In the last two weeks, escalating tensions between Israel and Iran have rattled global markets, triggering sharp selloffs and raising concerns about broader geopolitical instability. At the same time, steady job growth, cooling inflation, and major corporate shifts have offered some reassurance, highlighting the ongoing push and pull between risk and resilience. Let’s dive in!
- Steady Job Growth: Payrolls rose by 139,000 in May, outpacing expectations and reinforcing labor market resilience. Wage growth also exceeded forecasts, suggesting continued economic momentum despite ongoing policy and inflation concerns.
- Improved Consumer Sentiment: The University of Michigan’s sentiment index rose to 60.5 in early June, a 15.9% increase from the prior month and well above expectations. Easing trade tensions and lower inflation outlooks helped lift consumer confidence.
- Modest Inflation Gains: Consumer prices rose just 0.1% in May, with annual inflation holding at 2.4%. Core inflation also came in below expectations, as energy prices fell and vehicle and apparel costs declined, easing immediate concerns about tariff-driven price pressures.
- New Housing Trends: Housing inventory is rising, competition is easing, and prices remain relatively steady—marking a more favorable summer for buyers. Improved consumer confidence and a stable labor market are helping support activity, though high mortgage rates continue to present affordability challenges.
- Household Debt Update: Total U.S. household debt rose $167B in Q1 2025, reaching $18.2T. While mortgage balances and credit limits grew, credit card and auto loan balances declined. A key shift came from student loans, which saw delinquency spike to 8.04% as pandemic-era reporting pauses ended, marking a notable stress point in consumer credit.
- Israel and Iran Conflict: Stocks fell sharply after Israeli airstrikes on Iran escalated tensions and boosted oil prices. The Dow dropped 769 points, while energy and defense stocks gained. Markets are watching for inflationary impacts from rising crude and potential fallout from stalled nuclear talks.
- Google Cleared in Mexico: After a multi-year probe, Mexico’s antitrust commission closed its case against Google, finding no monopolistic behavior in the company’s digital ad practices. The decision spares Google from potential fines of up to 8% of its local revenue.
- AI Expansion Strategy: Meta is investing $14.3 billion in Scale and bringing CEO Alexandr Wang on board to boost its pursuit of superintelligence. The deal strengthens Meta’s position in the AI race as it works to close the gap with rivals like OpenAI and Google.
- US Steel Deal Approved: Nippon Steel’s $14.1B acquisition of US Steel has received conditional U.S. approval following a national security agreement. The deal includes $14B in additional U.S. investments and establishes a “golden share” for federal oversight, creating the world’s second-largest steelmaker while preserving American operations and jobs.
Over the next two weeks, markets will closely watch key data releases including the final Q1 GDP revision and the June consumer confidence report, both of which may influence expectations around Fed policy. Geopolitically, focus will remain on developments in the Middle East and U.S. trade negotiations.
Footnotes
SFM Market Commentary: 6/20/25
In the last two weeks, escalating tensions between Israel and Iran have rattled global markets, triggering sharp selloffs and raising concerns about broader geopolitical instability. At the same time, steady job growth, cooling inflation, and major corporate shifts have offered some reassurance, highlighting the ongoing push and pull between risk and resilience. Let’s dive in!
Over the next two weeks, markets will closely watch key data releases including the final Q1 GDP revision and the June consumer confidence report, both of which may influence expectations around Fed policy. Geopolitically, focus will remain on developments in the Middle East and U.S. trade negotiations.
Footnotes