9 trillion reached in June 2022, a 10-fold increase in two decades.
• A second taskforce would study Fed communications. Press conferences may not be used as much going forward, with Warsh noting they are valuable only when the Fed has something new to say. We suspect the dozens of speeches we get from various Fed governors over the course of a year will also be scaled back (something we endorse).
• Other task forces will look at the Fed’s use and reliance of data, productivity readings, and jobs data collection. On the latter, Warsh pointed out traditional labor surveys are often going unanswered and the data needs to be made more robust.
• Finally, a fifth taskforce would look at the Fed’s inflation frameworks and measures to see how they could be fine-tuned. All five task forces are expected to finish their work and issue their recommendations by year-end.

Macro readings and other news from the past week

• US May retail sales rose 1.0% on the month (well ahead of estimates) and were up by 7.5% y/y. Excluding gasoline station sales (+3.4%), sales were up 0.7% in May (m/m) and so the report has succeeded in dampening concern about a potential slowdown in consumer spending.US housing data for May came in mixed. Starts fell by 15.4% in May m/m to a 1.177 million annual rate, below the 1.41 million expected, while building permits slipped 0.7% to 1.413 million, roughly in line with expectations. Single-family permits rose 0.6%, but builder confidence fell two points to 35 in June. The weakness in starts was heavily concentrated on the multi-unit side, down a whopping 40% month-over-month. Pending home sales rose 3.8% in May and were up 4.8% from a year earlier.
• In the US manufacturing space, the Empire State index fell to 5.7 in June from 19.6 in May, below the 13.9 expected. The Philadelphia Fed index, however, rebounded to 10.3 from -0.4. Industrial production rose by 0.1% in May, short of the 0.3% expected.
• US import prices were up by 1.9% m/m in May and were up 6.7% y/y, the largest annual increase since August 2022. Fuel import prices jumped 12.5% on the month. Nonfuel import prices rose by 0.8%. We suspect a good portion of this increase will be reversed going into June given the current decline in energy prices.
• The Bank of England left interest rates unchanged at 3.75% in a 7-2 vote last week, with the two policymakers voting for a 25-basis-point increase. UK retail sales rose 1.2% in May, higher than expected and were up 3.2% from a year earlier. Separately, UK GDP contracted by 0.1% m/m in April, its first monthly decline since August. Services output fell 0.2%, production was unchanged and construction increased by 0.1%. The economy still grew 0.7% in the three months through April, supported mainly by services and construction. On the political front, the UK is looking at a leadership change. Prime Minister Keir Starmer announced Monday that he would step down. His likely successor is former Manchester Mayor Andy Burnham who decisively won a parliamentary seat, entitling him to challenge Starmer now that he will be a sitting member.
• Chinese May retail sales fell for the first time in over three years — off by 0.6% and reversing April’s 0.2% rise. Domestic car sales were particularly weak, falling for an eighth consecutive month. Spending during China’s five-day Labor Day holiday was also disappointing, while the impact of the latest government’s consumer-goods trade-in scheme has not generated the buying needed to prevent the May retail number from tipping into negative territory. Separately, China’s industrial output rose by 4.5% in May from a year earlier (versus 4.1% in April), but much of this increase was skewed by a spike in high-tech manufacturing output (up 15.1% y/y). Meanwhile, fixed-asset investment fell by a rather sharp 4.1% in the first five months of this year following a 1.6% decline in January-April. Property investment numbers remain grim – off 16.2% during the first five months of the year following a 13.7% decline in the January-to-April period. China’s new home prices were down as well, off by 0.2% in May m/m. On an annual basis, home prices are off by 3.5%, showing no improvement from April.
• Crude oil’s fundamentals are shifting toward the bearish side. The IEA said last week the crude market could see a significant supply overhang going into next year as global production is set to surge by roughly 8 million barrels a day against a demand increase of just 2 million barrels. For this year, the IEA expects a supply decline of nearly 4 million barrels that will be partly offset by rising output from other geographies. For the year as a whole, oil supply will come in around 1 million barrels per day short of demand, but this is almost half the shortfall from the IEA’s previous estimate. Global oil demand will fall by 1.1 million bpd this year, much less than the 5 million bpd April-June decline.

This week’s US macro readings

• Tuesday we get the S&P flash manufacturing and service PMI numbers.
• Wednesday brings us May new home sales (last 622,000), followed by May leading economic indicators.
• Thursday will be the busiest day of the week. We get weekly initial jobless claims, personal income and spending for May, the May PCE inflation index, May durable goods orders and lastly, the first revision to Q1 GDP.
• Friday, we get the May trade balance and June consumer sentiment readings.

We wish all our readers all the best for the upcoming week.