Middle East between truce and stable oil
Talks between the USA and Iran continue, with the first round of negotiations concluded in Switzerland and the agreement reached between Israel and Lebanon, although the situation remains punctuated by several reciprocal attacks. Over the weekend, Tehran carried out attacks against vessels transiting the Strait of Hormuz, prompting the USA to strike Iranian targets and Iran to respond by targeting Bahrain and Qatar. Despite this, the parties decided on Sunday to cease hostilities and to organize a new meeting in Qatar to discuss the details of reopening the Strait, also in light of Oman’s proposal to introduce tolls on vessel transit. Oil remains at pre-conflict levels, with WTI at 70 dollars per barrel, despite the flow through the maritime passage being reduced again due to tensions and military attacks that have never fully ceased.
Rates falling and tech sector under pressure
Rates continue to fall, with the ten-year Bund at 2.85%, down from highs above 3%, and the Treasury at 4.35%, down from highs above 4.5%. There are also strong profit-taking moves on tech indices, such as the Nasdaq 100, and on Asian markets, like the Kospi, fueled by fears of rising hardware component costs, particularly memory chips. Meanwhile, Apple and Microsoft have announced price increases on several products, including iPhones and consoles, with the risk that this could weigh on demand and the concern that several Big Tech companies could be affected by the rising costs of these components. The memory chip issue remains one of the hottest topics at the moment: Micron’s quarterly results significantly exceeded expectations, with a positive reaction in the stock, while South Korea announced a plan to double DRAM chip production capacity within five years, thanks to new investments by Samsung and SK Hynix. On the AI front, another negative note comes from the possible postponement of OpenAI’s IPO to 2027, according to a New York Times scoop.
USA: accelerating PCE inflation and dollar rally
On the macro front, in the USA the inflation measured by the PCE index in May recorded a year-on-year change of 4.1%, accelerating from the previous 3.8% and at the highest level since 2023. The core figure also rose, climbing to 3.4% from 3.3%, although both values were in line with expectations. More encouraging was the monthly PCE figure, at 0.4%, slightly below expectations.
The third reading of the US GDP for the first quarter was revised upwards from 1.6% to 2.1%; however, the component related to private consumption was particularly negative, revised down to 0.4%, offset by solid investment and public spending. The import component was also sharply revised downwards, which favored the aggregate figure. Following these data and the previous hawkish turn by the Fed, the dollar rally continued: the EUR/USD exchange rate fell back below 1.14, a level not seen since March 2025, before Liberation Day. This strengthening put pressure on precious metals, with gold retracing below the psychological threshold of 4,000 dollars per ounce.
Europe and Italy: improving confidence and BTP recovery
In Europe, the Gilt-Bund spread continued to narrow, on the increasingly likely assumption of a handover at Downing Street from Keir Starmer to Andy Burnham, currently the only Labour candidate for succession. Regarding Italy, in April 2026 the value of seasonally adjusted industrial sales increased by 0.3% month-on-month, while volumes decreased by 1.0%[1]. On an annual basis, adjusted for working days, sales grew by 3.2% in value and fell by 0.6% in volume.
Furthermore, June Istat confidence data were also published: the consumer index fell from 93.4 to 92.4, while the business index rose from 94.2 to 95.2, with widespread improvements across all examined sectors: manufacturing (from 87.9 to 88.4), construction (from 99.4 to 101.7), services (from 96.8 to 97.2), and retail trade, which saw a sharp rise from 101.3 to 105.5.
In the bond market, reduced tension on the energy front favored BTPs, with the ten-year yield returning to 3.60%, i.e., to levels seen at the start of the conflict in March, down from highs of 4.10%. The spread with the Bund remains around 70 basis points, down from the peak of nearly 100 basis points reached at the height of the conflict.
The upcoming week between the ECB Forum in Sintra and the US labor market
The week promises to be full of events: on Monday the ECB Forum in Sintra began, featuring speeches by several prominent figures, from Warsh to Lagarde, particularly anticipated after the hawkish turn of several central banks. Among the most relevant macro data are Euro Area consumer inflation and the US labor market, the latter published a day earlier than usual on Friday due to Independence Day.
