Focus on Powell's testimony in Senate semi-annual policy report, safe-haven demand weakens Gold prices hit two-week low

Basic news

On Wednesday (June 25, Beijing time), spot gold trading was around $3,323/ounce, and gold prices fell on Tuesday, hitting the lowest in more than two weeks. It was followed by Iran and Israel’s ceasefire, weakening the demand for safe-haven gold. At the same time, Federal Reserve Chairman Powell said at a congressional hearing on Tuesday that the Fed needs more time to observe whether the tariff hike will push up inflation before considering a rate cut; U.S. crude oil trading was around $65.12/barrel, and U.S. oil fell 3% on Tuesday, hitting a two-week low, as the market expected a ceasefire between Israel and Iran would reduce the risk of interruption of oil supply in the Middle East.

Focus on this day

Feder Chairman Powell testified and stated in the Senate xmmarkets.cnmittee on the semi-annual monetary policy report, minutes of the Bank of Japan meeting.

Stock Market

U.S. stocks rose more than 1% on Tuesday, with investors welcoming Israel and Iran a vulnerable ceasefire agreement, while analyzing testimony from Federal Reserve Chairman Powell in Congress to find clues about the direction of future policies.

The three major stock indexes rose sharply for the second consecutive trading day. The Nasdaq 100 hit a record closing high. The S&P 500 index is close to its record closing high set on February 19.

U.S. President Trump announced a ceasefire agreement on Monday night, but Israel appears to have violated it. Still, investors see the ceasefire as a sign of easing tensions. Greg, CEO of AXS Investments"The ceasefire has really added fire to the stock market's surge. We believe that investors' betting on a calming situation in the Middle East is indeed a good thing for the stock market, although it will drag down bond and oil prices."

Crude oil prices plummeted, as supply concerns caused by the conflict eased, dragging down the energy sector. Powell testified before the U.S. House Financial Services xmmarkets.cnmittee that interest rate cuts can be cut until he knows more about the economic impact of the tariff hike. He added, "We are in a good position to wait until we understand more about the economic potential to go before considering adjusting our policy stance."

Financial markets expect the Fed to lower the indicator interest rate by more than 20% at the end of its July policy meeting, while the likelihood of a first rate cut in September is close to 70%.

Economicly, U.S. consumer confidence fell unexpectedly in June, as families' growing concerns about job opportunities. “Consumer confidence has declined,” Bassuk added. "We see these economic data cast a shadow on the strength of the U.S. economy, which is another factor that is more likely to cut interest rates this year."

The U.S. Department of xmmarkets.cnmerce is expected to release the final value of the first quarter GDP on Thursday, and will release the highly-watched personal consumption expenditure (PCE) price index on Friday, which will reveal inflation, consumer spending and income growth.

The Dow Jones Industrial Average rose 1.19% to 43,089.02 points, while the S&P 500 rose 1.11% to 6,092.18 points. The Nasdaq rose 1.43% to 19912.53 points.

Of the 11 major sectors of the S&P 500, the technology sector led the gains, while the energy sector performed the worst, down 1.5%. Among the "Seven Technology Heroes", Tesla underperformed, down 2.4%. Airline stocks rose as tensions in the Middle East eased. The S&P 1500 aviation index rose 2.4%. But defense stocks fell.

Gold market

Gold prices fell on Tuesday, hitting their lowest in more than two weeks, after Iran and Israel announced a ceasefire, weakening demand for gold. Spot gold fell 1.4% to $3,319.96 per ounce, after a drop of more than 2% and hit its lowest level since June 9. The settlement price of US gold futures fell 1.8% to $3333.9.

Peter Grant, vice president and senior metal strategist at ZanerMetals, said: "Easing tensions in the Middle East are the main factor in the fight against gold. Safe-averse buying has weakened and the market is more in a risk-favorable mode. We have received pretty good support around $3,300 and then better support around $3,250."

After news of a ceasefire in Israel and Iran on Tuesday, global stocks surged and the dollar fell, and the market was underestimated by US President Trump's statement that the two sides violated the ceasefire agreement.

Israeli Defense Minister Katz said earlier that he had ordered the military to deal with GermanyThe Helan target launched a new round of attacks in response to Iran's "blatant violation" of the ceasefire agreement by launching missiles.

Grant added: "There are some questions about whether the ceasefire will continue, and until this is really resolved, I think the downside potential (for gold) may be quite limited."

Meanwhile, Federal Reserve Chairman Powell said at a congressional hearing on Tuesday that the Fed needs more time to see if the tariff hike will push up inflation before considering a rate cut.

Spot silver hit its lowest since June 5, down 0.8% to $35.83 per ounce. Platinum rose 1.6% to $1,314.91, while palladium fell 1.5% to $1,061.90. Oil market

Oil prices fell 6% on Tuesday, hitting a two-week low as markets expected a ceasefire between Israel and Iran would reduce the risk of oil supply disruptions in the Middle East.

A few hours after the ceasefire agreement was announced, U.S. President Trump accused Israel and Iran of violating the agreement, leaving the ceasefire arrangement in jeopardy.

Brent crude oil futures fell 6.1% to close at $67.14 a barrel. U.S. crude oil fell 6.0% to close at $64.37. Settlement prices for Brent and U.S. crude fell to their lowest levels since June 10 and June 5, respectively, both dates earlier than June 13, Israel launched raids on key Iranian military and nuclear facilities. "The geopolitical risk premium formed since Israel's first attack on Iran nearly two weeks ago has xmmarkets.cnpletely disappeared," said Tamas Varga, senior analyst at TPICAP's PVMOil Associates brokerage and consulting firm. "On Monday, the settlement prices of both major oil contracts fell by more than 7%. The two major oil contracts once rose to five-month highs after the U.S. attacked Iran's nuclear facility over the weekend.

Another factor affecting oil prices xmmarkets.cnes from U.S. consumer confidence, which unexpectedly declined in June due to families’ growing concerns about job opportunities and economic uncertainty brought about by Trump’s tariffs.

Forex Market

The dollar fell on Tuesday after Iran and Israel announced a ceasefire and the euro rose to its highest level since October 2021, although Fed Chairman Powell reiterated that he expects inflation to start climbing this summer.

A ceasefire agreement began to take effect on Tuesday under pressure from U.S. President Trump, igniting hope for the two Middle East nemesis to end the largest military confrontation in history. "The market is currently lifting Middle East trading," said Adam Button, chief currency analyst at ForexLive.

The euro and yen strengthened as oil prices plummeted. The EU and Japan rely heavily on oil and liquefied natural gas imports, while the United States is a net exporter.

The euro rose 0.38% against the US dollar to 1.1$62, which had hit $1.1641 earlier. The dollar fell 1% against the yen to 144.68 yen.

Risk-sensitive assets such as the Australian dollar have also risen due to improved risk sentiment. The Australian dollar rose 0.68% against the US dollar to $0.6503.

The pound rose 0.77% against the dollar to $1.3626, reaching its highest since January 2022 at $1.3648.

Powell testified in the U.S. Congress that he and many officials expect inflation to start rising soon and that the Fed is not in a hurry to reduce borrowing costs during this period. But the dollar is still falling.

Two Fed policymakers have expressed support for the recent rate cut, citing concerns about the job market and weaker expectations for a rise in inflation. "The market originally expected Powell to crack down on the possibility of a rate cut, but he remained on the wait-and-see attitude." Button said: "The biggest point of contention at the moment is the job market. Waller and Bowman said they saw signs of weakness, while Powell said they did not see weakness in the labor market." Bowman, vice chairman of the Federal Reserve's financial regulation, said on Monday that the timing of a rate cut seemed imminent. Fed governor Waller said Friday that the Fed should consider cutting interest rates at its next meeting. Trump said on Tuesday that U.S. interest rates should be lowered at least two to three percentage points.

Federal funds futures traders are expected to cut interest rates by 60 basis points this year, with Waller's expectations being about 46 basis points before his speech last Friday. This shows that the market expects the Fed to cut interest rates twice again, at 25 basis points each time, and the possibility of a third rate cut is getting greater and greater.

People still believe that the possibility of the Fed cutting interest rates at its July 29-30 meeting is small, with the first rate cut expected in September.

U.S. consumer confidence unexpectedly worsened in June as households were concerned about business conditions and employment prospects in the next six months.

International News

The EU is preparing to take more tariff countermeasures to put pressure on the US

The Financial Times reported on the 24th that Bjorn Sebert, chief of staff of the European xmmarkets.cnmission President von der Leyen, said that before the deadline for trade negotiations between Europe and the United States on July 9, the EU needs to coordinate its position and prepare for more tariff countermeasures against the US to pose a "real threat" to the US. Seibert said von der Leyen is ready to take tariff countermeasures against the United States to strive for a better agreement. He hopes EU member states support a package of tariffs on €95 billion worth of U.S. goods, and said the EU is also preparing measures against the service industry, including taxes on U.S. technology xmmarkets.cnpanies and restricting U.S. xmmarkets.cnpanies from obtaining public procurement contracts.

U.S. Senate Republicans plan to start voting on the tax bill on Friday

U.S. Senate Majority Leader Thun said Tuesday that he expects to open on FridayThe vote will be held on Trump's "Beautiful Great Act", which will keep the vote until the weekend and disrupt the House's recess plan next week. But Thun is confident Congress will submit the bill to Trump by the July 4 deadline. Thun met with House Speaker Johnson about noon Tuesday. Minutes before the meeting, Thun said he hadn't spoken with Johnson about the bill recently. House leadership reportedly told people they are worried about whether the Senate version of the bill will pass. Modifications to state and local tax (SALT) deductions and Medicaid provider taxes are the biggest concern. Regarding SALT, Toon said, "I know this will be the last issue that needs to be solved, and so will it be."

Netanyahu: If Iran tries to restart its nuclear program, Israel will take action

Israeli Prime Minister Netanyahu said in a broadcast statement that if Iran tries to restart its nuclear program, Israel will take action. "Israel has eliminated two direct existential threats from Iran: nuclear threat and ballistic missile threat", he said, "In the early hours of Tuesday, Israel launched its worst strike since the war against Iran, eliminating hundreds of Iranian regime personnel." "The United States' participation in this battle is a historic event." He said Israel has never had a better friend in the White House than President Trump. Netanyahu said: "We must defeat Hamas now."

The US initial intelligence assessment showed that it did not "completely destroy" Iran's nuclear facilities

The US initial intelligence assessment showed that the US strike against Iran did not destroy its nuclear facilities, and it is likely that it only reversed its nuclear program for several months. According to xmmarkets.cnN on the same day, an early U.S. intelligence assessment report described by three people familiar with the matter showed that previous U.S. military strikes on three nuclear facilities at Iran did not destroy the core xmmarkets.cnponents of Iran's nuclear program, and may only delay its nuclear program for several months. The report is based on an assessment of xmmarkets.cnbat losses conducted by the U.S. Central xmmarkets.cnmand after the U.S. air strike, one of the people familiar with the matter said. According to reports, analysis of the damage to Iran's nuclear facilities and the impact of air strikes on Iran's nuclear program is still underway, and the analysis results may change as more information is disclosed. Iran's uranium enrichment stocks have not been destroyed, two people familiar with the matter said. One of the people familiar with the matter said the centrifuge at Iran's nuclear facility was basically "intact". According to reports, the White House acknowledged the existence of the assessment, but did not agree with the content.

Israeli Transport Minister: Israel plans to fully reopen airspace

On the 24th local time, Israeli Transport Minister Mili Regov said that Israel is advancing a plan to fully open its airspace, including increasing the number of flights, extending airport operation time and introducing foreign airlines. Mili Regov said she had directed the Israel Airport Authority to prepare and the implementation of the plan would depend on the two conditions of “the lifting of restrictions by the local garrison xmmarkets.cnmand” and “coordination with security and intelligence agencies.” She also revealed that the 24th will24 flights landed at the Tel Aviv Ben-Gurion Airport in Israel and 9 flights landed in Haifa.

Feder Williams: Tariffs and uncertainties will slow down U.S. economic growth and inflation rise this year

Feder Williams expects U.S. economic growth will slow down and inflation will rise this year, largely due to the impact of trade tariffs. "I expect uncertainty and tariffs to curb spending, reduce immigration, and thus slow labor growth," Williams said, "so economic growth is expected to slow down sharply to around 1% this year, with unemployment rising from its current 4.2% to 4.5% at the end of the year. He also expects inflation to rise to 3% as Trump's tariff policy drives prices, and then gradually slows to the 2% target in two years. Williams did not make any forward-looking xmmarkets.cnments on interest rate policy. "Keeping this moderately restrictive monetary policy stance is perfectly appropriate for achieving maximum employment and price stability goals," he said of the FOMC meeting. The Fed's current interest rate stance "gives us time to closely analyze newly received data, assess changing prospects, and assess the risk balance of achieving our dual mission goals."

Germany will increase bond issuance to stimulate economic growth and provide funding for defense programs

Germany will borrow about one-fifth of the amount of money planned in the xmmarkets.cning months to deal with the surge in spending. Meanwhile, a tax cut agreement totaling 46 billion euros ($53 billion) also highlights the upward trend of German bond issuance demand. Increased the scale of bond issuance in the third quarter and tax cuts are some of the measures taken by the ruling coalition led by Prime Minister Friedrich Mertz to revitalize the weak German economy and strengthen military construction. The German cabinet also approved this year's budget and the government's medium-term fiscal plan, which includes a net new loan of about €500 billion by the end of 2029. According to the latest plan released on Tuesday, the German Finance Agency, which manages federal debt, will raise 118.5 billion euros between July and September, 19 billion euros more than the plan originally announced in December last year. Germany's long-term government bonds fell, with 30-year government bond yields rising as much as 10 basis points to 3.06%, the highest level since the end of May.

Powell suggested waiting

Federal Chairman Powell said that we just suggest everyone wait and wait for more signs. There are no signs of weakness in the labor market at this time. If we see a weaker labor market, we will take steps to adjust. As long as the economy remains strong, we can give a brief pause here. There may be many future interest rate paths. Inflation may not be as strong as expected. If so, it is recommended to cut interest rates as soon as possible; if the labor market is weak, it is also recommended to cut interest rates as soon as possible, but if inflation and labor market perform strongly, it may cut interest rates later.

U.S. consumer confidence unexpectedly declined due to widespread concerns about the economy

U.S. consumer confidence unexpectedly declined due toTrade policy raises concerns about the economic, labor market and personal financial outlook. Data released by the World Federation of Large Enterprises on Tuesday showed that the consumer confidence index fell 5.4 points to 93. This is lower than expected by all economists surveyed. The expected indicator reflecting consumers' outlook for the next six months fell 4.6 points to 69, while the status indicator fell 6.4 points to 129.1. The decline in confidence almost wiped out nearly half of the rebound in the previous month, highlighting consumers' continued anxiety about the possible impact of the increase in U.S. import tariffs. Despite moderate inflation over the past three months, some consumers have become more cautious in spending.

Domestic News

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