Markets remain long TACO

• Brent crude traded around $78/barrel Thursday morning, near Wednesday's levels after initially rising more than 5%, as markets weighed Trump's assurance that any conflict would be 'over very quickly'
• Fed June meeting minutes showed 'a few participants' noted potential for immediate rate hikes, with concerns about 'more broad-based' price pressures; futures now imply 38 basis points of tightening through January 2027
• SK Hynix's $28 billion U.S. facility was oversubscribed more than seven times, while Broadcom rallied on Apple's chip spending plans, briefly lifting chip stocks and the Nasdaq

Market Summary: U.S.-Iran Tensions and Fed Inflation Concerns

Key Developments:

U.S.-Iran military tensions escalated following U.S. strikes on Iranian targets, with Tehran retaliating against Kuwait, Bahrain, and Qatar. President Trump declared the interim agreement "over" but indicated any conflict would end "very quickly," tempering immediate war concerns.

Oil Market Response:

Despite geopolitical flareup, oil prices remained relatively stable with Brent crude trading around $78/barrel Thursday morning, near Wednesday's levels after an initial 5% spike. The muted response suggests markets are prioritizing Trump's assurances over escalation risks. However, analysts warn a sustained "cold war" over the Strait of Hormuz could necessitate higher risk premiums in crude pricing.

Equity Markets:

Asian stocks showed mixed performance after brief enthusiasm following U.S. chip sector gains. Broadcom rallied Wednesday on news Apple plans significant chip purchases, lifting the Nasdaq slightly. SK Hynix's $28 billion U.S. facility was reportedly oversubscribed more than seven times, reflecting strong memory chip optimism.

Federal Reserve Outlook:

June Fed meeting minutes revealed an evenly divided debate on monetary policy, with "a few participants" noting cases for immediate rate hikes amid concerns about "more broad-based" inflation pressures. Fed funds futures now imply 38 basis points of tightening through January 2027. Global bond yields continued rising Thursday on Middle East tensions and inflation fears, with Japan's 10-year yield advancing.

Other Notable Items:

• Russia announced diesel export ban to support domestic fuel markets amid Ukrainian drone attacks on refineries
• Ukraine granted license to manufacture Patriot missile interceptors following NATO summit

Upcoming: U.S. jobless claims, existing home sales data, 30-year bond auction, PepsiCo earnings