A black swan looms as Fed enters a pivotal week amid Iran strikes, inflation data, and rate talks

US-Iran Conflict Escalation Raises Market Anxiety

On June 21, US President Trump announced airstrikes on three key nuclear facilities in Iran, igniting geopolitical tensions. In response, Iran retaliated with missiles, using their long-range ballistic missile "Khorramshahr" for the first time. Analysts believe this military escalation could trigger broader conflicts in the Middle East, heightening global market unease.

Ray Takeyh, an expert from the Council on Foreign Relations, stated that the US's direct involvement in regional conflicts might initiate a more unpredictable phase in security conditions. The market is closely monitoring the conflict's development, with risk-aversion sentiments clearly rising.

Increased Market Volatility, Energy Prices as New Anchor

Although the three major US stock indices remain near high levels and are fluctuating, energy assets have started reflecting the risk. Citigroup analysts noted that geopolitical conflicts are not yet fully priced into stocks but have noticeably impacted oil pricing. With Brent Crude nearing $80, future trends will influence overall risk assets.

The investment chief of Federated Hermes pointed out that if the situation escalates, US stocks could face further shocks; if it gradually eases, it will benefit the stock market and other high-risk assets.

Powell's Testimony as a Policy Indicator

This week, Federal Reserve Chairman Powell will attend Senate and House hearings on June 24 and 25, respectively, providing testimony on inflation, employment, and monetary policy. The market expects him to maintain a cautious tone, but his statements amidst ongoing trade tariff uncertainties may influence market expectations of future interest rate paths.

There are internal disagreements within the Federal Reserve. Governor Waller has hinted that there might be room for a rate cut in July if data supports it, while San Francisco Fed President Daly believes action in the fall would be more appropriate. Investors will watch whether Powell continues with the "wait for more data" stance or signals a stronger policy shift.

Core Inflation Data to Be Released, a Key Observation Point

The US May PCE price index, a focus of the market, will be released on June 27. Analysts expect this data to indicate slight inflationary growth, but the increase remains controlled, with core PCE rising 2.6% year-on-year.

Despite mild short-term data, Shenwan Hongyuan suggests that the tariff effect might be "delayed but not absent" in the second half of the year, with signs of rising import prices already visible. Companies may "hide" price increases during inventory clearance, which, once exhausted, will lead to overall price volatility.

Upcoming Q1 GDP Final Reading May Confirm Economic Weakness

The upcoming release of the US Q1 real GDP final reading on June 26 is also attracting market attention. Previous revised figures showed the economy shrinking at an annual rate of 0.2%, better than the initial value, but still reflecting internal demand weakness and economic pressure from import growth. If the final reading continues to weaken, it may reinforce expectations of future rate cuts.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.