More signs of US slowdown, as Middle East tensions escalate
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How are escalating Middle‑East tensions affecting US dollar strength and equity markets?
Well, this is how far things have escalated in the Middle East. Donald Trump has been calling for unconditional surrender from Iran. Israel is telling residents in Tehran to leave, and the US President is saying they're not going to take out the Supreme Leader, not yet, anyway. In short, fighting talk and the markets are naturally cautious. But on top of that, more soft data from the US. Retail sales was softer than expected, and that is just the start of it. Potentially new tariffs just days away as well. And the Fed this time tomorrow. It's the morning call from Nab for Wednesday, the eighteenth of june twenty twenty five. Good morning. So naught point eight percent added to the US dollar on the DXY this morning, a three quarters of a percent fall in the Aussie dollar down to less than sixty four point eight US cents this morning.
The pound is down one point one percent, naught point seven percent off the euro, half percent off the Canadian dollar, not point three percent lower for the Swiss franc, and equities are well down at the close in the US just now, not point nine percent off the Nasdaq, naught point eight percent off the SP, and they're down naught point seven percent lower. Not just the US, of course, 1.1% off the DAX, 1% off the Eurostocks 50, and half a percent off the FTSE 100. Uh, US bond yields are well down again, six basis points lower for ten-year treasuries, down to four point three nine percent, again in contrast to Europe, where yields are up a little, but only one or two basis points for ten years. In most countries in Europe, Aussie ten years yesterday, we're at four point two five percent, uh just one basis point higher than that on the U.S.
Futures this morning, but oil is up a lot again. Four point three percent higher for WTI, four point two percent for Brent, which is around seventy-six thirty a barrel now. So the Middle East uh trade on Monday did seem a little bit strange, didn't it? Uh this the optimism there, given that this war between Israel and Iran is far from over. Uh now the concern is how just involved is the United States? It's gonna get what happens next, Nab Sally Old joins me today. So uh lots of movement, particularly in oil, uh back on the up again in a big way and much more concerned today about what's gonna happen.
What do the latest US retail sales and industrial production numbers reveal about economic slowdown?
Yeah, that's right, Phil. Good morning. So I think, you know, effectively uh another risk off session is the market, as you said, starts to fret about um I guess the situation in the in the Middle East not easing and starting to question um, you know, exactly as you said, the extent of the US's involvement in what's going on and and what might play out from here after uh, you know, a n a number of comments from the US President on social media and I guess more evidence that um, you know, various bits and pieces of of the US um I guess military complex uh appear to be converging in in uh various parts of the of the Middle East. And so that's clearly unnerving markets a little bit. And so as you said, equity's down, uh US bond yields down and US dollars stronger and oil stronger.
as the market, you know, really sort of grapples about uh what the end game might be in the Middle East.
Can't really say much more than that, can we? Apart from it depends what happens next. But we also had, uh, compounding the problems today, a lot of weak data in the United States as well, didn't we? So core retail sales for May actually fell by didn't slow, actually fell, contracted by naught point three percent. Uh the same for industrial production, minus naught point two percent in May. Uh so yeah, not good news.
Yeah, that's right. So we had retail sales for May, industrial production for May, uh and the also the uh NAHB Home Builders Index, that that fell too. Yes. And so I guess when you step back and you you look at uh you know what these numbers imply for where US growth is broadly tracking in the second quarter, you know, relative to where it might have started the year, uh the message is pretty clear, which is that the economy
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Chapters
8 chapters
1
How are escalating Middle‑East tensions affecting US dollar strength and equity markets?
0:01–2:05
2
What do the latest US retail sales and industrial production numbers reveal about economic slowdown?
2:05–4:02
3
Why did US home‑builder index fall and what does it say about mortgage‑rate pressure?
4:02–5:39
4
How is the slowdown in car purchases influencing the overall US retail‑sales headline?
5:39–7:39
5
What are analysts expecting from the Fed’s dot‑plot and upcoming policy decision?
7:39–9:33
6
How is the Bank of Japan’s policy stance and QT plan impacting global markets?
9:33–11:19
7
Why is New Zealand’s food‑price surge raising concerns about second‑quarter inflation?
11:19–13:03
8
What could UK CPI volatility mean for the Bank of England’s next rate cut?
13:03–14:08