Finance

Crude oil prices have retreated from recent peaks, with Brent and WTI futures declining following reports of a memorandum of understanding between the U.S. and Iran. This agreement, aimed at reopening the Strait of Hormuz, has begun to strip the geopolitical risk premium from energy forward curves. Major energy firms such as ConocoPhillips and Exxon Mobil saw their shares decline as regional gas pricing and production guidance softened in response to these easing tensions.

In the first meeting under new Chair Kevin Warsh, the Federal Reserve held interest rates steady in the 3.50%–3.75% range but surprised markets with a hawkish shift in the dot plot. Nine committee members now anticipate at least one more rate hike before the end of 2026, citing persistent inflation and strong economic data. This signal has driven the 10-year Treasury yield toward the 4.49% mark and prompted a flattening of the 2-year and 10-year yield curve.

May retail sales outperformed economist expectations with a 0.9% jump, indicating that U.S. consumer spending remains robust despite elevated energy costs. While higher gasoline prices accounted for a portion of the increase, core retail sales excluding volatile sectors also rose by 0.7%. This data reinforces the 'higher-for-longer' interest rate narrative, as strong demand and tight labor markets complicate the Federal Reserve's efforts to return inflation to its 2% target.