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Macro Wrap

War Update: The US military launched fresh airstrikes against Iran late Tuesday in retaliation for attacks on commercial shipping in the Strait of Hormuz. US forces carried out a new round of offensive strikes on Iran, using precision-guided munitions to hit more than 80 targets, in a direct response to recent Iranian attacks on commercial vessels in the Strait of Hormuz. US targeted Iranian air-defence systems, command-and-control networks, coastal radar sites and anti-ship missile capabilities, and destroyed over 60 small vessels belonging to the Islamic Revolutionary Guard Corps in the Strait and adjacent waters. US Central Command said forces had begun “powerful strikes to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway”. while the Treasury revoked Iran’s oil export waiver, marking the sharpest US–Iran escalation since their memorandum of understanding less than three weeks ago. Sentimentally negative for broader markets and Indian rupee

The US May trade deficit widened 42.2% month-on-month to $77.6 billion, the largest since March 2025, as exports fell 3.2% and imports rose 3.3%. The print came in slightly better than the $78.4 billion consensus estimate.

Atlanta Fed GDP Now revised up. The Atlanta Fed's GDP Now model revised its Q2 US GDP growth estimate up to 1.36% from 1.19% previously, following the May trade data release. The estimate remains well below the Bloomberg consensus of 2.47%

US one-year inflation expectations rose to 3.7% in June 2026 and three-year expectations to 3.3%, while the five-year outlook stayed at 3.0%. Gas price expectations fell to 1.5%. Job security perceptions improved, households felt financially better off than a year ago but more expect tighter credit ahead.

The DJIA, the S&P500, and the Nasdaq Composite Index fell 0.2%, 0.4%, and 1.2% respectively. The Euro Stoxx 50 declined 1.2%. The Dollar Index rose 0.3% to 101.14. EUR-USD slipped 30 pips to 1.1410. The US 2Y yield rose 8bp to 4.19% and the 10Y rose 8bp to 4.55%. The German 10Y yield rose 5bp to 2.99%. The UK 10Y yield rose 6bp to 4.85%. Brent crude oil prices rose 3.0% to USD74.16, as the Hormuz attack reignited supply disruption fears. Gold fell 1.4% to USD4,106.

Gold slumped up to 1.8% to below $4,120 an ounce as the dollar, oil, and bond yields rose together, extending its decline to a second session and reinforcing views that the three-year bull run from the January peak near $5,600 may be over, despite the PBOC’s largest monthly gold purchase since October 2023 and a 20 month buying streak, set against roughly $18 billion of ETF outflows. Sentimentally negative for Gold lenders.

Data watch: we get the US wholesale inventories for May.