Ten Stories Moving the Market

Ten Stories Moving the Market:

China has held direct talks with Yemen's Houthi movement to enable its tankers to sail through the southern Red Sea without being attacked after the Iran-aligned militia pledged to prevent access to Saudi ​ports; Beijing has asked the Houthis directly to promise safe passage for its tankers, according to a senior Iranian official – Reuters. (Why you should care – Given China’s relationship with Iran, Asian-bound energy supplies are likely to receive safe passage)

Iran-backed militias in Iraq fired drones at oil facilities in Saudi Arabia’s Eastern Region for the second day in a row, piling pressure on the kingdom, which is grappling with a maritime blockade limiting its crude oil shipments – Bloomberg. (Why you should care – the attacks run the risk of stoking tensions with the U.S.)

The U.S. said it intercepted an Iranian attack on military bases, ending a dayslong pause in fighting and increasing the risk of return to tit-for-tat attacks in the Middle East – WSJ. (Why you should care – Iranian media claimed the action was in response to joint Suadi and U.S. strikes on Iranian backed militia in Iraq) 

Oman has presented Iran with a plan backed by Gulf states to manage the Strait of Hormuz, including collecting voluntary fees for using it; the Omani proposals are intended to serve as a basis to end the disruption to trade through the strait – Reuters. (Why you should care -any proposals not ensuring free transit are likely to receive push back from UN member nations)

Japan’s Labor Ministry advisory panel on Tuesday recommended raising the nationwide average minimum hourly wage by 4.9% for the current fiscal year; the new wage floor is expected to gradually take effect starting in October after regional authorities finalize their own rates – Bloomberg. (Why you should care – the change is likely to underpin inflation growth and Bank of Japan rate hikes)

Wall Street banks have demanded more collateral from hedge funds in recent weeks as a rout in AI stocks accelerates and triggers heavy losses across several popular strategies; banks asked funds whose holdings are heavily concentrated in certain industries to provide additional collateral to keep their existing levels of leverage – FT. (Why you should care – rising collateral demands have likely resulted in forced selling, deepening the drop in AI-related socks)

Seagate Technology forecast quarterly revenue and profit above estimates, as the rapid buildout ​of AI infrastructure fuels robust demand for its ‌high-capacity hard disk drives – Reuters. (Why you should care – heat-assisted magnetic recording has allowed the company to pack more storage onto its chips without building new manufacturing facilities)

SK Hynix earmarked at least $31 billion in capital spending this year after reporting a six-fold surge in quarterly profit, a record amount of spending to safeguard its lead over Samsung Electronics and ride a multiyear boom in AI spending – Bloomberg. (Why you should care – capital spending plans overshadowed incrementally positive commentary on memory demand)

Recent remarks from senior Federal Reserve officials who have often helped shape expectations have laid out what would push them to raise rates; June’s cooler inflation readings came in below that bar, shifting the debate over a possible rate increase to September – WSJ. (Why you should care – the uncertainty implies a rate hike is possible at today’s monetary policy meeting)

Australia’s core inflation came in cooler than anticipated last quarter, rising 0.8% compared to the 0.9% expectation; the Reserve Bank of Australia doesn’t expect inflation growth to hit it’s 2% to 3% target range before next year – Bloomberg. (Why you should care – the slowdown is likely to leave interest rates on hold at the upcoming monetary policy meeting)

Economic Calendar:

Earnings: ARM, BSX, EQIX, FTNT, GD, HOOD, LRCX, META, MSFT, ORLY, PG, QCOM, SBUX, VRT

U.K. – BoE Consumer Credit for June (4:30 a.m.)

U.S. - MBA Mortgage Applications (7 a.m.)

U.S. - Energy Information Administration Crude Oil Inventory Data (10:30 a.m.)

Treasury Auctions $30 Billion in 2-Year Floating Rate Notes (1 p.m.)

BoC Summary of Deliberations (1:30 p.m.)

Federal Reserve Monetary Policy Announcement (2 p.m.)

Fed’s Warsh (Chairman, Voter) Speaks (2:30 p.m.)