US yields fall after Fed’s Bowman says interest rate cuts may come sooner

NEW YORK – Yields on US Treasuries fell on Monday as Federal Reserve vice-chair Michelle Bowman unexpectedly signaled the first interest rate cut this year could come as soon as July.

Markets also saw Iran’s response on Monday to US attacks on its nuclear sites over the weekend as a sign that further escalation of the conflict is unlikely.

Bowman, recently tapped by US President Donald Trump to be the central bank’s top bank overseer, said she is growing more concerned about risks to the job market than the potential inflationary effects of tariffs.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, fell 5.7 basis points to 3.851%.

But investors still see little chance of a rate cut in the July meeting, and a 77% chance of rates being steady, according to CME’s FedWatch tool. That percentage barely changed following Bowman’s comments.

“I was surprised by her comments, a rate cut in July is not the consensus in the market,” said Will Compernolle, macro strategist at FHN Financial in Chicago.

Compernolle said even as Bowman’s comments reassured the market that rate cuts will happen this year, investors note that other Fed officials consider that they need more time to assess the effect of tariffs on inflation.

Odds of lower rates from September rose above 80%, while bets on lower rates from October climbed above 92%.

The yield on the benchmark US 10-year Treasury note fell 3.5 basis points to 4.34%, after retreating more than 6 basis points during the day.

Markets took a positive view of events in the Middle East, with oil prices falling 6% on Monday after Iran sent missiles against a US military base in Qatar. The missiles were intercepted, and there were no casualties, a result seen by investors as a sign that the conflict will not escalate.

“If oil prices do not rise, that’s good news to inflationary pressures,” said Vail Hartman, US rates strategist at BMO Capital Markets in New York.

Investors’ main worry was the potential closure of the Strait of Hormuz, Hartman said, which could have large repercussions on global energy trade.

On Monday, there were no clear indications that this would happen.

(Reporting by Tatiana Bautzer, editing by Deepa Babington, Nick Zieminski, and Nia Williams)

US stock futures rise after Trump says ceasefire reached between Israel and Iran

US stock futures rose on Monday after President Donald Trump said a ceasefire has been agreed to between Israel and Iran.

S&P 500 emini futures rose 0.3% and Nasdaq futures added 0.5%, suggesting traders expect Wall Street to climb when it opens on Tuesday.

(Reporting by Noel Randewich; Editing by Chris Reese)

Gold steady as Israel-Iran conflict escalates, US involvement uncertain

Gold held steady on Friday, with geopolitical tensions escalating in the Middle East as Israel and Iran continued their air war, while investors remained wary of possible US involvement.

FUNDAMENTALS

* Spot gold was steady at USD 3,367.60 an ounce, as of 0020 GMT. Bullion was down 1.9% so far this week.

* US gold futures were also stable at USD 3,384.20.

* The conflict in the Middle East intensified on Thursday when Israel bombed Iran’s nuclear sites, while Iran fired missile and drone strikes on Israel, including an overnight attack on an Israeli hospital. Neither side has signalled an exit strategy.

* US President Donald Trump will decide in the next two weeks whether the US will get involved in the Israel-Iran air war, the White House said on Thursday, raising pressure on Tehran to come to the negotiating table.

* Meanwhile, US special envoy Steve Witkoff and Iranian Foreign Minister Abbas Araqchi have spoken by phone several times since Israel began its strikes on Iran last week, in a bid to find a diplomatic end to the crisis, three diplomats told Reuters.

* Trump reiterated his calls for the Federal Reserve to cut interest rates, saying the rates should be 2.5 percentage points lower.

* The Fed held rates steady on Wednesday, and policymakers retained projections for two quarter-point rate cuts this year.

* European officials are increasingly resigned to a 10% rate on “reciprocal” tariffs being the baseline in any trade deal between the US and the European Union, five sources familiar with the negotiations said.

* The US dollar index fell 0.2%, making greenback-priced bullion more affordable for overseas buyers.

* Elsewhere, spot silver was steady at USD 36.36 per ounce, platinum fell 0.7% to USD 1,297.89, while palladium was down 0.4% to USD 1,046.71. All three metals were headed for weekly gain.

(Reporting by Anmol Choubey in Bengaluru; Editing by Rashmi Aich)

Oil prices up nearly 3% as Israel-Iran conflict escalates, US response remains uncertain

CALGARY – Oil prices jumped almost 3% on Thursday as a week-old air war between Israel and Iran escalated and uncertainty about potential US involvement kept investors on edge.

Brent crude futures settled up USD 2.15, or 2.8%, to USD 78.85 a barrel, its highest close since January 22.

US West Texas Intermediate crude for July was up USD 2.06, or 2.7%, to USD 77.20 at 1330 EST (1730 GMT).

Trading volumes were light on Thursday due to a US federal holiday.

Israel bombed nuclear targets in Iran on Thursday, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight.

There was no sign of an exit strategy from either side, as Israeli Prime Minister Benjamin Netanyahu said Tehran’s “tyrants” would pay the “full price” and Iran warned against a “third party” joining the attacks.

The White House said on Thursday that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks.

That prospect has crude prices grinding higher, said Rory Johnston, analyst and founder of the Commodity Context newsletter.

“Consensus (in the market) is increasingly forming that we will see US involvement in some way,” Johnston said.

Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day of crude oil.

About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran’s southern coast, and there is widespread concern the fighting could disrupt trade flows.

The risk of major energy disruption will rise if Iran feels existentially threatened, and US entry into the conflict could trigger direct attacks on tankers and energy infrastructure, said RBC Capital analyst Helima Croft.

On Thursday, JP Morgan said an extreme scenario, in which the conflict widens to the broader region and includes a Strait of Hormuz closure, could result in oil prices surging to USD 120 to USD 130 per barrel.

Goldman Sachs said on Wednesday that a geopolitical risk premium of about USD 10 a barrel is justified, given lower Iranian supply and risk of wider disruption that could push Brent crude above USD 90.

Even if Middle East tensions were to cool off in the coming days, oil prices are probably not headed back to the low USD 60 range they were trading at a month ago, said Phil Flynn, senior analyst at the Price Futures Group.

“I think this (conflict) knocks oil out of its complacency,” said Flynn. “I would argue that the market has been underplaying geopolitical risk.”

But DBRS Morningstar said in a note on Thursday that it expects any sudden oil price surge to be temporary. A higher oil price will exacerbate tariff-related headwinds to the global economy and oil demand, so as long as the conflict recedes, the war premium will deflate and prices will cycle lower, DBRS said.

Russia’s top oil official said on Thursday OPEC+ oil producers should proceed with plans to increase output, noting rising summer demand. Russian Deputy Prime Minister Alexander Novak said at an economic forum in St. Petersburg that OPEC+ should calmly execute its plans and not scare the market with forecasts.

(Reporting by Amanda Stephenson, Enes Tunagur, Colleen Howe, and Sam Li; Editing by David Goodman, Deepa Babington, and Rod Nickel)

Dollar holds steady as Middle East keeps investors jittery

LONDON – The dollar edged up on Thursday as the threat of a broader Middle East conflict loomed over markets, while a raft of rate decisions in Europe highlighted the difficulty central bankers have in dealing with heightened uncertainty.

Rapidly rising geopolitical tensions have boosted the dollar, which has reclaimed its safe-haven status lately.

Iran and Israel carried out further air attacks on Thursday, with the conflict entering its seventh day. Concerns over potential US involvement have also grown, as President Donald Trump kept the world guessing about whether the United States would join Israel’s bombardment of Iranian nuclear sites.

The Federal Reserve left rates steady on Wednesday. The Bank of England also left rates unchanged on Thursday, citing elevated global uncertainty and persistent inflation as concerns for the economic outlook. The pound fell initially, but later recouped most of those losses.

The Swiss franc, meanwhile, was stronger against the dollar following an expected rate cut from the Swiss National Bank.

But the surprise came from the Norges Bank, which delivered a 25 bps rate cut, while markets had expected the Norwegian central bank to hold rates.

The dollar and the euro both rallied by 1% against the Norwegian crown. The crown is still one of the top-performing major currencies against the dollar this year, with a gain of around 11%.

Meanwhile, the euro dipped 0.1% to USD 1.1473. The dollar rose 0.2% against the yen to 145.56.

The dollar index =USD, which measures the currency against six others, was flat at 98.9 and was set for about a 0.8% gain for the week, its strongest weekly performance since late February.

ING strategist Francesco Pesole said the fact that geopolitical risks and high oil prices were not “US-induced risks,” unlike the risks to US government finances from Trump’s tax cut plans or his tariff policies, the dollar could once again take on its role as a safe haven.

“The dollar is still in a more favourable spot than the energy-dependent safe-haven alternatives (like the euro) in this environment,” he said.

US markets were closed on Thursday for the federal Juneteenth holiday, which could mean liquidity is lower.

FED STANDS PAT

In a widely expected move, the Fed held rates steady, with policymakers signaling they still expect to cut rates by half a percentage point this year, although not all of them agreed on a need for rate cuts.

Fed Chair Jerome Powell said goods price inflation will pick up over the course of the summer as Trump’s tariffs start to impact consumers.

“Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer,” Powell told a press conference on Wednesday. “We know that because that’s what businesses say. That’s what the data say from the past.”

The comments from Powell underscore the challenge facing policymakers as they navigate uncertainties from tariffs and geopolitical risks, leaving markets anxious about the path of US interest rates.

Still, traders are pricing in at least two rate cuts this year though analysts are unsure of the starting point.

“Having now kept interest rates unchanged for six months, Chair Powell seemed to indicate that the Fed could well stay paused through the summer, making October the next “live” meeting. We continue to expect policy to remain on hold past the end of the year,” economists at BNP Paribas said.

Trump, who has been a vocal critic of the Fed chair for not cutting rates more quickly, posted on social media on Thursday that US rates should be “2.5 points lower.”

(Additional reporting by Amanda Cooper in London; Editing by Frances Kerry and Bernadette Baum)

Oil prices rise more than 4% as Iran-Israel conflict escalates

HOUSTON – Oil prices climbed over 4% on Tuesday as the Iran-Israel conflict raged with no end in sight, though major oil and gas infrastructure and flows have so far been spared from substantial impact.

Brent crude futures settled at USD 76.45 a barrel, USD 3.22, or 4.4%. US West Texas Intermediate crude finished at USD 74.84 a barrel, up USD 3.07 or 4.28%.

While there was no noticeable interruption to oil flows, Iran partially suspended gas production at the South Pars field it shares with Qatar after an Israeli strike started a fire there on Saturday. Israel also hit the Shahran oil depot in Iran.

The continuing exchange of airstrikes between Israel and Iran returned geopolitical risk to oil markets already aware of a tight supply and demand balance, said Phil Flynn, senior analyst with the Price Futures Group.

“This is not a one-and-done; it’s probably much more similar to Russia and Ukraine,” Flynn said.

A collision of two oil tankers near the Strait of Hormuz, where electronic interference has increased during the conflict, highlighted the possibility that the vital waterway for oil shipments could be cut off.

“The market is largely worried about disruption through (the Strait of) Hormuz, but the risk of that is very low,” said Saxo Bank analyst Ole Hansen.

There is no appetite for closing the waterway, given that Iran would lose revenue and the US wants lower oil prices and lower inflation, Hansen added.

Uncertainty led market participants on Tuesday to wonder how Iran’s leadership would react if they thought they were losing their grip on power, said John Kilduff, partner at Again Capital.

“We’re talking a security premium upwards of USD 10 a barrel that’s now built into the price,” Kilduff said.

Despite the potential for disruption, there were signs oil supplies remain ample amid expectations of lower demand.

In its monthly oil report on Tuesday, the International Energy Agency revised its world oil demand estimate downwards by 20,000 barrels per day from last month’s forecast and increased the supply estimate by 200,000 bpd to 1.8 million bpd.

Investors were also focused on central bank interest rate decisions, PVM Associates analyst Tamas Varga said in a note, with the US Federal Open Market Committee set to discuss rates later on Tuesday.

(Reporting by Erwin Seba in Houston, Seher Dareen in London, Anjana Anil in Bengaluru, and Jeslyn Lerh in Singapore; Editing by David Evans, Rod Nickel, and Nia Williams)

Gold inches up on safe-haven demand as Middle East tensions rise

Gold prices edged up on Tuesday as Iran-Israel tensions boosted safe-haven demand but a stronger dollar capped gains, while silver surged to a 13-year high.

Spot gold rose 0.2% to USD 3,390.59 an ounce as of 0151 pm EDT (1751 GMT). US gold futures settled 0.3% lower at USD 3,406.9.

The US dollar index firmed 0.8%, making dollar-priced bullion more expensive for other currency holders.

“Geopolitical uncertainty, with the Israeli-Iran war that will probably escalate before it de-escalates, is going to keep a floor under the market for safe-haven bidding,” said Jim Wycoff, senior analyst at Kitco Metals.

US President Donald Trump said that he wanted a “real end” to the nuclear dispute with Iran, and indicated he may send senior American officials to meet with the Islamic Republic as the Israel-Iran air war raged for a fifth day.

Elsewhere, the Federal Reserve will announce its policy decision on Wednesday, followed by Chair Jerome Powell’s press conference.

The US central bank is widely anticipated to leave its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December.

A low-interest-rate environment and geopolitical uncertainty tend to boost gold’s appeal.

Central banks around the world expect their gold holdings as a proportion of their reserves to increase over the next five years, a survey by the World Gold Council showed.

Data showed that US retail sales dropped more than expected in May, but consumer spending remained supported by solid wage growth.

Spot silver gained nearly 2% to USD 37.05 per ounce, reaching its highest level since February 2012.

Citi in a note said silver could rise to USD 40 over the next six to 12 months.

“We expect silver availability to tighten on consecutive years of deficit, sticky stockholders requiring higher prices to sell, and robust investment demand,” it added.

Platinum was up 1.5% to USD 1,264.61 and palladium rose 1.7% to USD 1,047.54.

(Reporting by Sarah Qureshi and Ashitha Shivaprasad in Bengaluru; Editing by Jan Harvey and Vijay Kishore)

Wall Street edges lower, oil climbs as Middle East conflict grinds on

NEW YORK – Wall Street indexes edged lower and oil kept climbing on Tuesday as US President Donald Trump left the Group of Seven summit early and investors awaited a series of interest rate decisions by major central banks this week.

Trump returned to Washington a day before the summit ends as the Israel-Iran conflict intensified, saying US patience was wearing thin but he would not kill Iran’s leader “for now.”

The news nixed market hopes for more progress at the summit on issues like the sweeping tariffs Trump has promised to impose on many allies.

“The market was anxious to hopefully hear updates on trade agreements out of the G7 and the news of Trump leaving early was disappointing, although we all know why,” said Eric Sterner, chief investment officer at Apollon Wealth Management.

“The market is paying attention to the (Middle East) conflict but it feels that’s contained to those two countries,” Sterner said. “It does cause concern, especially if Iran does anything with the Strait of Hormuz,” he added, noting around 20% of the world’s oil supply passes through that waterway.

US crude continued to surge and settled 4.46% higher at USD 74.97 a barrel, while Brent rose to USD 76.54 per barrel, up 4.52% on the day.

Stocks stayed under pressure, with the Dow Jones Industrial Average extending losses to 0.78% on the day. The S&P 500 fell 0.84% and the Nasdaq Composite shed 0.92%.

No disruptions to crude supply have been reported, although news of a collision between two ships in the Gulf of Oman sent another brief jolt through the oil market overnight.

Analysts noted that the VIX volatility index has risen in the last week, but at around 21 it is well below April’s highs above 60 and nowhere near the records, above 80, hit during the 2008 financial crisis.

“This is happening at a point in time where we are less sensitive, first of all the fact being that oil prices are still down year to date, and secondly the macro economy is … showing that financial markets are relatively resilient at the moment,” Bjarne Breinholt Thomsen, head of cross asset strategy at Danske Bank, said in a webinar on Tuesday.

Stocks in Europe also sagged. The STOXX 600 closed around its lowest in three weeks.

CENTRAL BANKS LOOM

Investors awaited meetings this week by the Federal Reserve, Bank of England and Swiss National Bank. The Bank of Japan left short-term interest rates unchanged on Tuesday, at 0.5% as expected.

US Treasury yields fell ahead of the Fed’s scheduled update, which is widely expected to produce no immediate change in interest rates.

But market participants will be monitoring new projections on how Trump’s tariffs could affect growth and inflation. Traders are pricing in two cuts by the end of the year.

They are also tuning in to comments from Chair Jerome Powell, who Trump has repeatedly criticized for not lowering interest rates.

“One thing that settled the markets earlier this year was the independence of the Fed and the fact they would not be influenced, but data-driven,” said Matt Rubin, chief investment officer at Richmond, Virginia-based Cary Street Partners.

“Jerome Powell is going to continue to express that they are focused on data at this point, and that data does not warrant a cut.”

The US 10-year note last yielded 4.385%, 6.9 basis points down from 4.454% late on Monday.

(Additional reporting by Lucy Raitano in London and Johann M Cherian and Ankur Banerjee in Singapore; Editing by Kim Coghill, Bernadette Baum, David Evans, Deepa Babington, and Richard Chang)

Foreign central banks are shrinking US asset exposure: McGeever

ORLANDO – As debate rages around ‘de-dollarization’ and the world’s appetite for dollar-denominated assets, one major cohort of overseas investors appears to be quietly backing away from US securities: central banks.

That’s the conclusion to be drawn from the New York Fed’s latest ‘custody’ data, which shows a steady decline in the value of Treasuries and other US securities held on behalf of foreign central banks.

There are many ways to gauge foreign demand for US assets, and they often send conflicting signals. Moreover, the broadest and most accurate measures, like US Treasury International Capital (TIC) or the International Monetary Fund’s ‘Cofer’ FX reserves data, come with a long lag of two months or more.

The New York Fed custody holdings figures are weekly, which is as ‘real time’ as it gets in the world of central bank flows.

These figures last week showed that the value of US Treasuries held at the New York Fed on behalf of foreign central banks fell to USD 2.88 trillion. That’s the lowest since January, and the USD 17.1 billion decline was also the biggest fall since January.

Including mortgage-backed bonds, agency debt and other securities, the total value of foreign central banks’ US custody holdings at the New York Fed last week dropped to USD 3.22 trillion, the lowest since 2017.

That figure has fallen by around USD 90 billion since March, just before President Trump’s ‘Liberation Day’ tariff debacle on April 2, with more than half of the decline coming from Treasuries.

If these moves are representative of broader trends, then FX reserve managers are reducing their exposure to US bonds, as a share of their overall holdings and in nominal terms too.

MURKY PICTURE

It’s not easy to get a firm handle on the exact composition of central banks’ dollar-denominated assets, which are worth trillions and are spread across multiple sectors, jurisdictions and continents. This is why different cuts of central bank data can tell different stories.

For example, the latest TIC data show that foreign holdings of US Treasuries rose to a record USD 9.05 trillion in March, with official sector holdings increasing as well. The official sector held nearly USD 4 trillion of bills and bonds, around 45% of all foreign exposure.

But these figures are nearly three months out of date, and foreign demand for Treasuries in recent months – in the secondary market and, more recently, at auction – has been driven by private sector institutions, not the official sector.

There are large pools of ‘hidden’ FX reserves too potentially worth trillions of dollars, held in offshore accounts, overseen by quasi-official entities like sovereign wealth funds or, in the case of China, state banks.

Meghan Swiber, director of US rates strategy at Bank of America, says the fall in custody holdings is a warning sign, especially as it has been accompanied by a modest decline in foreigners’ usage of the Fed’s overnight reverse repo (RRP) facility.

When Treasuries mature, foreign central banks will often park the cash at the RRP. But they haven’t been doing that lately, Swiber says, meaning both their Treasury holdings and overnight cash balances at the Fed are falling.

“We worry about foreign demand going forward,” Swiber wrote on Monday, also pointing out that it’s “unusual” for reserve managers to reduce their US Treasury holdings when the dollar is weakening. “This flow likely reflects official sector diversification away from dollar holdings.”

The USD 28.5 trillion Treasury market is deep and liquid, and central banks remain significant participants in it. They are cautious and careful by nature, meaning any changes to their holdings will be gradual.

But the weekly custody data suggest some central banks may already be getting that ball rolling.

(The opinions expressed here are those of the author, a columnist for Reuters)

(By Jamie McGeever; Editing by Jan Harvey)

Investors want clear ocean management rules to scale up funding

LONDON – A UN push for investment to protect the world’s oceans yielded around USD 10 billion in deals at a conference last week, way below the estimated annual need as many investors seek clearer regulation on ocean management before committing funds.

While political leaders at the United Nations conference in Nice took steps to tackle overfishing and pollution threatening delicate ecosystems and the people who depend on them, getting countries to agree to better governance has proven tough.

Just 50 countries have so far ratified a new High Seas treaty which sets out rules agreed by more than 130 nations in 2023 to govern international waters and clamp down on harmful practices. The United States, pulled out of various climate initiatives by President Donald Trump, is among those yet to ratify the treaty.

The lack of a clear governing framework and robust ocean-related data has stymied private sector finance to date, said Oliver Withers, head of nature at British lender Standard Chartered.

“The major dynamic that doesn’t apply to terrestrial is the high seas don’t belong to any one individual sovereign,” he said. “It is a significant challenge, there is no single sovereign responsible for the high seas.”

Of the deals chalked up in France, the bulk came from public sector banks, including USD 2.5 billion in funding by the Development Bank of Latin America and the Caribbean (CAF) and 3 billion euros (USD 3.5 billion) from a group of development banks to fight plastic pollution.

While a step up, the total figure falls far short of what is needed. Between 2015 and 2019, only USD 10 billion was invested against the UN estimate of USD 175 billion in required annual funding.

“Public finance isn’t enough but private finance is even less. So I think it’s a space in its infancy,” said Francine Pickup, Deputy Director, Bureau for Policy and Programme Support at the U.N. Development Programme.

Pickup said improving the policy backdrop and regulation, including removing subsidies she said encouraged harmful practices such as overfishing, was key, followed by the creation of a pipeline of investments including in start-ups focused on ocean-related technology.

To date, the sector has received just a small slice of overall funds, data shared with Reuters by industry tracker Sightline Climate showed.

Between 2020 and 2025, ocean tech received just 0.4% of the USD 202 billion invested across all sectors during that period, although the data showed a stronger start to 2025.

“What we seek as investors is that governments and the policymakers address systemic risks,” said Robert-Alexandre Poujade, biodiversity lead at BNP Paribas Asset Management, adding he would welcome the treaty “if it has lots of teeth and enforcement mechanisms”.

Fixing the funding shortfall also requires a concerted effort by policymakers and investors to tackle overlapping challenges to protecting marine biodiversity and ocean health.

A warming planet is heating up the oceans, exacerbating effects such as water acidification and coral bleaching that climate scientists say will be improved if the world manages to cut carbon emissions as planned.

Overfishing and polluting sea vessels, offshore oil drilling and, potentially, deep-sea mining that collectively damage ocean health also require firmer policy action, scientists, ocean experts and investors say.

While action has hitherto been slow, there were signs of progress in Nice, as more than 20 countries backed a call by France to prevent deep sea mining; and a number of fresh Marine Protected Areas were created.

“In a sense the ocean is the last area that we have been pillaging without thinking about tomorrow,” said Flavien Jouber, Seychelles’ minister for agriculture climate change and environment, describing it as a “sense of free-for-all”.

(USD 1 = 0.8693 euros)

(Reporting by Simon Jessop, Virginia Furnsess, and Kate Abnett; Additional reporting by Marc Jones in London; Editing by Emelia Sithole-Matarise)

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