Key Takeaways
- US and Iran are reportedly nearing a peace deal or Memorandum of Understanding (MOU) that could be signed in Geneva as soon as Sunday, coinciding with next week's G7 summit.
- China's May Aggregate Financing reached 17.48 trillion CNY, significantly outperforming analyst expectations of 17.15 trillion CNY, signaling a potential rebound in credit demand.
- Global oil prices fell to two-month lows as markets reacted to the prospect of the Strait of Hormuz reopening, which has been largely closed due to the three-month-old conflict.
- UK households are bracing for a significant rise in inflation next year, with business sentiment turning increasingly negative amid persistent geopolitical uncertainty.
Geopolitical Breakthrough: US-Iran Peace Deal on the Horizon
The United States and Iran are edging closer to a diplomatic breakthrough aimed at ending a three-month-old war that has severely disrupted global energy markets. According to senior officials, an agreement—likely in the form of a Memorandum of Understanding (MOU)—could be signed in Geneva as early as this Sunday. The timing aligns with the upcoming G7 summit in Evian, France, where world leaders are set to discuss regional stability.
Logistical preparations are already underway, with reports of US Air Force C-17 Globemaster III aircraft departing for Europe carrying equipment for a potential visit by Vice President JD Vance to the signing ceremony. President Donald Trump stated on Thursday that a "great settlement" has been reached and that the Strait of Hormuz would officially reopen "very soon" following the signing. Iran has reportedly requested the ceremony take place in a European country to provide the agreement with an "international character."
China Credit Data Surprises to the Upside
In a boost for the world’s second-largest economy, China’s financial data for May showed stronger-than-expected credit expansion. Aggregate Financing hit 17.48 trillion CNY, beating the estimated 17.15 trillion CNY. New Yuan Loans also came in higher at 9.11 trillion CNY against an expected 9.04 trillion CNY.
While the M2 Money Supply grew at a steady 8.6% year-over-year, the M1 Money Supply saw a slight beat at 5.5% (est. 5.0%). These figures suggest that Beijing's efforts to stimulate the economy through targeted lending may be gaining traction, providing a tailwind for China-focused ETFs like the iShares China Large-Cap ETF (FXI).
UK Inflation Risks and US Political Friction
In the United Kingdom, economic sentiment is souring as households anticipate a "significant rise" in inflation over the next year. Despite a recent drop in headline inflation to 2.8% in April, experts warn that the effects of the Middle East conflict and shipping disruptions will likely push rates back up to 3.8% by the end of 2026. This has put the Bank of England in a difficult position, as it weighs the need for restrictive interest rates against a stagnating economy.
Domestically, US Senate Majority Leader John Thune is facing increasing frustration within the GOP. According to Punchbowl News, Thune has expressed concerns that his "hopes often get dashed" as President Trump continues to bypass traditional Senate leadership to pursue independent initiatives. Meanwhile, the Senate Banking Committee is preparing for a markup on tech and chips legislation, while Democrats look to make inroads in deep-red Iowa ahead of the midterms.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.