Economic Update 6-16-2025
Economic data included consumer and producer price inflation coming in a bit cooler than expected, although both remain above long-term trend. Consumer confidence also improved, in keeping with paused tariff policies. However, continuing jobless claims kept rising, which could be due to some seasonal effects and/or labor markets softening further.
After starting positively, equities reversed course and fell in the U.S. and foreign developed markets, largely in response to escalation of the Israel-Iran military conflict. Bonds gained as yields fell back, especially abroad with a weaker dollar. Commodities gained as crude oil prices spiked, due to the same Middle East escalation concerns.
U.S. stocks were positive for most of the week, with a mix of influences, but ended down on net. Early in the week, investors reacted positively to a short London meeting between the U.S. and China, which resulted in no real breakthroughs, but getting the “negativity out,” as Commerce Secretary Lutnick put it, perhaps providing a restart point for further talks. The Chinese have been increasingly using exports of rare earth minerals as leverage (they aren’t really rare insofar as finding them in the earth’s crust goes, but the processing of them is, and they’re critical for modern technological devices like computers and phones). The Administration also indicated that an extension of the current 90-day tariff pause was possible for countries negotiating in “good faith.” Markets reacted positively to some extent on Wed. to the cooler CPI report; however, this was seen as making the Fed’s job a bit tougher as to the push-and-pull between higher and lower rate policy. However, all was undone as stocks fell back by Fri. morning in response to Israel’s strikes on Iran, which raised geopolitical concerns.