Geopolitical Tensions Set the Stage
Global markets are set to open on a tense footing this week following a dramatic escalation in US-Iran relations. Over the weekend, the United States launched precision strikes on three Iranian nuclear sites—Fordow, Natanz, and Esfahan—raising the specter of broader conflict in the Middle East. The immediate financial market impact is expected to include a spike in oil prices, safe-haven flows into gold and the US dollar, and a potential selloff in risk assets.
President Trump, facing a pivotal week diplomatically, will be attending the NATO summit in Brussels on June 24–25. His presence there is expected to heighten focus on defense spending and transatlantic cohesion amid rising global tensions.
Global Economic Highlights
While geopolitics take center stage, a modest but meaningful economic calendar will also shape market sentiment. From inflation prints to durable goods data and high-profile central bank testimony, here’s what traders and investors should watch closely.
Monday, June 23 – European PMI Insights
- Eurozone Flash PMI (08:00 GMT):
Analysts expect June’s composite PMI to inch up to 50.5, just above the contraction line. However, sectoral divergence persists. Manufacturing is forecast to stagnate near 49.7 as export momentum fades, while weak consumer sentiment weighs on services. - UK PMI (08:30 GMT):
UK firms appear increasingly cautious. Analysts forecast a tepid services PMI at 51.0 and a slight manufacturing recovery to 47.0, driven by modest gains in order books but hampered by global tariff uncertainty and domestic cost pressures. - Speakers: ECB’s Lagarde and Nagel, alongside US Fed Chair Powell and Governors Waller, Bowman, and Williams, will offer further clues on monetary outlooks.
Tuesday, June 24 – German Business Confidence & Canada CPI
- Germany Ifo Business Climate (08:00 GMT):
The headline index is expected to rise to 88.2, supported by optimism around tax reforms and fiscal spending plans. The German cabinet is also poised to adopt the 2025 budget, including a €500 billion special investment fund—potentially a major tailwind for sentiment. - Canada May CPI (12:30 GMT):
Markets anticipate inflation to remain steady at 1.7% y/y. Food and core goods inflation are expected to underpin monthly price gains, with core measures hovering around 3.0% annualized. - Speakers: A flurry of central bank commentary is expected, including from ECB’s Lane and Fed officials Hammack and Collins. BoE Governor Andrew Bailey and other policymakers are also slated to speak.
Tuesday & Wednesday – Fed Chair Powell Testifies Before Congress
Fed Chair Jerome Powell heads to Capitol Hill for back-to-back testimony before the House (Tuesday) and Senate (Wednesday). His remarks will be closely scrutinized for insights into the Fed’s policy stance amid sticky inflation and geopolitical risks.
Markets expect Powell to maintain a cautious tone, emphasizing the Fed’s “wait-and-see” approach. Despite rate cuts priced in by year-end, resilient labor data and tariff-driven inflation risks are likely to keep the central bank on hold for now.
Midweek – US Senate Vote on Spending Bill
A key fiscal milestone looms as the US Senate is scheduled to vote on the administration-backed tax reform package. Market participants are watching closely, especially with bipartisan resistance building in the House. Passage could significantly shift expectations for fiscal stimulus and long-term yields.
Wednesday, June 25 – Australia CPI
- Australia May CPI Indicator (01:30 GMT):
Inflation is projected to ease slightly to 2.3% y/y. While the trimmed mean may fall to 2.5%, analysts warn that upside risks remain for Q2 CPI, with housing and energy costs in focus. The Reserve Bank of Australia will weigh these figures ahead of its July meeting.
Thursday, June 26 – US Durable Goods & Japan CPI
- US May Durable Goods (12:30 GMT):
A robust rebound of 8.5% is expected after April’s sharp 6.3% decline. However, the surge is largely attributed to a spike in aircraft orders, especially from Boeing, following President Trump’s Middle East visit. Core capital goods orders—excluding transportation—may remain subdued due to corporate caution around investment. - Japan Tokyo CPI (23:30 GMT):
Inflation in the capital region is seen easing to 3.3% y/y, thanks in part to the release of food stockpiles. Yet, housing and service-related inflation is likely to persist, keeping the Bank of Japan vigilant. - Speakers: ECB’s Schnabel and de Guindos, and Fed officials Barr and Hammack, will also be in the spotlight.
Friday, June 27 – PCE Inflation & Canadian GDP
- US Core PCE Inflation (12:30 GMT):
The Fed’s preferred inflation gauge is forecast to rise 0.1% m/m, with a year-on-year increase to 2.6%. Analysts note that May’s rise is driven in part by gains in medical goods and electronics. The reading is unlikely to trigger immediate policy moves but could shape expectations for September and December. - Canada April GDP (12:30 GMT):
Flat growth is expected after a 0.1% uptick in March. Weakness in manufacturing and ongoing trade frictions are likely to weigh on output, raising concerns over near-term growth momentum.
Markets Caught Between Conflict and Caution
With geopolitics heating up and economic signals remaining mixed, global markets may face a week of heightened volatility. Central bankers are walking a fine line between policy patience and inflation vigilance, while governments juggle fiscal reform, military posturing, and fragile consumer sentiment.
Investors should brace for sharp moves across energy markets, interest rate expectations, and FX volatility as key data and diplomatic developments unfold. Stay tuned—this week’s headlines could shape the second half of 2025.
IBAFIN 
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