The latest US labour market report delivered mixed signals.

The US economy added 57’000 jobs in June, well below expectations of 115’000 and down from the revised 129’000 jobs created in May. Despite the weaker hiring, the unemployment rate declined to 4.2%, highlighting that the labour market remains relatively resilient.

Markets:

• Equities: European markets moved markedly higher, while US equity futures also advanced following the release, although gains remained more moderate than in Europe

• Bonds: Treasury yields declined after the report, with the US 10-year yield easing to 4.48%.

• Commodities: Precious metals rallied. Gold climbed to around USD 4’150 and silver towards USD 62 - oil trading little changed: WTI USD 68 and Brent USD 71/barrell

• Currency: The US dollar weakened against most major currencies

• Cryptos: recovered with Bitcoin climbing back to almost USD 62k

• Volatility: remains low - falling below 16

My View: The latest employment report paints a mixed picture, however suggests labor market to continue being resilient. While hiring is clearly slowing, there are still no signs of a meaningful deterioration, that would force the Federal Reserve to change its stance.

As highlighted by Fed Chair Kevin Warsh yesterday, the Federal Reserve's primary concern remains inflation, not employment. As long as the labor market stays healthy enough, the Fed has room to keep monetary policy restrictive.

I therefore continue to expect higher interest rates for longer, with another rate hike remaining a realistic scenario. Markets are increasingly pricing the next potential hike for September. A move in July is not unlikely, however markets do not price this in.
Overall, equity investors remain too optimistic, expecting the Fed to continue supporting financial markets.

As I have stated repeatedly over recent weeks, I believe the Fed risks falling behind the curve if inflation continues spreading into second- and third-round effects.

For now, markets continue to move sideways near record highs as bulls and bears battle for direction. Next week's earnings season should provide a much clearer picture of corporate fundamentals and whether the earlier spike in energy prices during the Middle East conflict has started to impact company results and profit margins.

Markets were once again looking to Federal Reserve Chair Kevin Warsh for clues about the future path of interest rates. Speaking at the ECB Forum in Portugal, Warsh deliberately avoided providing any forward guidance on monetary policy.

His statement that "prices are too high" reaffirmed the Fed's commitment to restoring price stability, suggesting policymakers are in no rush to declare victory over inflation.

The comments came ahead of another important round of economic data. ADP reported that the US private sector added 98'000 jobs in June, below expectations, while Challenger, Gray & Christmas announced that planned job cuts fell to just under 46’000, slightly below last year's level. The mixed signals leave investors waiting for Thursday's official Nonfarm payrolls report, which has been brought forward due to the Fourth of July holiday.

Markets:

• Equities: Took a hit after Warsh’s comments, led by Tech

• Bonds: Yields moved higher

• Commodities: Silver and gold both moved higher

• Currency: USD strengthened

• Cryptos: higher with Bitcoin back above USD 60k

My View: Warsh message came across clearly: inflation remains his primary concern.

As I have commented for weeks, markets have largely ignored the inflation data. Investors seem convinced that inflation is no longer the problem. Investors continue to focus on the prospect of future easing while dismissing inflation data that remains well above the Federal Reserve's target. That complacency leaves little margin for disappointment if inflation proves more persistent or the labour market remains resilient.

Thursday's nonfarm payrolls report will likely become the week's defining event. A strong labour market would reinforce the argument that the Federal Reserve can maintain restrictive policy for longer, or even consider another rate hike if inflation remains stubborn. A weaker report would strengthen hopes that inflation can cool without pushing the economy into recession.

That is precisely the outcome investors are currently pricing in: an economy that slows just enough to end the tightening cycle, but not enough to damage corporate earnings. It is an attractive narrative, but also a fragile one.

Another point to keep in mind, the US economy has become increasingly dependent on rising asset prices. Strong financial markets support household wealth, confidence and consumer spending. At the same time, this creates vulnerability. Should equity markets experience a meaningful correction, the negative wealth effect could quickly feed into weaker consumption and slower economic growth.

The current market rally therefore rests on a very narrow runway. Expectations remain high. I believe investors’ portfolios are positioned too optimistic. Valuations remain stretched, and there is no room for disappointment.

Friday after market close new attacks started between US-Iran after Iran was Just when markets appeared to believe the worst was behind them, tensions in the Middle East flared up once again.

Late on Friday, shortly after US markets had closed, fresh hostilities erupted between the United States and Iran. The renewed escalation followed reports that Iran had attacked a commercial cargo vessel transiting the Strait of Hormuz earlier that day, prompting retaliatory US strikes.

Both sides quickly agreed to another temporary truce. According to US officials, Washington and Tehran have agreed to halt military operations and resume negotiations over the Strait of Hormuz and other outstanding issues. Shipping traffic through the world's most important energy chokepoint has continued, although at a slower pace than normal.

Markets: The announcement of the renewed truce came early enough before Monday's market opening to avoid a potential wave of panic selling.

• Commodities: Oil prices stopped falling as traders once again priced in a modest geopolitical risk premium

My View: While fears of a complete disruption to energy supplies have eased, uncertainty remains elevated.
As I have repeatedly highlighted over recent weeks, the road to peace is unlikely to be a straight line.

The White House continues to present an optimistic picture, but announcing a deal is one thing, implementing it is another. Rolling back decades of sanctions, rebuilding trust, and agreeing on long-term security arrangements will be far more difficult than issuing positive headlines.

The current agreement clearly provides Iran with breathing room and appears to be favourable for Tehran in the near term. At the same time, there remains a meaningful risk of renewed escalation at any moment. One incident, one miscalculation, or one failed negotiation could quickly reverse the recent progress.

For investors, the key message remains unchanged: do not mistake a pause in hostilities for a lasting peace. The geopolitical risk premium has declined, but it has certainly not disappeared.

Yesterday’s inflation print showed the highest reading since October 2023. The core Personal Consumption Expenditures (PCE) Price Index, which excludes food and energy, rose 0.3% in May, lifting the annual rate to 3.4%. Headline PCE inflation accelerated to 4.1% year-on-year, marking its highest level since April 2023.

Despite higher inflation, the US consumer continues to spend. Personal consumption expenditures increased 0.7% during the month, comfortably exceeding expectations and highlighting the resilience of consumer demand. Meanwhile, first-quarter US GDP growth was revised higher to an annualized 2.1%, underlining that the economy remains on solid footing despite elevated interest rates.

Markets:

• Equities: US equity futures remained positive following the release, with investors largely shrugging off the stronger inflation data.

  Bonds: Treasury yields edged lower as markets slightly reduced the probability of an aggressive tightening cycle, although expectations for a September rate hike remain high.

  Commodities: Precious metals traded mixed while oil prices remained broadly stable.

  Currencies: The US dollar showed limited reaction following the data release, falling slightly from its recent highs.

My View: Inflation is proving to be far more persistent than many investors had hoped. The latest US inflation data showed another acceleration, with the Federal Reserve's preferred inflation measure reaching its highest level in well over two years.

The report comes just over a week after the Federal Reserve, under its new Chair Kevin Warsh, delivered what markets interpreted as a notably hawkish message on inflation and interest rates.

Markets now largely expect another rate hike in September. However, this expectation is far from being reflected across all asset classes. Equity markets, in particular, continue to behave as if monetary policy will have little impact, with US indices pushing towards new record highs almost daily.

In my view, the Federal Reserve risks falling behind the curve. Inflation has become increasingly broad-based, while resilient consumer spending and stronger economic growth continue to support demand. Delaying further policy tightening increases the risk that second- and third-round inflation effects become more deeply embedded in the economy.

For now, equity investors appear willing to ignore these risks. History shows, however, that markets can remain complacent for longer than expected, until they suddenly are not.

The AI rally received a fresh boost after Micron Technology delivered another blockbuster quarter, reigniting investor enthusiasm across the semiconductor sector.

Micron reported second-quarter revenue that was four times higher than a year ago and issued a sales forecast that comfortably exceeded Wall Street expectations. The company also beat estimates across virtually every key financial metric, including revenue, earnings per share and adjusted gross margin.

One figure stood out in particular. Micron reported a gross margin of 84.9%, up from 74.9% in the previous quarter and just 39% a year earlier. That now exceeds the gross margins of every major US technology company, surpassing Meta's 81.9% and Nvidia's 75%. The AI infrastructure boom continues to fuel unprecedented demand for high-bandwidth memory (HBM), allowing Micron to achieve record profitability almost as quickly as customers can secure its chips.

Investors rewarded the results immediately. Micron shares surged as much as 15% in after-hours trading, lifting sentiment across global equity markets. Nasdaq 100 futures climbed around 2%, while South Korea's Kospi jumped nearly 7% as investors rushed back into AI-related stocks.

Markets:

• Equities: AI-related semiconductor stocks rallied, led by Micron. Nasdaq 100 futures gained around 2%, while Asian technology shares posted strong gains.

My View: The latest results reinforce one message: demand for AI infrastructure remains exceptionally strong. Memory chips have become one of the most critical components powering the AI revolution, with hyperscalers and technology companies continuing to invest aggressively in new data centres.

Readers of my comments on ETFMandate know that I have been, and remain, skeptical of the current AI boom.

However, for the time being, AI has become the new gold. Every major technology company is racing to build AI infrastructure, and demand for advanced memory chips continues to outpace supply. Fear of missing out the race dominates and intensifies the process. AI companies are buying virtually every chip they can get, creating persistent shortages and giving manufacturers such as Micron significant pricing power. The explosive improvement in gross margins clearly illustrates how favourable the current market environment has become for leading chip producers.

Micron's exceptional earnings have once again reset expectations for the AI memory trade and may have given the broader AI rally a fresh lease on life.

The key question now is whether this is merely another short-covering bounce or the beginning of a new leg higher for technology stocks. Momentum could return even we are already at lofty, dream-driven valuation levels.

I remain skeptical. The AI investment boom is real, but so is the risk of excessive optimism. History shows that markets often overshoot, especially when capital flows become concentrated in a handful of high-growth names. The semiconductor sector remains one of the most crowded trades in global equity markets, leaving little room for disappointment.

For investors who have enjoyed the extraordinary rally in chip stocks, Micron's outstanding earnings may provide an attractive opportunity to take some profits and reduce exposure.

Despite Micron's impressive results, my view remains that downside risk and potential bigger correction is much higher than upside potential on the sector and AI names, therefore, continue to position my portfolio accordingly.

More oil tankers are once again openly crossing the Strait of Hormuz as diplomatic efforts between the United States and Iran continue to make progress. Both Washington and Tehran have signaled early advances toward ending the conflict, although negotiations are expected to be lengthy and both sides continue to present differing interpretations of the discussions.

As fears of a prolonged disruption to global oil supplies continue to fade, crude prices have extended their recent decline.

Markets:

• Crude prices fell to their lowest levels since March. WTI declined to around USD 71 per barrel, while Brent slipped toward USD 74 per barrel.

My View: US President Trump appears to have realized that lower oil prices are essential to relieve the US economy and consumers from high energy costs. The easiest way to achieve this is to let Iranian oil flow again and pay a political price Iran is willing to accept in exchange for keeping the Strait of Hormuz open.

The market is increasingly pricing in a scenario where the Strait remains open and the risk of a major supply disruption continues to diminish. While negotiations are still at an early stage and far from a final agreement, falling oil prices suggest investors are becoming more confident that the worst-case scenario can be avoided.

Even if a lasting agreement is reached, it will take time before global oil flows fully normalize. Supply chains were abruptly disrupted at the end of February, shipping routes had to be rerouted, and parts of the energy infrastructure were damaged during the conflict. Restoring production, repairing infrastructure, and rebuilding normal logistics cannot happen overnight.

As a result, while geopolitical risk premiums may continue to decline, the physical recovery in oil supply is likely to be a gradual process rather than an immediate return to pre-conflict conditions.

Lower energy prices would ease some global inflationary pressures and reduce the risk of aggressive monetary tightening by central banks.

However, I remain cautious. The negotiations are likely to be complex, and geopolitical headlines can change quickly. Any setback in the talks could trigger another sharp rebound in oil prices and increase market volatility.

I already took some chips off the table on my oil position early last week, while keeping a certain allocation in case the talks end without a deal or the situation re-escalates, a scenario that, in my view, still carries a meaningful probability.

For now, the direction of travel looks encouraging, but it is far too early to declare victory.

After several bumpy sessions in recent weeks that were followed by swift recoveries, technology stocks are heading for another tumble today, with Nasdaq 100 futures pointing sharply lower and tech-heavy Asian markets swept by heavy selling.

Korean regulators recently issued warnings over leveraged ETFs as margin debt and retail borrowing had reached extreme levels. The resulting deleveraging forced investors to reduce positions, amplifying the decline.

In South Korea, artificial intelligence winners SK Hynix and Samsung both plunged more than 12%, while Taiwan's technology sector remains under pressure after months of FOMO-driven speculation and a surge in retail borrowing. Foreign investors aggressively sold semiconductor stocks, contributing to a nearly 10% plunge in the Korean KOSPI index and temporarily triggering a trading halt.

Concerns over monetary policy, largely ignored by markets during the last two week, have resurfaced. Following inflation figures and the Fed's hawkish message, investors are finally increasingly worried that interest rates may remain higher for longer, a particularly challenging environment for highly valued technology stocks.

Markets:

• Equities: Global sell-off driven by semiconductors and Nasdaq Futures falling nearly 3%

• Bonds: Almost unchanged - US 2-year Treasury yield 4.21% US 10y yield at 4.50% and the Japanese 10y yield at 2.68%.

• Commodities: Oil prices almost unchanged - WTI: USD 73/barrel, Brent: USD 77; Precious metal prices fall - gold trading at USD 4115 - silver USD 62

• Currencies: USD strengthened against major currencies

• Cryptos: following the sell-off - Bitcoin at USD 62k

• Volatility: VIX index is up to 20

My View: The trigger was not one single event, but a classic late-cycle unwind. Excessive leverage, crowded AI positioning and renewed rate-hike fears collided at the same time. I have highlighted several times in recent weeks that investors should not ignore the risk of a market re-pricing as I expect interest rates remain higher for longer.

The market is lately driven by the retail investors, usually not a good sign and marking a late cycle stage. Institutional investors and insiders already moved to the sidelines.

The problem with crowded trades is that everyone rushes to the exit simultaneously. When valuations become detached from fundamentals, even minor disappointments can trigger outsized moves.

The weakness comes only days after the historic SpaceX IPO. After briefly surpassing a valuation of USD 2 trillion, the company is now at risk of losing that milestone again as investors reassess lofty valuations across the technology sector.

After years of seemingly endless gains, investors have grown used to buying every dip. Let’s see what happens this time.

Yesterday evening, the first Federal Reserve meeting under new Fed Chair Kevin Warsh took place.

As expected, the Fed left its benchmark rate unchanged at 4.25%.

Warsh, recently selected by President Donald Trump to replace Jerome Powell, struck a more hawkish tone than markets had anticipated, emphasizing the importance of maintaining price stability.

While the central bank predictably kept rates unchanged, policymakers appeared divided on the outlook. Their latest projections showed that nine officials expect at least one rate hike this year, with six of them anticipating two or more increases. Another nine members expect no change or even a rate cut.

Markets:

• Equities: US futures are higher after yesterday's decline.

• Bonds: Short-term yields moved higher. The US 2-year Treasury yield climbed from 4.07% to 4.22% before easing back to 4.18%, while long-term yields remained relatively stable, with the US 10-year Treasury yield at 4.45% and the Japanese 10-year yield at 2.62%.

• Commodities: Oil prices continue to decline - WTI: USD 74/barrel, Brent: USD 78; Precious metals initially weakened but recovered today, with gold trading at USD 4290 - silver USD 68

• Currencies: USD strengthened against major currencies

• Cryptos: falling with Bitcoin at USD 66k

• Volatility: After a modest reaction to the Fed decision, the VIX fell back to around 17

My View: I have consistently questioned market expectations and repeatedly warned that investors could be moving in the wrong direction. For months, I have highlighted the possibility that rate hikes, rather than rate cuts, could become the dominant theme in 2026.

Markets are not always rational. The crowd often follows momentum, and periods of excessive optimism tend to push investors in the same direction.

Looking back and see what markets did, I obviously turned cautious too early.

Falling oil prices over recent days are providing some relief from inflationary pressures. However, the situation in the Middle East remains unresolved. Even if the so called deal with Iran is signed and the Strait of Hormuz reopens this Friday, it will take days, if not weeks, before supply chains and oil deliveries normalize.

Moreover, during the 60-day negotiation period, anything can happen. Markets could once again be confronted with geopolitical headlines capable of rapidly changing sentiment.

As I have stated previously, much of the economic damage has already been done. Yet markets continue to ignore this reality and are focusing on, in their view, tremendous potential in AI.

A repricing of risk assets is still necessary, in my view.

The main argument against such a repricing is that a considerable number of institutional investors are still sitting on the sidelines, waiting for precisely such an event. This could limit the downside, as fresh capital may eventually step in.

So far, however, the market rally continues to be driven largely by retail investors. That is rarely a healthy sign and should not be ignored.

Last night, Japan's central bank raised its policy rate to 1.0%, in line with economists' expectations. It marks the highest level since 1995 and represents another step in the policy normalization process that began in 2024.

Meanwhile, the Reserve Bank of Australia (RBA) left its benchmark rate unchanged at 4.35%.

Markets:

• Equities: broadly green

• Bonds: yields lower - US 10y 4.45%, Japan 10y 2.65%

• Commodities: Oil prices continue to decline - WTI: USD 78/barrel, Brent: USD 81; Precious metals stable with gold USD 4340 - silver USD 70

• Currencies: no major moves

• Cryptos: higher with Bitcoin reaching USD 67k

• Volatility: falls to 16

My View: Following last week's ECB rate hike, we are now seeing another major central bank moving further along the tightening path. Besides addressing inflation concerns, the Bank of Japan is also seeking to provide support for the yen, which has remained under pressure.

The 25-basis-point hike itself is not the real game changer. What matters much more is the future path of interest rates. In the short term, lower oil prices are providing some relief and easing inflation concerns. It remains to be seen whether this trend will continue.

I also remain skeptical about the prospects for a lasting agreement with Iran. In my view, President Trump has mainly gained another 60 days, but the underlying issues remain unresolved and a comprehensive deal is still far from certain.

The key event this week will be tomorrow's Federal Reserve decision and the first press conference by the new Fed Chair, Kevin Warsh.

In line with market expectations, I do not expect a rate hike. However, the tone set by the new Fed Chair will be closely watched. Markets will be looking for clues on the future path of monetary policy and whether the Fed remains primarily focused on fighting inflation or becomes increasingly concerned about slowing economic growth.

Historically, markets have often tested incoming Fed Chairs, while midterm election years have tended to be more challenging for equities. At the same time, investors have become accustomed to policy support and increasingly aggressive attempts by politicians and policymakers to calm markets and sustain confidence.

This creates a dangerous environment. The stronger and faster markets are pushed higher, the greater the risk that any reversal could be equally rapid. History shows that highly concentrated and policy-supported rallies can unwind much faster than they were built, with declines extending far beyond what most investors initially anticipate.

As announced by US President Donald Trump since mid-March, the United States and Iran appear finally to be moving toward a peace agreement aimed at ending the conflict and restoring stability to the region.

According to multiple reports, Washington and Tehran have agreed on a memorandum with a framework that includes:

• A permanent ceasefire.

• The reopening of the Strait of Hormuz.

• A 60-day negotiation period to work out a comprehensive agreement.

• A commitment by the US not to impose additional sanctions during the talks.

• Discussions on sanctions relief and the release of frozen Iranian assets.

The deal is expected to be formally signed later this week.

Earlier in the week, President Trump stated that an agreement had already been approved, while Tehran denied that a final deal had been reached. Since then, negotiators have narrowed the remaining differences, although many details are still missing.

Markets: cheer like the final deal got already signed

• Equities: Higher, as investors cheer what they perceive to be a lasting solution.

• Bonds: Government bond yields moved lower.

• Commodities: Oil prices declined sharply as fears of supply disruptions eased. Precious metals traded higher.

• Currencies: USD weaker, CHF stronger

My View: It appears that my assessment over recent months was correct: President Trump is doing everything possible to support financial markets and avoid a negative backdrop heading into the midterm elections. Markets are clearly one of his top priorities, and rising asset prices ultimately benefit him personally as well.

He needs a positive outcome from the Iran conflict without losing face. That explains the strong push to reach an agreement and remove some of the pressure. However, many details are still missing, and it is far too early to draw final conclusions.

Investors should therefore not confuse a diplomatic breakthrough with a final solution. Major issues remain unresolved, including:

• Iran's uranium enrichment activities.

• The future of its highly enriched uranium stockpiles.

• Ballistic missile programs.

• Iran's regional proxies.

• Long-term sanctions relief.

In other words, this is not yet a final nuclear agreement. What has been achieved so far is essentially a ceasefire and a roadmap for further negotiations. Iran has not yet agreed to all terms.

The next 60 days will determine whether both sides can turn this framework into a lasting accord.

From a market perspective, the immediate consequence is clear: the risk of a prolonged disruption in the Strait of Hormuz has somewhat declined. However, the waterway will only fully reopen once the memorandum is formally signed. Until then, markets are likely to remain vulnerable to every new headline.

Yet investors already seem to be celebrating as if a comprehensive solution has been reached. Given the many unresolved issues, that may prove premature.

Do not forget that the economic damage has already been done. Inflation remains elevated, central banks are turning more hawkish, and more than ten central banks are set to announce interest-rate decisions this week.

Looking at financial markets, everything appears perfect. In reality, we are far from a perfect environment. It is simply another round in which asset prices are being pushed even further away from economic fundamentals.

Today marks a historic day for financial markets as the largest IPO ever is set to take place.

SpaceX is expected to make its stock market debut at an offering price of USD 135 per share, raising USD 75 billion and valuing the company at approximately USD 1.77 trillion. The deal is almost twice the size of the last record-breaking IPO, Saudi Aramco, and would immediately make SpaceX the seventh most valuable company in the United States. It also looks set to propel Elon Musk to become the world's first trillionaire.

Demand appears extraordinary. According to reports, the offering is more than four times oversubscribed, while retail investors alone are said to have submitted orders exceeding USD 100 billion.

Markets: Markets remain on a bumpy road. However, once again, investor sentiment has been supported by another deal announcement from President Trump, encouraging investors to focus on optimism rather than underlying risks. The sheer scale of investor enthusiasm underlines the enormous appetite for one of the most anticipated stock market debuts in history.

My View: SpaceX to Mars!
This IPO has been hyped for weeks across social media channels among traders, or, let's face it, gamblers.

In my view, a company that burns billions of cash has never deserved such a sky-high valuation. Investors are paying almost entirely for future hopes and potential cash flows that may or may not materialize. Nobody seems to care. The atmosphere increasingly resembles the dot-com bubble. Yet, as always, many argue that "this time is different."

The biggest winners are the current shareholders and especially Elon Musk, who are now able to sell shares to private and retail investors at moon, or rather Mars, prices.

Oversubscription itself fuels the hype. Investors who hope to receive USD 10’000 worth of shares may have to place orders exceeding USD 40’000. The illusion of scarcity creates even more excitement and pushes demand to extreme levels.

I would not be surprised to see the shares surge initially. But I would be equally unsurprised if a sharp sell-off follows soon afterwards or days after. From the past, I have the Facebook IPO well in mind.

Bookrunners have every incentive to support the stock in the early stages. They know that two more mega IPOs, Anthropic and OpenAI, are waiting in the pipeline. A successful SpaceX listing would help pave the way for those offerings and generate another wave of lucrative fees. A disappointing performance, however, could jeopardize or delay future listings if market conditions deteriorate.

To sum up, this is simply another gambling story. Keep your hands off.

Today, as widely expected, the European Central Bank (ECB) raised interest rates by 25 basis points to 2.25%. It marks the first rate hike in three years, as policymakers step up efforts to contain renewed inflation pressures, particularly those stemming from higher energy prices linked to the ongoing Iran conflict.

According to ECB President Christine Lagarde, there was broad consensus within the Governing Council to take this step.

During the press conference, Lagarde acknowledged that inflation is likely to remain above the central bank's 2% target even in 2027, underlining the persistence of price pressures across the euro area.

Markets:

• Equities: European equities fell after the announcement

• Bonds: Government bond yields across the euro area remained elevated and continued to trend higher.

• Commodities: Precious metals lower with gold at USD 4’075, silver USD 63

• Currencies: The euro weakened slightly against major currencies.

My View: The ECB's decision comes at a time when the European economy appears increasingly fragile. Growth remains weak, while higher borrowing costs are likely to add further pressure on businesses and consumers.

I therefore remain cautious on European equities. Germany, traditionally regarded as the economic engine of Europe, continues to struggle with numerous structural challenges, including excessive regulation, weak competitiveness, and sluggish growth. At the same time, the German economy remains highly dependent on energy prices.

Raising interest rates in an environment of already weak economic growth increases the risk that Europe could face a prolonged period of economic stagnation while inflation remains elevated, a combination that would represent a difficult backdrop for investors.

As the Iran conflict is likely to continue, Europe is going to face persistently higher energy prices, adding further upside risks to inflation.

In my view, investors continue to underestimate inflation risks and remain far too relaxed on the subject. Markets are still pricing in a relatively benign inflation outlook, despite mounting evidence that price pressures may prove much more persistent than many expect.

US consumer prices continued to accelerate in May, driven largely by surging energy costs. Headline inflation climbed to 4.2% year-on-year, up from 3.8% previously, marking the hottest annual reading since April 2023.

The May Inflation Data:

• CPI YoY: +4.2% (est. +4.2%) – up from 3.8%

• CPI MoM: +0.5% (est. +0.5%)

• Core CPI YoY: +2.9% (est. +2.9%) – up from 2.8%

• Core CPI MoM: +0.2% (est. +0.3%)

(Core CPI excludes food and energy prices)

Markets: investors cheer rising inflation - Markets welcomed the report, with investors focusing on the softer-than-expected monthly core inflation figure. The fear had been that inflation would come in even hotter.

• Equities: US Futures turned positive following the release

• Bonds: Government bond yields moved lower after the data - US 10-year Treasury yield 4.53%, Japanese 10-year yield at 2.68%

• Commodities: Oil prices continued to rise amid renewed tensions with Iran - WTI USD 89, Brent USD 93. Precious metals down with gold at USD 4’160, silver USD 64

• Cryptos: traded lower on the day but recovered after the inflation report - Bitcoin USD 62k.

• Currencies: USD weakened after data - remains in narrow trading range

• Volatility: VIX elevated above 20 but tending lower after data

My View: Markets continue to read the signals the wrong way. Investors seem to celebrate the lower-than-expected monthly core inflation figure. However, the broader picture tells a different story: inflation is accelerating again.

In my view, markets are once again drawing the wrong conclusions from the data. It is just another example of investors ignoring where economic trends are heading.

At the same time, the conflict with Iran remains far from resolved. Only yesterday, President Trump suggested that a deal with Iran was close. Today, however, a deal suddenly appears almost impossible. Following the downing of a US helicopter, both Washington and Tehran retaliated last night, increasing the risk of further escalation.

Meanwhile, price swings in crowded trades are becoming increasingly violent. Yesterday alone, the Nasdaq surged 1.4%, then plunged more than 5.4% within just three hours, before rebounding 3.3% into the close.

As highlighted in my Weekend Mail after last Friday's sharp moves, these are warning signs that should not be ignored. The more frequently these violent swings occur, the greater the risk that future drawdowns become faster and more severe.

So far, this does not resemble a wave of panic. Instead, it looks more like a rotation of capital between sectors. But history shows that periods of extreme volatility and increasingly unstable price action in different asset classes often emerge before investor sentiment changes more broadly.

Investors should pay attention.

Markets quickly stabilized after last Friday's shock, when investors got caught by a surprisingly strong US labor market report.

Since then, markets have received exactly the messages they wanted: easing tensions in the Middle East compared with yesterday, lower oil prices, and a fresh rebound in semiconductor stocks.

A sign that sentiment had become fragile was the renewed effort by US President Donald Trump to calm investors through a series of posts on Truth Social and interviews, highlighting new investments and once again expressing confidence that an agreement with Iran could be reached soon. His comments also helped put downward pressure on oil prices.

The VIX Index, which measures implied volatility in the S&P 500, jumped from 16 to above 21 on Friday before quickly retreating below 19, allowing investors to regain confidence.

Markets:

• Equities: Global equity markets higher, led once again by technology and semiconductor stocks

• Bonds: Yields little changed as investors await tomorrow's US inflation data - US 10-year Treasury yield 4.54%, Japanese 10-year yield at 2.67%

• Commodities: Oil prices lower on hopes of easing Middle East tensions - WTI USD 88, Brent USD 91. Precious metals down with gold at USD 4’310, silver USD 67

• Cryptos: sideways after sell-off - Bitcoin USD 62k.

• Currencies: USD lower today - remains in narrow trading range

• Volatility: VIX back below 19 after briefly surging above 21 on Friday

My View: In my weekend newsletter, I highlighted the VIX as the key indicator to monitor this week. The rapid stabilization in volatility made it relatively obvious that investors would once again return to buying the dip.

Supported, of course, by a certain person posting at exactly the right moments. How many times have we heard that an Iran deal is only hours or days away by Donald Trump? Who still believes these statements? I can no longer hold back: this is market manipulation at its finest.

As long as the AI trade keeps working, investors remain willing to step back into risk. The question is: for how much longer?
Beneath the surface, conditions are becoming increasingly unstable. Friday's sell-off was a clear warning sign. Anyone who failed to recognize how quickly sentiment can change is taking the risk of substantial losses that could materialize starting within days or weeks.

No one can predict the exact timing of a major correction or the beginning of a bear market. However, more and more indicators are flashing warning signals. When even major US financial institution, Bank of America, begins advising clients to take profits because their own indicators are showing elevated risks, the situation deserves attention.

I started highlighting these warning signs at a much earlier stage. Since then, conditions have only become more extreme. Things are becoming increasingly irrational.

Tomorrow's US inflation report adds another important piece to an already fragile market environment.

The cryptocurrency market has entered a significant correction phase.

Since reaching an interim high of around USD 82k in mid-May, Bitcoin and most major cryptocurrencies have experienced substantial selling pressure. The decline has accelerated over recent days, with Bitcoin falling towards USD 62k today and approaching a technically important support level around USD 60k.

The latest wave of selling intensified after it became public that Strategy, the original Bitcoin treasury company founded by Michael Saylor, sold 32 Bitcoin worth approximately USD 2.5 million.

While the transaction itself is relatively small compared to the company's total Bitcoin holdings, investors focused on the message behind the sale. It was the first Bitcoin sale by the company since 2022. Previously, Strategy CEO Phong Le had indicated that selling Bitcoin would only be considered as a "last resort" to fund dividend payments. The announcement therefore raised questions about liquidity needs and confidence within one of the most prominent corporate Bitcoin holders.

Strategy's average acquisition cost for its Bitcoin holdings stands at approximately USD 75’700 per coin. With Bitcoin currently trading near USD 63k, the company's entire Bitcoin treasury is now underwater on an unrealized basis.

Markets: remain calm with Tech stocks lower

• Equities: for once Europe higher while US Futures trading lower and Nasdaq Futures down more than 1%

• Bonds: yields sideways - US 10-year Treasury yield 4.45%, Japanese 10-year yield at 2.67%

• Commodities: Oil prices weakened on renewed hopes for an Iran deal - WTI USD 92, Brent USD 94. Precious metals re-gain with gold at USD 4’500, silver USD 74

• Cryptos: with downside pressure - Bitcoin USD 63k.

• Currencies: USD lower today - remains in narrow trading range

• Volatility: The VIX remains low moving towards17

My View: why follow Cryptocurrencies even if I am not invested? I have highlighted this point several times here on ETFMandate.

The importance of cryptocurrencies extends far beyond the crypto market itself. A sharp decline in crypto prices can create a spill-over effect into highly valued technology and AI-related stocks. Many market participants active in cryptocurrencies are also heavily invested in AI and technology companies. In many cases, these investors are using leverage.

As crypto prices fall, investors may face margin calls and are forced to raise cash. Often, this means selling other assets such as technology stocks. What starts as a crypto correction can therefore evolve into a broader de-risking event across financial markets.
If enough investors are forced to unwind leveraged positions simultaneously, a self-reinforcing deleveraging cycle can emerge.

Whether the current decline is already the beginning of such a process remains too early to determine. However, it is a development worth monitoring very closely.

The overlap between the crypto community and the AI investment community is significant. Both groups tend to exhibit a higher tolerance for risk, often run concentrated portfolios, and frequently employ leverage to maximize returns.

As long as prices move higher, this creates powerful momentum. When prices start moving lower, the same mechanism can amplify downside risks.

For now, the message is simple: even investors with no direct exposure to cryptocurrencies should pay attention to what is happening in the crypto market. It may provide an early warning signal for broader risk appetite across financial markets.

The tariff story is back.

The US administration is proposing new import levies of at least 10% on goods from major trading partners, including the European Union, United Kingdom, Canada and Mexico, following an investigation into products allegedly linked to forced labor.

Imports from countries such as China, Switzerland and Japan would face even higher tariffs of 12.5%.

The move represents another major step by President Donald Trump to rebuild the tariff wall that was previously struck down by the US Supreme Court.

Markets: Nobody Cares - almost no market reaction. Only a handful of companies with direct exposure to the affected trade flows experienced modest declines in their share prices today. Beyond that, investors largely ignored the announcement.

My View: What is the current tariff status? Guess your honest answer is that it has become increasingly difficult to keep track — you don’t even know!

Over the past year alone, tariffs have been announced, postponed, challenged in court, overturned, refunded, reintroduced under different legal frameworks, and now proposed once again under a new justification.

But at the moment, it hardly matters. Markets simply do not care!
Investors are chasing AI-related assets with little regard for rising geopolitical risks, trade tensions, inflation pressures, or deteriorating global supply chains.

The tariff topic highlights a much bigger issue. The United States desperately needs additional sources of revenue as government debt continues to grow rapidly.

Tariffs are one way to generate additional income. However, even under optimistic assumptions, tariff revenues are nowhere near sufficient to cover the government's financing needs, let alone its growing interest expenses.

This is one reason why the Trump administration is putting significant emphasis on lower Treasury yields.

Every basis point increase in refinancing costs makes servicing the enormous stock of US government debt substantially more expensive. As existing debt matures and needs to be refinanced, higher yields quickly translate into significantly higher interest payments.

If bond yields were to remain elevated for a prolonged period, debt servicing costs could eventually enter a self-reinforcing debt spiral.

To be clear, this is not my base case scenario, nor do I currently expect a US default. However, it illustrates how critical the fiscal situation has become.

For now, markets remain focused on AI. But beneath the surface, tariff uncertainty, rising debt levels, fiscal challenges and energy risks continue to build.

History has shown that markets can ignore risks for surprisingly long periods of time. They cannot ignore them forever.

The AI investment boom is no longer limited to public markets. A growing number of the world's most valuable private technology companies are now preparing for stock market listings, potentially creating one of the largest IPO waves in financial history.

This week, AI developer Anthropic officially took its first step toward becoming a publicly traded company. The company announced that it has confidentially filed a draft registration statement (Form S-1) with the U.S. Securities and Exchange Commission (SEC). Anthropic is currently valued at approximately USD 965 billion, making it one of the most valuable private companies in the world. If market conditions remain supportive, the company could potentially go public as early as this autumn.

Anthropic is not alone.

SpaceX is reportedly targeting an IPO on June 12 and is expected to seek a valuation of at least USD 1.8 trillion. While earlier reports suggested a valuation exceeding USD 2 trillion, the company appears to have slightly lowered expectations following discussions with investors and advisors.

Meanwhile, OpenAI is also widely expected to pursue a public listing later this year, potentially adding another mega-sized IPO to an already crowded pipeline.

The timing is remarkable.

At the same time that private companies are seeking fresh capital, established technology giants continue to raise unprecedented amounts of money to finance the AI arms race. Alphabet shares traded lower after the company announced plans to raise USD 80 billion to fund its expanding AI investments. The transaction ranks among the largest capital raises ever undertaken by a public company.

Markets:

• Equities: Nothing currently appears able to derail the AI rally. Technology shares higher across global markets

My View: Taken together, these developments highlight the enormous capital requirements of the AI revolution. Building AI infrastructure requires massive investments in data centers, semiconductors, energy supply, networking equipment, software development, and highly specialized talent. The industry is consuming capital at a pace rarely seen before.

Markets currently interpret this spending boom as proof of virtually unlimited future growth opportunities. Investors continue to allocate capital aggressively to AI-related companies, pushing valuations across the sector to increasingly extreme levels.

However, history suggests that periods characterized by record IPO activity, aggressive capital raising, and widespread investor enthusiasm often occur during the later stages of investment booms. Companies naturally seek to raise capital when investor appetite is strongest and valuations are most attractive.

The current IPO wave may therefore be another sign that the AI boom is entering a much more mature, and potentially more dangerous phase.

The situation increasingly resembles the final stages of previous technology bubbles. In 1999 and 2000, investors were willing to fund virtually any company associated with the internet revolution. Today, a similar pattern can be observed across the AI ecosystem. Capital continues to flow into companies with limited regard for valuation, profitability, execution risk, or future competition. The narrative has increasingly become more important than the fundamentals.

What concerns me most is the growing disconnect between valuations and economic reality.

Companies are being valued at hundreds of billions, and in some cases nearly trillions, of dollars despite generating little or no profits relative to their market capitalizations. At the same time, the costs associated with the AI buildout continue to rise. Data centers, semiconductors, energy infrastructure, cooling systems, networking equipment, and financing costs are all becoming increasingly expensive.

The key question remains unanswered: who will ultimately earn an attractive return on these enormous investments?

History shows that transformative technologies often create tremendous benefits for society while delivering disappointing returns for investors. Railroads, airlines, telecommunications, and even the internet itself experienced periods of massive overinvestment. Investors became convinced that demand would justify virtually unlimited spending. Eventually, reality caught up with expectations.

Another aspect investors frequently overlook is the impact that large IPOs can have on broader equity markets.

New listings do not create fresh investment capital. Instead, they absorb liquidity from existing investments. As companies such as Anthropic, SpaceX, or OpenAI eventually become part of major equity indices, passive funds and institutional investors will be forced to allocate capital accordingly. In practice, this means selling existing index constituents to make room for the new entrants.

The larger the IPO, the larger this redistribution effect becomes. This process could create additional pressure on today's hyperscalers and market leaders, which currently account for a significant portion of major index performance.

Furthermore, IPOs rarely occur when valuations are depressed. They are typically launched when optimism is abundant and companies can maximize proceeds. Existing shareholders understand this dynamic very well. Founders, venture capital firms, private equity investors, and early employees often seek liquidity after years of paper gains. Once lock-up periods expire, another wave of selling pressure frequently follows as insiders monetize their holdings.

For me, the increasing number of mega-sized AI IPOs is not a bullish signal—quite the opposite.

It suggests that insiders increasingly view current market conditions as an attractive opportunity to cash in. History repeatedly shows that when investors become convinced that a theme can only move higher, risks are often significantly greater than the market is willing to acknowledge.

My view remains unchanged. I continue to question whether artificial intelligence will ultimately prove to be the revolutionary economic transformation that markets currently expect. In many cases, what was previously referred to as "digital transformation" has simply been rebranded as "AI transformation."

AI will undoubtedly remain part of our future and will improve efficiency across many industries and business processes. However, that does not automatically justify today's valuations or guarantee attractive investment returns.

At current price levels, markets are increasingly pricing in a near-perfect future. Any disappointment in growth, profitability, adoption rates, financing conditions, regulation, or competitive dynamics could trigger a significant repricing across the sector.

Whether the upcoming IPO wave marks the beginning of another speculative leg higher or ultimately becomes remembered as a sign of peak optimism remains one of the most important questions investors should monitor over the coming months.

To me, the valuations increasingly look speculative.

Yesterday, the Fed’s preferred inflation gauge, the PCE Price Index, was released largely in line with expectations. However, the details were less encouraging.

Core PCE Inflation (excluding food and energy) accelerated to 3.3% YoY, up from 3.2% in March. On a monthly basis, Core PCE rose 0.2%, slightly below expectations of 0.3%.

Headline PCE Inflation came in at 3.8% YoY, matching expectations but increasing from 3.5% the previous month.

Today, several European inflation releases also mostly pointed toward renewed price pressures:

May CPI Inflation (YoY)

• France: +2.4% (est. +2.3%) vs. 2.2% in April

• Italy: +3.2% (est. +3.2%) vs. 2.7% in April

• Spain: +3.2% (est. +3.4%) vs. 3.2% in April

• Germany: +2.6% (est. +2.9%) vs. 2.9% in April

Markets: nothing stops the US Tech rally

• Equities: mostly higher globally

• Bonds: yields continue to decline - US 10-year Treasury yields 4.45%, while Japanese 10-year yields also continued to rise to 2.66%

• Commodities: Oil prices weakened on renewed hopes for an Iran deal - WTI USD 87, Brent USD 91. Precious metals gain with gold at USD 4’500, silver USD 75

• Cryptos: with downside pressure - Bitcoin USD 73k.

• Currencies: USD trading sideways

• Volatility: The VIX fell below 16

My View: Despite the inflation backdrop, markets remain focused on one theme only: AI and technology. Markets continue to ignore what is happening beneath the surface.

If the Iran conflict persists and the Strait of Hormuz remains disrupted, I see oil prices biased to the upside. Global oil inventories are falling rapidly and could soon reach critical levels if supply disruptions continue.

Higher energy prices ultimately feed through the entire economy. Transportation, manufacturing, and consumer goods all become more expensive, creating additional inflationary pressure. This increases the likelihood that interest rates remain higher for longer and could even force further rate hikes by central banks such as the Bank of Japan, the ECB, or potentially others later this year.

Yet investors appear completely unconcerned. Falling bond yields, record-high equity valuations, compressed volatility, and aggressive risk-taking suggest that markets are pricing in a more than perfect scenario.

The current environment increasingly reminds me of the late stages of previous market manias, where investors stop paying attention to risks and focus only on what is moving higher.

The madness can continue for longer than many expect. The only question is: On which day does the music stop playing?

Markets once again face renewed geopolitical escalation after recent optimism around a possible US-Iran deal faded quickly.

Only lately, US officials stated that an agreement with Iran appeared very close, with reports suggesting that only final signatures were missing. However, the conflict reflamed after the US started new attacks against Iran, while Iran responded accordingly.

The latest statement from Iran further increased tensions:

“No peace in Middle East until Israel is ‘destroyed’.”

Markets:

• Equities: Slightly lower after recent strong gains as investors previously priced in a fast de-escalation scenario.

• Bonds: Bond yields moved higher again as oil prices rebounded on renewed supply concerns. US 10-year Treasury yields moved back above 4.5%, while Japanese 10-year yields also continued to rise to 2.7%

• Commodities: Oil prices gained sharply again amid fears around energy supply disruptions - WTI USD 91, Brent USD 96. Precious metals traded lower short-term despite the geopolitical escalation - gold USD 4400, silver USD 73

• Cryptos: lower - Bitcoin fell back towards USD 73k.

• Currencies: USD unchanged

• Volatility: The VIX moved back above 17 as uncertainty increased again.

My View: I maintained the view that I do not believe in a fast end to the conflict. Hearing all the recent statements and observing the geopolitical developments, I decided not to follow the current mainstream positioning of investors.

Personally, I saw many of the recent optimistic US statements more as attempts to stabilize and ‘manipulate’ markets and sentiment rather than reflecting a sustainable solution.

Therefore, I remained positioned in oil, did not add further equity exposure, and in contrary reduced exposure by adding short positions. At the same time, I remained invested in precious metals, where I continue to see attractive mid- to longer-term upside potential.

The current market environment still appears highly headline-driven, while many investors continue to underestimate the longer-term risks for inflation, energy markets, and global economic stability.

The AI-fueled rally continues to push global equity markets to fresh record highs as more companies enter the exclusive USD1 trillion market capitalization club.

South Korean chipmaker SK Hynix surged above the $1 trillion valuation mark for the first time after a massive rally of around 250% since the beginning of the year. The move reflects the ongoing enthusiasm around AI infrastructure and soaring demand for memory chips.

At the same time, US semiconductor company Micron also crossed the $1 trillion threshold after UBS sharply raised its price target, sending the stock almost 20% higher in a single session.

Markets:

• Equities: Semiconductor and AI-related stocks continue to lead global equity markets higher.

• Bonds: Bond yields fell back from recent highs - US 10y yield 4.48% - Japan 10y yield 2.70%.

• Commodities: with Iran hopes commodity prices fall - oil: WTI USD 89 and Brent USD 96 - gold: USD 4405 and silver USD 74

• Currencies: USD broadly stable.

• Cryptos: with downside tilt - Bitcoin USD 75K

• Volatility: Volatility falls to lower levels around 17

My View: The semiconductor sector remains at the center of the current market euphoria. To me, it increasingly feels as if investors view chips as the “new gold” of the AI revolution. The race to scale AI infrastructure continues at full speed, supporting tech-heavy equity indices around the world.

At the same time, market breadth is deteriorating noticeably, as only a smaller group of companies continues to drive the rally higher. Historically, this is usually not a healthy sign for the broader market. More and more capital is flowing into just a handful of names, creating increasingly parabolic price movements.

The narrative currently seems simple: chip shortages, exploding AI demand, and enormous pricing power create the impression that semiconductor companies can only continue moving higher.

However, there is another side to this story.

The higher chip prices rise, the more expensive the entire AI infrastructure buildout becomes. Data centers, AI hardware, energy supply, and financing costs are all increasing simultaneously. Rising capital costs simply add another layer of pressure to future profitability.

I do not believe this development is sustainable across the entire AI industry.

Technology cycles move extremely fast. What appears to be cutting-edge infrastructure today can become obsolete surprisingly quickly. This increases the risk of future write-downs, falling margins, and eventually weaker earnings.

At current valuation levels, markets are increasingly pricing in perfection, or perhaps even over-perfection.

I cannot predict the exact timing of when this cycle will reverse. But history shows that parabolic moves in financial markets rarely end gradually. Once momentum shifts, stock prices often fall at the same speed they previously moved higher, or even faster.

Therefore: fasten your seatbelts.

Disclosure: Short position in Semiconductors, Micron, KOSPI Index