Key Takeaways
- President Trump threatened to withdraw more U.S. troops from Europe during the NATO summit in Ankara, citing deep dissatisfaction with allies' lack of support during the Iran war.
- Iran attacked three commercial ships in the Strait of Hormuz within a 24-hour window, including a Qatari LNG tanker, testing a fragile interim peace deal.
- U.S. inflation expectations surged in June, with 1-year expectations hitting 3.7% and 3-year expectations rising to 3.3%, according to the New York Fed.
- Global dairy prices plunged 4.9% in the latest auction, driven by a 4.4% drop in Whole Milk Powder prices to $3,425/MT.
- Lawmakers are pressuring Treasury Secretary Scott Bessent over a new Russia sanctions bill on the sidelines of the NATO summit.
Trump Challenges NATO Unity in Ankara
President Donald Trump arrived at the NATO summit in Ankara, Turkey, on Tuesday with a sharp warning for European allies, refusing to rule out further U.S. troop withdrawals from the continent. Speaking at the start of a meeting with Turkish President Recep Tayyip Erdoğan, Trump expressed "deep disappointment" with NATO members, claiming they failed to support the U.S. during its recent military conflict with Iran.
Trump asserted that the U.S. has spent "hundreds of billions of dollars" protecting Europe while receiving little in return during the Iran war. He further claimed he might have skipped the summit entirely had it not been hosted in Turkey, highlighting a growing rift within the 32-member alliance. The President’s rhetoric comes as the administration pushes for a "NATO 3.0" reboot, emphasizing loyalty and increased defense spending from European partners.
Maritime Violence Escalates in Strait of Hormuz
The security situation in the Middle East deteriorated rapidly as Iran's Revolutionary Guards reportedly attacked three commercial vessels in the Strait of Hormuz over a 24-hour period. Among the targets was the Al Rekayyat, a Qatari liquefied natural gas (LNG) tanker, which was struck on its port side, causing an engine room fire.
These attacks represent a direct challenge to the 60-day interim peace agreement reached in late June between Washington and Tehran. While no casualties were reported, the strikes have reignited fears of a broader blockade of the waterway, through which approximately 20% of global oil supply passes. Brent crude prices saw an immediate reaction, rising roughly 0.4% to $72.25 a barrel following the reports.
Inflation Expectations Hit Multi-Year Highs
Domestic economic data released Tuesday showed a troubling rise in consumer inflation expectations. The Federal Reserve Bank of New York reported that median one-year-ahead inflation expectations rose to 3.7% in June, the highest level since September 2023. Medium-term (3-year) expectations also climbed to 3.3%, marking their highest point since June 2022.
Despite the rise in near-term concerns, five-year inflation expectations remained anchored at 3.0%. The New York Fed noted that while consumers expect higher costs for rent and medical care, expectations for gasoline price growth actually declined. New York Fed President John Williams commented that while inflation remains "too high," recent energy price retreats could provide some relief in the coming months.
Dairy Markets and Sanctions Policy
In the commodities sector, the Global Dairy Trade (GDT) Price Index saw a significant correction, falling 4.9% in the July 7 auction. The average winning price dropped to $3,793 per metric tonne, with Whole Milk Powder—a key benchmark—falling 4.4% to $3,425/MT. This decline follows a period of inventory accumulation and shifting global demand.
On the legislative front, U.S. lawmakers are reportedly using the NATO summit's sidelines to press Treasury Secretary Scott Bessent on a pending Russia sanctions bill. The legislation aims to codify existing restrictions and potentially introduce "bone-crushing" secondary sanctions on countries trading with Moscow. Bessent has previously defended the administration's use of waivers to stabilize energy markets, but he faces increasing bipartisan pressure to tighten the economic squeeze on the Kremlin.
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.