Articles

• On Iran blockade says anything that is taken off will be taken off slowly
• There are 3 scenarios on Iran: deal, no deal, or kinetic action
• There’s more we can do on Iran if we have to
• See real wage growth to resume, on the other side of the war
• 100% approve of the Fed getting rid of forward guidance
• Rates peaked the day before Warsh was sworn in
• People have a wrong notion of what a strong dollar means
• A strong dollar means doing the right things for the economy
• When asked about maintaining the dollar as a reserve currency he said nothing has changed

US Treasury Secretary Scott Bessent said the administration remains committed to pursuing a diplomatic resolution with Iran but warned that alternative options remain on the table if negotiations fail, while also offering a robust defense of the Federal Reserve’s evolving policy framework and the long-term strength of the US dollar.

Speaking about ongoing discussions with Iran, Bessent indicated that any easing of restrictions related to the US naval blockade would be implemented gradually rather than all at once.

He outlined what he described as three possible paths forward for the standoff with Iran: a negotiated agreement, a failure to reach a deal, or military action.

While emphasizing the administration’s preference for diplomacy, Bessent stressed that the US retains additional tools if negotiations break down.

On the domestic economy, Bessent struck an optimistic tone, arguing that real wage growth could strengthen once the current geopolitical conflict subsides and uncertainty begins to fade.

Bessent also weighed in on monetary policy, offering strong support for the Federal Reserve’s decision to move away from explicit forward guidance as a central communication tool.

The comments reflect a growing view among some policymakers that excessive reliance on pre-signaled policy paths can reduce flexibility and create market distortions when economic conditions change unexpectedly. Bessent suggested that a more data-dependent approach allows policymakers to respond more effectively to evolving economic circumstances.

Turning to the dollar, Bessent rejected what he described as common misconceptions about currency strength. Rather than focusing solely on the exchange rate, Bessent argued that a strong dollar should be understood as the product of sound economic policy, sustainable growth, and confidence in US institutions.

His remarks come amid ongoing debate over whether a stronger or weaker currency better serves US economic interests. Bessent’s comments suggest the administration continues to view the dollar’s strength as a reflection of broader economic fundamentals rather than a specific exchange-rate target.

When asked about maintaining the dollar’s status as the world’s primary reserve currency, Bessent sought to reassure markets that there had been no change in policy.

The statement is likely aimed at reinforcing confidence in the dollar’s central role in global finance at a time when some geopolitical rivals have sought to reduce their dependence on the US currency for international trade and reserves.

This article was written by Giuseppe Dellamotta at investinglive.com.

Full report here

Trump did not reach a final decision on a Memorandum of Understanding (MoU) with Iran during a nearly two-hour meeting in the White House Situation Room, according to a senior administration official familiar with the deliberations.

The meeting came after Trump publicly suggested that a major breakthrough with Tehran could be imminent, outlining what he described as elements of a possible agreement involving the Strait of Hormuz, Iran’s nuclear activities, and broader regional security arrangements.

However, despite the lengthy discussion among senior national security and foreign policy officials, no final approval was given for a new deal, the official said.

According to the administration official, who spoke on condition of anonymity to discuss internal discussions, the White House believes negotiations are approaching a critical stage and that an agreement may be within reach. Nevertheless, several important issues remain unresolved and continue to prevent a final settlement.

Among the most significant outstanding points is the question of frozen Iranian assets.

The issue of whether, when, and under what conditions Iranian funds held abroad would be unfrozen has emerged as one of the principal obstacles in the final phase of negotiations. Iranian officials have repeatedly indicated that access to blocked assets and broader sanctions relief are essential components of any agreement, while US officials have debated the political and strategic implications of releasing funds to Tehran.

The administration’s assessment contrasts with some of Trump’s recent public statements, which suggested that a framework had largely been agreed upon and that only final procedural steps remained. The official’s account indicates that while substantial progress may have been made, negotiators have yet to bridge all remaining differences.

The disclosure also comes amid conflicting public messaging from Washington and Tehran. Iranian officials have insisted that no final agreement has been concluded and have emphasized that current discussions remain focused primarily on ending the conflict rather than negotiating long-term nuclear arrangements.

At the same time, both sides have signaled that diplomatic efforts have intensified in recent weeks, raising expectations that a broader understanding could eventually emerge. Negotiators are reportedly working through issues involving regional security, maritime access in the Strait of Hormuz, sanctions, frozen assets, and the sequencing of commitments by both governments.

While the White House remains optimistic that an agreement is close, the senior official said the negotiations have not yet reached the point where Trump is prepared to sign off on a final deal. Until the remaining disputes, particularly over Iranian funds, are resolved, the prospect of a comprehensive US-Iran agreement remains uncertain.

The latest developments suggest that diplomacy between Washington and Tehran may be entering its most decisive phase, with both sides appearing closer to an agreement than at any point in recent months, yet still divided on several issues that could determine whether a final accord is ultimately achieved.

This article was written by Giuseppe Dellamotta at investinglive.com.

• Trump did not reach a decision on any new deal with Iran after Situation Room meeting
• How have interest rate expectations changed after this week’s event?
• Iran’s Baghaei: No agreement has been finalised with the United States so far
• Fed’s Daly says she doesn’t see mass unemployment or displacement from AI
• Blockade lift announcement by Trump seen as first step toward broader US-Iran agreement
• Iran’s Fars News says Iranian sources deny Trump’s latest comments
• Trump: The US naval blockade will now be lifted
• Tech sector surges while communication services face downturn
• Trump administration wants autos under USMCA to be at least 50% made in the US – WSJ
• Major US stock indices extend gains to new record highs on US-Iran deal optimism
• Fed’s Paulson says healthy for markets to shift to tighter monetary policy outlook
• Iran’s top negotiator Ghalibaf: We gain concessions not with talks, but with missiles
• Fed’s Bowman says progress on lowering inflation has stalled
• US April wholesale inventories +0.5% vs +0.8% expected
• US April advanced goods trade balance -$82.40 billion vs -$86.50 billion expected
• Canada Q1 GDP -0.1% vs +1.5% expected
• Germany May preliminary CPI +2.6% vs +2.9% y/y expected

The highlight of the session was Trump’s announcement on Truth Social of the lifting of the US naval blockade and a “final determination” on a broader agreement to follow shortly in the White House Situation Room. This gave the positive risk sentiment a further boost, with oil prices extending losses. Iranian sources suggested the public blockade announcement was viewed as the first step in a wider framework that could eventually address regional security issues, sanctions, and future discussions on Iran’s nuclear program.

Iranian sources pushed back on Trump’s characterization of the talks though. Sources cited by Iran’s Fars News Agency described Trump’s statements as a mixture of “truth and falsehood,” denied claims regarding the dismantling of Iran’s nuclear material, and insisted that no final agreement has been approved. Tehran reportedly maintains that discussions remain focused on ending the conflict and lifting the blockade, while key issues such as frozen Iranian assets, sanctions relief, and broader political conditions remain unresolved.

Later reports indicated that Trump’s nearly two-hour Situation Room meeting ended without a final decision on a new agreement. According to US officials, the administration believes it is close to a deal, but significant sticking points remain, particularly regarding the unfreezing of Iranian funds and the sequencing of commitments by both sides. As a result, while markets interpreted the developments as a sign of diplomatic progress, negotiations continue and a formal agreement has yet to be finalized by either Washington or Tehran. Despite the noise, the constant push towards a deal continues to keep the markets supported.

Federal Reserve officials collectively reinforced a cautious and generally neutral policy stance, emphasizing that inflation remains above target and that current interest-rate setting remains appropriate. Fed’s Bowman warned that progress on disinflation has stalled and said an extended Middle East-driven energy shock could add to inflation pressures later this year, though she argued against overreacting to temporary price spikes.

Fed’s Paulson similarly stated that inflation was too high even before the recent geopolitical tensions, supported holding rates at mildly restrictive levels, and said it was healthy for markets to shift toward a tighter-for-longer policy outlook. Meanwhile, Fed’s Daly expressed confidence that monetary policy is well positioned to restore price stability without unnecessarily harming the economy, while highlighting the potential for AI-driven productivity gains to support growth and ease long-run inflationary pressures.

On the economic data side, Germany’s headline CPI slowed to 2.6% on easing energy prices, but core inflation rose to 2.5% vs 2.3% in the prior month. Canada’s GDP grew just 0.1% in the first quarter, well below the 1.5% consensus forecast. The Canadian data has been consistently surprising to the downside lately which makes the market’s BoC rate hike expectations look off.

In the US, trade and inventory data were more encouraging. The April advanced goods trade deficit narrowed to $82.4 billion from the expected $86.5 billion, suggesting net exports could provide a more favorable contribution to second-quarter GDP than previously anticipated. Meanwhile, wholesale inventories rose 0.5%, below the 0.8% forecast.

Have a great weekend!

This article was written by Giuseppe Dellamotta at investinglive.com.

Rate hikes by year-end

• RBNZ: 75 bps (79% probability of rate hike at the next meeting)
• ECB: 52 bps (89% probability of rate hike at the next meeting)
• BoJ: 42 bps (71% probability of rate hike at the next meeting)
• BoE: 32 bps (94% probability of no change at the next meeting)
• BoC: 28 bps (99% probability of no change at the next meeting)
• RBA: 18 bps (93% probability of no change at the next meeting)
• Fed: 13 bps (99% probability of no change at the next meeting)
• SNB: 11 bps (97% probability of no change at the next meeting)

The main theme of this week has been US-Iran deal optimism as several reports since the weekend have been pointing to an imminent breakthrough. That breakthrough hasn’t come yet, but it still led to a sizeable drop in oil prices and a dovish repricing in interest rate expectations for most central banks.

The biggest changes were seen in the RBA and RBNZ pricings. For the RBA, the market continues to scale back rate hike expectations, with traders not seeing any more rate hikes coming this year. This is due to meaningful softening in Australia’s economic data recently, with the unemployment rate jumping to the highest level since 2021 and monthly headline inflation slowing way below RBA’s forecasts.

For the RBNZ, the central bank held its Official Cash Rate steady at 2.25% but delivered a hawkish surprise. The central bank revealed that its decision was split 3-3, forcing a casting vote, and explicitly warned that interest rates will likely need to be increased sooner and more aggressively than previously forecasted. Traders rushed to price in a rate hike coming already at the next meeting in July with probabilities now standing at 79%.

This divergence between RBA and RBNZ has also led to the largest single-day decline in the AUD/NZD pair since 2022.

Notably, the market is still pricing in a 71% chance of a BoJ rate hike in June, which is way out of touch with the reality. BoJ Governor Ueda made it pretty clear that they will wait for the second half of 2026, and they will want to see the US-Iran conflict to end before delivering a rate hike that could just unnecessarily weigh on economic activity. The Japanese inflation data hasn’t been calling for urgent rate hikes at all.

This article was written by Giuseppe Dellamotta at investinglive.com.

• No agreement has been finalised with the United States so far
• The management of the Strait of Hormuz must be decided by Iran and Oman
• At this stage, we are focused on ending the war; we are not negotiating over Iran’s nuclear program

Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said no final agreement has yet been reached with the United States, pushing back against growing speculation that Washington and Tehran are on the verge of formalizing a broader understanding over nuclear-related issues.

Baghaei emphasized that discussions remain ongoing and that reports suggesting a finalized deal are premature. Iranian officials have repeatedly stated in recent days that while conclusions have been reached on parts of a potential memorandum of understanding, significant issues remain outstanding.

Baghaei also rejected suggestions that the United States should have a role in determining the future management of the Strait of Hormuz.

The remarks come after a series of statements from US officials and President Trump regarding the reopening of the strait and broader negotiations aimed at stabilizing the region.

Baghaei’s comments suggest Tehran is seeking to frame the issue as a regional matter to be handled by the countries directly bordering the strait rather than through arrangements dictated by the US. Iranian officials have previously argued that security in the Persian Gulf and the Strait of Hormuz should be managed by regional states.

Perhaps most notably, Baghaei indicated that Iran is not currently engaged in negotiations over its nuclear program, despite repeated statements from US officials linking any future agreement to restrictions on Iranian nuclear activities.

The statement highlights a continuing gap between the priorities publicly outlined by Tehran and those emphasized by Washington. US officials have consistently described Iran’s nuclear activities, uranium enrichment levels, and stockpile management as central components of any long-term agreement.

Iran, however, has repeatedly maintained that current discussions are primarily centered on ending the conflict and securing broader regional understandings before moving to more contentious issues such as sanctions relief and nuclear restrictions.

This article was written by Giuseppe Dellamotta at investinglive.com.

Al Jazeera reporter, Ali Hashem, posted on X:

“A highly informed source tells me that Trump’s post on the “Truth Social” platform regarding lifting the siege was actually the first condition before moving on to the rest of the agreement steps.

And according to the source, Tehran insisted on an official and public announcement first. It seems that Trump tried to present the matter as a secondary detail among larger files, while Iran considers it an essential step to build trust before entering the more sensitive files.

So far, direct discussions on the nuclear file itself have not been opened. The path is expected to proceed gradually through a memorandum of understanding (MOU), with each step met by a reciprocal step.

The source adds that the announcement of a ceasefire between Hezbollah and Israel is within the framework that was agreed upon.”

In other news, an Iranian source is saying that Trump’s claim about Iran’s highly enriched uranium stockpile is not true as a possible MoU between Tehran and Washington does not include any nuclear-related issues.

Another senior Iranian source is saying that a political understanding has been reached between US and Iran but it has not yet been finalised.

This article was written by Giuseppe Dellamotta at investinglive.com.

• Fars News Telegram link here

From Fars News Telegram channel:

Informed sources have rejected recent claims by US President Donald Trump regarding a possible agreement with Iran, describing his statements as a “mixture of truth and falsehood” and an attempt to portray a fabricated victory. According to these sources, it has become clear to almost everyone that these claims lack credibility.

According to the report, the agreement text, drafted under the framework of “commitment in exchange for commitment”, is in the final stages of approval in Iran, and no final decision has yet been made. Meanwhile, Trump, who reportedly sees himself as unable to walk away from the deal, has made statements that contradict the contents of the agreement text, while simultaneously announcing that he is ending the blockade immediately.

Distortion of the Agreement’s Main Provisions by Trump

1. Strait of Hormuz:
Trump has claimed that Iran is obligated to open the Strait of Hormuz without collecting any fees. However, according to the sources, no such provision exists in the agreement. Iran has emphasized that once the blockade is lifted, it will reopen the strait according to its own predetermined arrangements. These arrangements could include monitoring and inspecting vessels, providing services, and ensuring security. According to information obtained by a Fars News Agency reporter, Iran is currently preparing the infrastructure for these arrangements.

2. Dismantling Nuclear Material:
Trump has claimed that Iran will dismantle or destroy its nuclear materials. Informed sources stress that not only is there no such provision in the memorandum of understanding, but the claim itself is fundamentally baseless.

Key Elements of the Agreement That Trump Omitted

1. Immediate $12 Billion Payment:
The most important part of the agreement, which Trump did not mention, is the requirement for the immediate release of $12 billion from Iran’s frozen assets. According to the agreement text, this amount must be paid immediately, and Iran will not enter any subsequent stage of negotiations until the payment is made. Failure to implement this provision would constitute a violation of U.S. commitments.

2. Ceasefire in Lebanon:
Another issue is the establishment of a complete ceasefire in Lebanon in accordance with the position of Hezbollah.

According to informed sources, only after these issues are resolved will Iran enter discussions on the lifting of all sanctions and the nuclear issue, in line with its own red lines.

At the same time, Iranian officials have emphasized that any final agreement will be based on the principles and red lines of the Islamic Republic of Iran and structured around a policy of complete distrust toward the United States, in such a way that any breach of commitments would trigger an immediate reciprocal response.

This is getting tiresome…

This article was written by Giuseppe Dellamotta at investinglive.com.

Full report here

The Trump administration is preparing a proposal that would significantly tighten automotive sourcing requirements under the US-Mexico-Canada Agreement (USMCA), potentially requiring that half of all components and materials used in a vehicle originate from the United States in order to qualify for the trade pact’s preferential tariff treatment, according to a report by The Wall Street Journal.

The proposal, which is being developed ahead of formal negotiations over the future of the North American trade agreement, would mark one of the most substantial revisions to the automotive rules of origin since the USMCA replaced NAFTA in 2020.

Under the current agreement, vehicles must contain at least 75% North American content by value to qualify for lower tariffs. However, the existing rules do not require any minimum level of US-specific content, allowing automakers to meet the threshold through a combination of parts and materials sourced from the United States, Mexico, and Canada.

The administration’s new proposal would introduce a distinctly American content requirement, mandating that 50% of a vehicle’s components and materials come directly from US suppliers.

Supporters of the measure argue that it would encourage manufacturers to expand production within the United States, strengthen domestic supply chains, and create additional jobs in the American automotive sector. The proposal is consistent with President Donald Trump’s long-standing emphasis on reshoring manufacturing and reducing reliance on foreign production networks.

The move could have significant implications for the highly integrated North American auto industry, where vehicles often cross borders multiple times during the manufacturing process. Over the past three decades, automakers have built extensive supply chains that distribute production among facilities in the United States, Mexico, and Canada based on costs, specialization, and logistics.

Industry analysts say a US-specific content mandate would likely require manufacturers to rethink sourcing strategies and potentially increase investment in American parts production. At the same time, critics warn that stricter content rules could raise production costs, complicate compliance requirements, and reduce some of the efficiency gains created by regional integration.

The proposal comes as the three USMCA partners prepare for a scheduled review of the agreement. The pact includes a six-year review mechanism designed to assess its effectiveness and determine whether changes are needed before the agreement’s longer-term renewal deadlines.

According to the Wall Street Journal report, the administration developed the proposal ahead of negotiations over restructuring the agreement. A US delegation is currently in Mexico City for an initial round of formal discussions with Mexican officials regarding the future of the trade pact.

The automobile sector remains the largest and most economically significant manufacturing industry governed by the USMCA, making any changes to sourcing requirements particularly consequential for manufacturers, suppliers, workers, and consumers across the region.

For Mexico and Canada, the proposal could represent a challenge to the agreement’s original objective of promoting a fully integrated North American production platform. For the US, however, the measure would align with broader efforts to ensure that a greater share of the economic benefits from regional trade accrue directly to US workers and manufacturers.

This article was written by Giuseppe Dellamotta at investinglive.com.

• Iran must agree they’ll never have a nuclear weapon or bomb
• The Hormuz Strait must be immediately open, no tolls
• The naval blockade will now be lifted
• Uranium will be unearthed by the US in coordination Iran, plus the International Atomic Energy Agency, and destroyed
• All water mines, if any, will be terminated
• No money will be exchanged until further notice
• Other items, of far less importance, have been agreed to. I will be meeting now, in the Situation Room, to make a final determination

This article was written by Giuseppe Dellamotta at investinglive.com.

• S&P 500 +0.44%
• Nasdaq Composite +0.58%

The latest catalyst for the push into new all-time highs was yesterday’s Axios report saying that US and Iranian negotiators have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and launch negotiations on Iran’s nuclear program, but President Trump has yet to give his final approval.

The most important thing in terms of economic outlook is the Strait of Hormuz. There’s still lots of confusion on how and when it’s going to reopen. Just now, Iran’s Foreign Minister Aragchi said in a post on X that he discussed the Hormuz and its future administration in line with their sovereign responsibilities and international law.

Iran has been pushing for a toll system with Oman, and the US has repeatedly said that it would be unacceptable.

The main risks for the stock market at the moment are Fed rate hikes and a new US-Iran military conflict. For now, the fact that diplomacy continues to be the main driver, has been keeping the market supported as neutral Fed policy continues to indirectly ease financial conditions.

If the situation in the Strait of Hormuz doesn’t change before the June FOMC meeting, there’s a risk that the Fed delivers a more hawkish than expected decision and could trigger a nasty correction given the overstretched positioning.

This article was written by Giuseppe Dellamotta at investinglive.com.

• We gain concessions not with talks, but with missiles
• We have no trust in guarantees or words
• Only actions are the measure
• No action will be taken before the other side acts
• The winner of any agreement is the one who is better prepared for war from the day after

Iran’s chief negotiator and parliament speaker, Mohammad Bagher Ghalibaf, explicitly stated that Iran gains concessions not with talks, but with missiles, while emphasizing that Iran places little faith in diplomatic guarantees or verbal commitments.

The remarks come amid ongoing diplomatic efforts between Iran and the United States, where negotiations have been complicated by deep mistrust, escalations in the Strait of Hormuz, and disagreements over sanctions, security arrangements, and Iran’s strategic capabilities. Ghalibaf has repeatedly argued that Washington has failed to rebuild Iranian trust despite multiple rounds of talks.

According to Ghalibaf, negotiations are not viewed as a process built on confidence or goodwill, but as an arena where power determines outcomes. His statement that “only actions are the measure” reflects a longstanding principle within Iran’s revolutionary establishment: military leverage and demonstrated capability carry more weight than diplomatic assurances.

The comment that “no action will be taken before the other side acts” also signals Tehran’s insistence on reciprocity. Iranian officials have increasingly argued that previous agreements failed because Iran made concessions in advance while waiting for promises from US to be fulfilled. Under this framework, any future deal would require tangible steps by the opposing side before Iran responds in kind.

Perhaps the most significant part of Ghalibaf’s remarks was his assertion that “the winner of any agreement is the one who is better prepared for war from the day after.” The statement underscores a security-first mindset that continues to shape Iran’s strategic calculations. Rather than viewing diplomacy as an alternative to conflict, the doctrine suggests that negotiations are effective only when backed by credible military deterrence.

This article was written by Giuseppe Dellamotta at investinglive.com.

• Prior +2.9%
• HICP +2.7% vs +2.8% y/y expected
• Prior +2.9%
• Core CPI Y/Y +2.5% vs +2.3% prior

The German states inflation readings released earlier in the day were much lower than the prior month, so a notable miss on the national measure was expected. The German Core CPI Y/Y rose to 2.5% from 2.3% prior.

That’s due to a pullback in energy prices but the ECB is more focused on underlying inflation pressures and the risk of second-round effects if the situation in the Strait of Hormuz persists longer than expected.

As a reminder, the ECB is widely expected to deliver an “insurance” 25 bps rate hike in June and pause at least until September to see how the data and the US-Iran situation evolves over the summer.

This article was written by Giuseppe Dellamotta at investinglive.com.