Pulvinex direct report - First ever published.
Pulvinex is a proprietary research product working with thousands of data sources.
PDF with version with all images.
The dominant macro dynamic of this 24-hour window is a collision between two powerful and partially offsetting forces: a hawkish Federal Reserve regime inflection under new Chair Kevin Warsh and a geopolitical energy-premium unwind driven by the US-Iran interim ceasefire and the US Treasury’s issuance of a 60-day general license authorizing Iranian oil sales in dollars. Warsh’s debut FOMC press conference delivered a unanimous, forward-guidance-free inflation-fighting mandate — nine of eighteen dot-plot participants now project rates above 3.75% by year-end, Kalshi prediction markets moved to 57% probability of a 2026 hike, and Bank of America immediately shifted to a three-hike forecast (September, October, December) while Deutsche Bank projected two. The 2s10s Treasury curve compressed from 40 to 27 basis points — the sharpest single-meeting flattening in over a year — 2-year yields reached a four-month high, and the VIX broke above 19 from a sub-17 base, consistent with a genuine volatility regime shift following Friday’s $8.3 trillion options expiration. Simultaneously, the Treasury’s 60-day Iranian oil sanctions waiver — the first such authorization since 1991 — drove WTI to approximately $73–75 per barrel, down roughly $45 from the March peak of $118, with 62 million barrels of backlogged Persian Gulf crude preparing to exit. These two forces produce an inflationary crossfire: falling energy costs mechanically depress near-term headline CPI and PCE, while core and services inflation remains elevated — May PPI printed at 6.5% year-over-year and core PPI at 4.9%, the fastest wholesale inflation since 2022 — keeping the underlying pressure that drives Warsh’s hawkish posture firmly intact. The forthcoming May PCE release (Deutsche Bank consensus: 0.37% month-on-month, 3.44% year-over-year core) is the next critical arbitration point between these two forces.
The session simultaneously surfaced multiple second-order macro stress signals spanning distinct transmission channels. Japan’s yen broke through the 161–162 level — past the threshold that triggered Ministry of Finance intervention in April — prompting an emergency Katayama-Bessent online session and suspected direct intervention, with CFTC data showing 150,132 net short yen contracts near a record. The PBOC set the yuan midpoint at its weakest since June 8, the Korean won slumped on Fed hike expectations, and South Korea’s KOSPI suffered a 9.99% single-session crash — its worst since March — as AI-linked semiconductor concentration unwound violently, triggering Korea Exchange sidecar mechanisms. UK Prime Minister Keir Starmer resigned, with Andy Burnham (95% Polymarket odds) poised for installation by July 17; 10-year gilt yields held at 4.84–4.85%, with Pantheon Macroeconomics estimating 7–14 basis points of political premium from a Burnham premiership and analysts flagging Truss-era gilt stress risk if a non-market-friendly Chancellor is appointed. Emerging market currencies were under broad USD pressure — AUD/USD slipped below 0.70 to its lowest since April 8, the Thai baht hit a one-year low, and the Swiss franc lost support below 0.81 — all consistent with a DXY holding above 101 on the repriced Fed rate path. On the fiscal front, US federal interest costs hit a record $723 billion in the first eight months of FY2026, now the second-largest budget line after Social Security, with the CBO projecting net interest payments rising from approximately $1 trillion annually to $2.1 trillion by 2036. Germany’s June flash Composite PMI dropped to 48.0, missing the 49.7 forecast, with the services component collapsing to 46.8 — placing Germany in dual-sector contraction territory and compounding the ECB’s stagflationary dilemma. ECB President Lagarde acknowledged “some de-anchoring” in short-term inflation expectations while signaling no need for more forceful policy action, with markets pricing 33 basis points of additional ECB hikes by year-end.
The US Senate passed the bipartisan ROAD to Housing Act 85-5, barring institutional investors with more than 350 single-family homes from additional purchases — the first major federal structural intervention in single-family housing supply since the post-GFC era — with a four-year CBDC ban embedded in the legislation. Canada's May CPI printed at 3.2% year-over-year, above the 3.0% forecast, driven by a 33% gasoline spike. China sanctioned 10 US defense and rare earth firms and restricted 46 others from government procurement in direct retaliation for the Pentagon’s military blacklist, targeting MP Materials and USA Rare Earth in a signal of willingness to weaponize critical minerals dominance ahead of the September Xi-Trump summit. Goldman Sachs simultaneously cut US recession risk to 15% from 25% — citing easing geopolitical stress and lower energy prices — while raising H2 GDP growth to 2%, creating the widest major-bank policy split of the current cycle against BofA’s three-hike forecast. US-Iran technical talks in Switzerland continued with reported progress on frozen asset release procedures and a Strait of Hormuz communication line, though Iran temporarily closed the strait citing Israeli ceasefire violations before resuming, and Iranian officials disputed US claims that Tehran agreed to readmit IAEA nuclear inspectors. Former Federal Reserve Chairman Alan Greenspan died at age 100.
Thanks, Joao