Daily Market Outlook - Thursday, June 11

‘CPI didn’t move the Fed needle — and it didn’t rescue risk either. Equities remain under pressure from stretched tech valuations, IPO supply, renewed US-Iran tensions and weekend escalation risk. Oil is still high enough to keep inflation anxiety alive, with US markets now eyeing today’s PPI data, which could weigh with a hot print. The ECB is set to hike while keeping September firmly in play. Ueda’s absence clouds next week’s BoJ meeting, and weak UK housing data argue for a cautious BoE. Risk sentiment can steady, but it needs tech and geopolitics to stabilise as a base for the next leg higher to develop. '

Global equities are under renewed pressure as the tech-led selloff deepens and the US-Iran conflict shows little sign of near-term resolution. The MSCI All Country World Index fell as much as 0.3%, while Asia-Pacific equities dropped to a three-week low after US military strikes on Iranian targets effectively shattered the April ceasefire. Brent is up around 1% near $94/bbl, keeping the inflation and growth risks from the conflict firmly in view. European markets are set for a weaker open, although US sentiment has stabilised somewhat, with Nasdaq 100 futures rebounding from earlier losses to trade around 0.8% higher. The broader issue is that equity markets are now dealing with several overlapping pressures: stretched tech valuations, increasingly narrow leadership, renewed geopolitical risk and a busy IPO calendar testing investors’ willingness to absorb new supply.

Yesterday’s US CPI report did not add much extra damage. Core CPI rose to 2.9% y/y, up 0.1ppt as expected, while headline inflation increased by 0.4ppts to 4.2% y/y, also in line with forecasts. The message is that the energy shock is feeding directly into headline inflation through fuel prices, but so far there is limited evidence of broader pass-through into other categories. That is important for the Fed. CPI did not validate an even more aggressive tightening path, but it also did not reverse the repricing triggered by last week’s strong labour report. Markets still price roughly one 25bp Fed hike by year-end. So the latest equity weakness is not primarily about a fresh hawkish surprise from US inflation. It is more about valuation, positioning and geopolitics. The AI and semiconductor trade had already become crowded, and the recent run of major tech IPOs is adding a supply test at a time when investors are questioning how much future earnings growth is already priced. At the same time, further US-Iran strikes make the ceasefire look less durable and reduce confidence that the Strait of Hormuz can reopen smoothly in the near term. Oil therefore remains a crucial cross-asset variable. Brent near $94/bbl is not yet a full crisis price, but it is high enough to complicate the macro narrative. If the conflict remains contained, central banks may continue to treat the shock as mostly first-round and energy-specific. If supply risk rises materially, inflation expectations, real incomes and corporate margins all come under more pressure. That would be a much more difficult environment for equities already facing valuation stress.

Today’s main scheduled event is the ECB decision. A 25bp hike taking the deposit rate to 2.25% is almost universally expected, so the market focus will be on Lagarde’s press conference. The key question is how far she goes toward validating the fully priced follow-up move in September. She is unlikely to pre-commit three months ahead, especially with geopolitical and energy uncertainty elevated. But she is also unlikely to push back strongly against market pricing. The ECB will want to preserve optionality while reinforcing its inflation credibility. The Fed, ECB and BoE are increasingly operating under different constraints. The Fed has a strong labour market and an energy shock, making the second-round inflation risk harder to ignore. The ECB has weaker growth but a stronger institutional bias toward defending credibility against imported inflation. The BoE has softer domestic labour and housing signals, allowing it to argue for looking through more of the external shock. That divergence is one reason cross-market rates remain so important. Japan adds a further complication. BoJ Governor Ueda has been hospitalised and will miss next week’s policy meeting. A June hike is still expected, but the guidance thereafter is now more uncertain, with Deputy Governor Uchida set to host the post-meeting press conference. The policy decision itself may be straightforward; the communication could be harder for markets to interpret. With USDJPY near 160.50, the combination of BoJ uncertainty and intervention risk remains uncomfortable. Japanese rates markets are also fragile after recent pressure on long-end JGBs. If the BoJ hikes but sounds cautious under Uchida, the Yen may struggle to gain lasting support. If the message is more hawkish than expected, JGB volatility could intensify. Either way, Japan remains a key pressure point for global duration because domestic yield moves affect Japanese investor demand for overseas bonds.

In the UK, the latest RICS housing survey points to continued softness rather than outright deterioration. The headline house price balance was unchanged at -35% in May, meaning a net share of agents still reported falling prices over the past three months. More concerningly, the three-month price expectations balance fell to -45% from -39%, suggesting further price weakness ahead. However, new buyer enquiries held steady at -34%, indicating that activity may be stabilising at a weak level rather than continuing to decline sharply.

That housing data fits the broader UK macro picture. Domestic demand is soft, the labour market is cooling, and the BoE has more reason than the Fed or ECB to avoid overreacting to an externally driven energy shock. But gilt markets remain burdened by a separate political and fiscal risk premium, so softer UK data do not automatically translate into lower long-end yields.

Overnight Headlines

ECB Set To Hike Rates Amid Rising Inflation, Growth Concerns
US, Iran Hit Each Other Again As Hopes For Quick Peace Deal Fade
Trump Holds Situation Room Meeting On Iran Strike Options
Oil Surges As Fresh US Strikes On Iran Threaten Fragile Truce
Gold Rebounds From Monthly Low On Short-covering; PPI In Focus
China Cancels High-Level Meetings With EU
Taiwan Test-Fires US-Supplied Missile Launcher Toward China
BoJ Ueda’s Absence Fuels Market Nerves Over Press Conference
Oracle Reports Higher-Than-Expected Data Centre Spending
OpenAI Mulls Price Cuts Amid Anticipated Anthropic Price War
SpaceX Tells Investors It Has Secured Investment-Grade Credit Ratings
KKR Launches $10B Data Centre Group Led By Former AWS Chief
China Is Propping Up The Global Economy By Importing Less Oil

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD: 1.2425 (EU1.8b), 1.1800 (EU1.12b), 1.1530 (EU1.03b)
USD/JPY: 160.00 ($1.14b), 160.25 ($956.7m), 157.15 ($901.2m)
USD/MXN: 17.30 ($856.3m), 17.46 ($360.4m)
AUD/USD: 0.7250 (AUD655.2m), 0.7500 (AUD526.7m), 0.7035 (AUD463.4m)
USD/BRL: 4.8500 ($720m), 4.9850 ($601.1m), 5.1350 ($506.5m)
USD/CNY: 6.7000 ($1.16b), 6.7500 ($771m), 6.8000 ($612.8m)
EUR/GBP: 0.8650 (EU1.12b), 0.8750 (EU473.1m), 0.8700 (EU448.7m)
GBP/USD: 1.3300 (GBP782.3m), 1.3475 (GBP630.4m), 1.3450 (GBP522.2m) U
SD/CAD: 1.3950 ($488.5m), 1.4050 ($415.2m), 1.3700 ($388m)
USD/KRW: 1440.00 ($354m)

CFTC Positions as of June 5, 2026:

In a notable shift in market dynamics, equity fund speculators have ramped up their net short position on the S&P 500 CME, adding a hefty 38,113 contracts to bring their total to 485,582. Meanwhile, equity fund managers have trimmed their net long position by 23,807 contracts, now sitting at 985,207.
Turning to the Treasury futures market, speculators have also increased their net short positions across various maturities. The CBOT US 5-year Treasury futures saw an increase of 46,091 contracts, pushing their total to 1,369,218. The 10-year Treasury futures experienced a rise of 41,621 contracts, reaching 829,575. Not to be left out, the net short position for the CBOT US 2-year Treasury futures surged by 94,942 contracts, totaling 1,350,188. Additionally, the net short position for the CBOT US UltraBond Treasury futures grew by 27,868 contracts to 287,710. In contrast, speculators have slightly reduced their net short position in CBOT US Treasury bonds by 39,398 contracts, now standing at 159,853.
On the cryptocurrency front, Bitcoin maintains a net long position of 2,458 contracts.
In the currency market, the Swiss franc is showing a net short position of -32,909 contracts, while the British pound has dipped to a net short of -52,218 contracts. Conversely, the euro is in a more favorable position with a net long status of 48,866 contracts. The Japanese yen continues to struggle with a significant net short position of -129,567 contracts.