Daily Brief Macro: Global Commodities: The unintended consequences of destabilizing Iran and more

• Despite the pressure on the regime and escalating hostilities between Israel and Iran, oil prices have remained relatively contained, up only $10 since last Tuesday
• The risks of the Strait of Hormuz being closed are considered low due to US presence in the region and historical trends of short-lived oil shocks from conflicts
• Regime changes in oil-producing countries have historically led to significant spikes in oil prices, with supply disruptions lasting up to six months and causing prices to stabilize at levels 30% or higher than pre-conflict levels

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• PMI recoveries extended in June, taking averages above 50 as manufacturing is its strongest since Sep-22, and services almost align with its averages of recent years.
• The UK survey balances suffered from bad vibes, so they are the primary beneficiary of sentiment improving. Their recovery can extend further as vibes improve.
• Broad expansion helps labour demand to keep pace with supply, denying doves proof of a disinflationary demand shock. Without that, cuts roll later and may not resume.

• In our view, the sharp increase in the lending balance is one of the signs of many investors preparing for a pull-back in the Korean stock market.
• The lending balance of the Korean stock market surged from 47.3 trillion won on 2 January 2025 to 90.4 trillion won as of 20 June 2025.
• The rising lending balance in the Korean stock market could be construed as a bearish sign. 

• U.S. inflation expected to accelerate over the next few months, with core inflation forecasted to rise to 3.8% by December
• Trade policy and geopolitical risks, such as the potential for oil prices to spike, are factors supporting front end tips breakevens
• Euro area inflation data shows softening trend, with core inflation falling to 2.3% in May, impacted by factors like timing of Easter holidays

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• Over the weekend, oil traders dusted off their Strait of Hormuz crisis playbooks—and once again, they overplayed their hand.
• Saturday’s U.S. strike inside Iran sparked a sharp wave of geopolitical anxiety, turbocharged by Iran’s retaliatory missile barrage and the familiar threat from Tehran’s Parliament to shut down the Strait.
• Add a few “Hormuz closed?” headlines and prediction markets went into meltdown, briefly treating a full blockade as the base case.

• Despite ongoing military conflicts and a trade war, Asia ex Japan headline valuations are remarkably stable and robust. North Asia’s and India’s valuations and growth forecasts are healthier than ASEAN’s
• North Asia’s and India’s EPS growth and ROE profile are sturdier. Korea’s, Taiwan’s, China’s and India’s forecast EPS growth (2026E) are 15-17%. Conversely, Singapore’s, Thailand’s, Malaysia’s and Philippines’ are 4.5-8.5%.
• Taiwan and India (15-15.5%) have highest forecast ROEs. Indonesia (13.9%), Philippines (12.6%), HK/China (10-11%) follows. All others have single digit forecast ROE. Our overweights on Korea, HK/CN, India seem justified.

• Sprott Physical Uranium Trust (Spot) raised $200 million, causing a surge in uranium stocks.
• Spot’s ability to add more pounds of uranium depends on trading above NAV, which it achieved with recent raises.
• The market dynamics in uranium are unique, with financial players influencing the market in unexpected ways.

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• Price discovery and risk management tools in commodities markets through futures contracts
• Discussion with industry leaders at the 2025 Asia Pacific Precious Metals Conference in Singapore
• Focus on creating a kilo bar contract and improving price discovery in Asia, with a growing interest in connecting Asia to the world

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•  April NR production plunges 37.3% month-on-month  
•  Exports fall sharply; glove shipments dip 19.2% to US$258.9 mn  
• Imports too decline despite tapering NR production

• Norges Bank expected to cut rates later in the second half of the year, with further cuts expected in September and December
• Riksbank cut rates as predicted, with markets pricing in additional cuts by December
• Bank of England kept rates on hold, with no major surprises in their delivery

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