Morning Brief: Trump Warns of New Iran Strike; Treasury Yields Spike, Crushing US Stocks

At a Glance

⚠️ Trump warns of potential new strike on Iran, says he was "one hour" from ordering an attack, but notes Tehran wants a deal.

📉 US stocks crushed by soaring yields, S&P & Nasdaq down 3 straight sessions; Dow hits 2-week low.

📈 30Y Treasury yield hits 5.178% (19-year high); 10Y at 4.667% (highest since Jan 2025).

📊 Citi sees Brent at $120/bbl near-term**, warns of a possible **$150/bbl spike.

1. Market Outlook

Key Events

Trump said Tuesday the US may need to launch another strike on Iran, stating he was one hour away from ordering an attack before delaying it. He claimed Iranian leaders are "begging" for a deal, but vowed a new strike in coming days if talks fail. Vice President Vance said both sides have made "significant progress" and want to avoid renewed military action. Treasury Secretary Bessent urged allies to crack down harder on Iran's financing networks. Meanwhile, 30Y Treasury yields surged to 5.178% (19-year high), with the 10Y at 4.667% (highest since Jan 2025).

Market Reaction

US equities were pummeled by elevated yields, with the S&P and Nasdaq falling for 3 straight sessions and the Dow closing at a 2-week low. Google fell over 2%, leading mega-caps lower; the semiconductor index eked out a small gain, halting a 2-day slide, with Marvell up over 4%. WTI crude fell 0.82% to $107.77/bbl. Bitcoin hovered near $77,000.

2. Overnight Markets

Key Summary

Treasury yield surge crushes US stocks; S&P & Nasdaq down 3 straight sessions; oil dips slightly.

US Equities

• Dow: -0.65% (-322.24 pts) to 49,363.88
• S&P 500: -0.67% (-49.44 pts) to 7,353.61
• Nasdaq: -0.84% (-220.02 pts) to 25,870.71 💡 3 straight losses for S&P & Nasdaq; yield pressure on valuations outweighed easing geopolitics. Google (-2%) led tech lower; chips bounced (Marvell +4%, Western Digital +4%, Micron +2.5%).

European Equities

STOXX 600 +0.2% to 611.34. 💡 Modest bounce as US-Iran tensions eased, but gains limited.

Fixed Income

• 30Y Treasury: +5.5 bps to 5.178% (intraday high 5.197%, 19-year high)
• 10Y Treasury: +8.7 bps to 4.667% (intraday high 4.687%, highest since Jan 2025) 💡 30Y yield >5.2% (highest since 2006). Markets price structural fears: higher long-term inflation, runaway deficits, and excess Treasury supply. The bond vigilantes are back.

Commodities

• WTI June: -0.82% to $107.77/bbl
• Brent July: -0.73% to $111.28/bbl
• COMEX Gold: -1% to $4,506.30/oz
• COMEX Silver: -2.9% to $74.83/oz 💡 Oil dipped on talk of talks, but risks remain. Gold/silver fell on higher real yields.

Forex

USD index +0.18% to 99.31; EUR/USD -0.21% to 1.1631; GBP/USD -0.35% to 1.3386. 💡 Dollar strengthened on higher yields + geopolitical uncertainty.

Crypto

Bitcoin hovered near $77,000**; Ethereum around **$2,240. 💡 Risk assets pressured by yield surge + geopolitics.

3. Macro News

⚠️ Trump: US May Strike Iran Again; Was "One Hour" From Ordering Attack Says Tehran wants a deal, but threatens new strikes if negotiations fail. Insight: Talk-fight strategy—military threats to force concessions while signaling openness to talks. Markets see persistent risk, keeping yields elevated.

📈 30Y Yield Hits 5.178% (19-Year High); 10Y at 4.667% Insight: Long-end yields break 2006 highs. Markets price structural issues: higher long-term inflation, fiscal deficits, and Treasury supply. The bond vigilantes are back.

🇺🇳 UN Cuts 2026 Global Growth Forecast to 2.5%, citing Middle East-driven inflation Sees developed economy inflation rising to 2.9% and developing economies to 5.2%; China growth seen slowing to 4.6%. Insight: First major international body to cut growth due to the Middle East crisis. Stagflation is becoming a baseline forecast.

📊 Reuters/Ipsos Poll: Trump Approval Falls to 35%, with 21% of Republicans disapproving Insight: Near the 34% low set last month. Cracks in Trump’s base; economic issues (oil, inflation) will dominate midterms.

🇯🇵 Japan May Manufacturing Confidence Rises to +8, below March’s 4-year high of +18; services sentiment slips Insight: Manufacturing bounced from war shocks but remains weak. Services weakness signals soft domestic demand, complicating BOJ rate hikes.

📊 Citi: Brent to $120/bbl Near-Term, $150/bbl Bull Case Sees 2027 Brent at $80–90/bbl if Iran keeps Strait of Hormuz traffic controlled. Insight: **Most bullish call** from a major bank. Core logic: markets underestimate **long-term supply disruptions + tail risks**. The $150 scenario hinges on volatile reopening of the Strait, not a full blockade.

4. Corporate News

🗣️ Google I/O: All-In AI—Gemini Omni/3.5 Flash, Search Overhaul, Spark Agent, AI Glasses This Fall — Full AI push across models, search, and hardware. But stock fell 2% as investors focused on revenue impact, not product launches.

🚀 NVIDIA’s Jensen Huang: AI Infrastructure Still "Very Early", with memory and advanced chips as key bottlenecks On China visit: "I’m here to support President Trump; it’s an honor to represent the US." — "Very early" view backs the long-term AI narrative. Memory bottlenecks align with Micron/SK Hynix gains. His China comments walk a diplomatic tightrope.

5. Key Events to Watch Today

📊 NVIDIA Earnings: AI narrative stress test. Watch data center revenue growth, Blackwell shipment timeline, and China guidance.

📈 Fed Minutes (May Meeting): Markets parse pre-CPI/PPI discussions on inflation and rates.

🇪🇺 Euro Area & UK April CPI: High oil prices test inflation paths; ECB’s Nagel is already hawkish.

🗣️ Fed Governor Barr Speech: First official comments post-hot CPI/PPI; watch for hike odds signal.