Today's Update 06-26-2025

Key Points and Metrics

Harry Colt

Jun 26, 2025

Key Points and Metrics:

Economic Indicators:

US Initial Jobless Claims:
- Actual: 236,000
- Forecast: 243,200
- Previous: 245,000
- Lower-than-expected claims indicate a stable labor market.
US GDP Q1 Final:
- Quarter-over-Quarter:
  - Actual: -0.5%
  - Forecast: -0.2%
  - Previous: -0.2%
- GDP contracted more than anticipated in the first quarter.
US Durable Goods Orders (May Preliminary):
- Headline Orders:
  - Actual: +16.4%
  - Forecast: +8.5%
  - Previous: -6.6% (revised from -6.3%)
  - Significant rebound in durable goods orders, suggesting strong demand.
- Core Durable Goods (Excluding Transportation):
  - Actual: +0.5%
  - Forecast: 0%
  - Previous: 0% (revised from +0.2%)
  - Modest growth in core orders indicates steady business investment.
US GDP Price Index Q1 Final:
- Actual: +3.8%
- Forecast: +3.7%
- Previous: +3.7%
- Inflation within the GDP components slightly higher than expected.
US Core PCE Prices Q1 Final:
- Actual: +3.5%
- Forecast: +3.4%
- Previous: +3.4%
- Core inflation measure ticked up, signaling persistent inflation pressures.
US Wholesale Inventories MoM Advance (May):
- Actual: -0.3%
- Forecast: +0.2%
- Previous: +0.1% (revised from +0.2%)
- Decrease in inventories may impact future GDP calculations.
US Advance Goods Trade Balance (May):
- Actual: -$96.6 billion
- Forecast: -$86.1 billion
- Previous: -$87.0 billion
- Trade deficit widened more than expected, which could weigh on GDP.
Chicago National Activity Index (May):
- Actual: -0.28
- Forecast: -0.13
- Previous: -0.36 (revised from -0.25)
- Indicates below-average growth in the national economy.

Federal Reserve Insights:

Fed's Goolsbee:
- Optimistic about recent inflation readings.
- Emphasized the need for caution due to upcoming tariff deadlines on July 9.
- Stressed the importance of ensuring inflation remains under control.
Fed's Barkin:
- Recent inflation data is encouraging.
- Job market remains healthy amid uncertainties.
- Fed is well-positioned but faces risks related to both employment and inflation.
- Believes the Fed has time to monitor data before making policy changes.

Market Movements:

US Dollar Index (DXY):
- Fell by 0.5%, reaching the lowest level since April 2022.
- Decline attributed to reports that President Trump may announce a new Federal Reserve Chair earlier than usual.
- Markets are now pricing in approximately 63 basis points of rate cuts by the end of the year.
Treasury Yields:
- 10-year yield decreased by 2 basis points to 4.27%.
- Indicates increased demand for government bonds amid economic uncertainties.
Currency Strength:
- Strongest Currencies: Japanese Yen (JPY), British Pound (GBP), Euro (EUR), Swiss Franc (CHF).
- Weakest Currency: US Dollar (USD).

Upcoming Earnings Estimates:

June 26th:
- Nike (NKE):
  - Earnings Release Time: 4:15 PM ET
  - Expected EPS: $0.13
  - Expected Revenue: $10.72 billion
July 15th:
- BlackRock (BLK):
  - Earnings Release Time: 6:00 AM ET
  - Expected EPS: $10.68
  - Expected Revenue: $5.38 billion
- JPMorgan Chase (JPM):
  - Earnings Release Time: 6:55 AM ET
  - Expected EPS: $4.43
  - Expected Revenue: $44.1 billion
- Wells Fargo (WFC):
  - Earnings Release Time: 7:00 AM ET
  - Expected EPS: $1.40
  - Expected Revenue: $20.78 billion
- Citigroup (C):
  - Earnings Release Time: 7:00 AM ET
  - Expected EPS: $1.65
  - Expected Revenue: $20.77 billion

Other Notable News:

US Debt Limit Concerns:
- Treasury Secretary extended debt-limit measures through July 24th.
- Urged Congress to act on the debt limit before the August recess.
International Relations:
- Iran's Supreme Leader made strong statements regarding the US.
- Ongoing geopolitical tensions could impact energy markets.
Bank of England Comments:
- Governor Bailey mentioned uncertainties in the economy.
- Stated that interest rates are on a gradual downward path.
- Emphasized the need for restrictive monetary policy to manage inflation risks.
European Economy:
- Euro (EUR) Strengthened: Reached its highest level since September 2021 at $1.1695.
- German GfK Consumer Sentiment:
  - Actual: -20.3
  - Forecast: -19.2
  - Previous: -20
  - Consumer sentiment slightly weakened, indicating cautious spending behavior.
Asian Markets:
- Chinese Yuan (CNY):
  - Strengthened to levels not seen since November 2024 against the USD.
  - Indicates confidence in China's economic stability.
Currency Strength Chart (3:01 AM, June 26th):
- Strongest to Weakest: JPY, GBP, EUR, CHF, AUD, NZD, CAD, USD.
- Reflects the USD's weakness relative to other major currencies.

Key Takeaways:

Economic Data:
- Mixed signals with strong durable goods orders but a contraction in GDP.
- Labor market shows resilience with lower initial jobless claims.
- Inflation metrics slightly higher, keeping pressure on the Fed's decisions.
Federal Reserve Outlook:
- Potential early appointment of a new Fed Chair is causing market speculation.
- Increased expectations of interest rate cuts by the end of the year.
Market Sentiment:
- Investors are seeking safe havens amid geopolitical uncertainties.
- Currency markets reflect a shift away from the US dollar.
Upcoming Corporate Earnings:
- Watch for Nike's earnings report today, which may provide insights into consumer spending trends.
- Big banks reporting in July could influence market direction.

Geopolitical Tensions:

Iran's Khamenei delivered televised message claiming victory over Israel
US CIA confirms Iran's nuclear program "severely damaged" by recent strikes
Russia open to OPEC+ output hike at next meeting

Market Catalysts:

WSJ report: Trump may announce Powell's Fed replacement by September/October
Nike earnings after market close (EPS: $0.13, Rev: $10.72B expected)
S&P 500 futures up 0.4%, tech stocks rallying on Micron strength

Final Thoughts

We have convergence of factors that's creating significant dollar weakness and rate cut euphoria. The WSJ report about Trump potentially naming Powell's replacement early is acting as a shadow Fed chair catalyst, essentially front-loading dovish expectations into the market.

The economic data is painting a mixed picture - while jobless claims and durable goods surprised to the upside, the GDP revision lower and sticky core PCE above target should give the Fed pause. Yet markets are choosing to focus on the dovish Fed speak and political dynamics rather than the inflation persistence.

The dollar's 8% YTD decline is becoming a major story, especially with the EUR hitting multi-year highs. This creates a feedback loop where dollar weakness could actually become inflationary through import prices, potentially complicating the Fed's easing path.

Geopolitically, the Iran situation remains a wildcard for energy markets, though oil's muted response suggests traders are betting on contained escalation. Keep an eye on how this evolves, as any flare-up could quickly shift the inflation narrative.

The setup heading into Nike earnings and tomorrow's data releases suggests continued volatility, with the dollar bears firmly in control for now. But remember - when everyone's leaning one way in FX markets, that's often when the biggest reversals happen.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.

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Harry