As geopolitical focus shifts from the Middle East to the NATO summit in The Hague, Wall Street turns its attention back to the U.S. economy and growing expectations of a Federal Reserve interest rate cut as early as September.

NATO Summit & Geopolitics:

o NATO leaders are set to approve significant defense spending increases, aligned with U.S. President Trump’s stance.

o The Iran-Israel ceasefire appears stable, reinforcing the perception that Middle East tensions are no longer the major disruptor of global oil markets they once were.

Oil & Energy Markets:

o Despite recent conflict, crude oil prices remained contained and are now down over 20% year-on-year.

o U.S. crude is trading at $65/barrel, easing inflationary concerns and relieving pressure on central banks.

Fed & Interest Rate Outlook:

o Market bets on a Fed rate cut by September have surged.

o Futures are now pricing in 60 basis points of cuts by year-end.

o Some Fed officials, including previously hawkish Michelle Bowman, have hinted at possible cuts as early as July.

o Fed Chair Powell remained cautious in his congressional testimony, but soft economic data is fueling dovish sentiment.

U.S. Economic Indicators:

o Consumer confidence dropped unexpectedly in June.

o Housing market showing early signs of weakness: single-family home prices declined 0.4% in April.

o Treasury yields have dropped to six-week lows, with the dollar weakening significantly.

Global Market Impact:

o Wall Street rallied over 1% on Tuesday and held gains overnight.

o Global equities hit new all-time highs, aided by falling oil prices and a weaker dollar.

o European defense stocks rose further as NATO pushes for defense spending of up to 5% of GDP.

Company News:

o FedEx fell ~6% after issuing a weak earnings forecast.

o Tesla’s European sales dropped 27.9% in May despite EV market growth.

o Worldline plunged over 20% amid fraud cover-up allegations from European media.