TL;DR

Fed holds rates; Middle East tensions rise; stablecoin bill lifts Circle, Coinbase, crypto sector.

Highlights

• Fed held rates at 4.25%–4.50%, maintains outlook for two 2025 cuts; growth and inflation projections both revised higher1.
• Powell flagged tariff-driven inflation risks, noting goods inflation could persist through summer8.
• President Trump publicly pressed Fed for up to 2.5 percentage points in rate cuts, citing ECB easing9.
• US May housing starts fell 9.8% (1.256M annual rate); permits down 2%, both missing forecasts14.
• Iran fired over 400 missiles at Israel; US moved to deploy three aircraft carriers to region and began evacuating Americans from Israel2417.
• Israeli cyberattack targeted Iranian banks and state TV; Iran reported service disruptions but no major data loss16.
• US crude inventories dropped 11.5 million barrels, the largest weekly draw since 2024; WTI and Brent rose modestly5.
• Senate passed the GENIUS Act, establishing federal stablecoin rules; Circle shares surged up to 19%, Coinbase up 10%1011.
• Coinbase and Nodal Clear to accept USDC as futures collateral by 2026, pending CFTC approval20.
• Microsoft to cut thousands of sales jobs, continuing shift toward AI and software priorities6.
• Texas Instruments announced $60B+ investment in seven US chip fabs, expected to create 60,000 jobs7.
• Gilead ’s twice-yearly HIV prevention shot (Yeztugo) received FDA approval; analysts see strong long-term sales potential15.

Commentary

The Fed’s decision to keep rates unchanged was expected, but the updated projections—slower 2025 growth and higher inflation—signal a cautious stance1. Powell’s comments about tariffs reinforcing goods inflation suggest the Fed is unlikely to accelerate cuts unless inflation data improves8. Meanwhile, President Trump’s vocal push for aggressive rate cuts and criticism of Powell highlight rising political pressure, but the FOMC remains on hold for now9. This policy divergence is likely to keep rates and the dollar rangebound, with short-term volatility possible as markets parse Fed and White House signals.

Housing data came in weak, with starts and permits both missing expectations, reinforcing the drag from elevated mortgage rates and tighter financial conditions14. Homebuilder equities and related sectors may see continued pressure as higher-for-longer rates weigh on construction activity.

Geopolitical tensions in the Middle East have escalated, with Iran’s missile attacks on Israel2, US military buildup4, and cyber operations all raising the risk of broader conflict16. The US evacuation of citizens from Israel and the presence of three carrier groups underscore the seriousness of the situation174. Oil markets responded to the largest US crude draw in a year, but gains in WTI and Brent were limited by broader market caution5. Energy traders should remain alert to further supply disruptions if hostilities expand.

In sector news, the Senate’s passage of the GENIUS Act provided a strong catalyst for crypto-related equities, with Circle and Coinbase rallying sharply1011. The move to accept USDC as futures collateral further integrates stablecoins into traditional finance and supports the dollar’s role in digital payments20. Microsoft ’s layoffs and Texas Instruments ’ record chip investment reflect ongoing shifts toward AI and domestic manufacturing, with potential implications for tech and industrial stocks67. Gilead ’s new HIV prevention shot could be a long-term growth driver, but reimbursement and policy headwinds remain15.