Please see below, todays Daily Investment Bulletin from Brooks Macdonald covering their thoughts on markets and the ongoing Geopolitical Issues:
What has happened
Yesterday saw global equity markets seesaw as US President Trump left everyone guessing whether the US would join Israeli attacks on Iran. Elsewhere, the US Federal Reserve left rates unchanged as expected – the Bank of England announces its latest interest rate decision (also no change expected) at 12 o’clock midday today UK time. US markets are shut today (“Juneteenth” public holiday), so expect trading volumes to be lighter elsewhere.
Middle East
While Trump said yesterday that Iran had reached out about the possibility of negotiations, he said that he hadn’t yet made his mind up about US military strikes. Yesterday the Wall Street Journal reported that Trump had privately approved of attack plans but had held off on the final order. Overnight, Bloomberg has reported that US officials are preparing for a possible US strike on Iran in the coming days.
US Federal Reserve
As widely expected, the US Federal Reserve (Fed) left interest rates unchanged yesterday for the fourth meeting in a row, at a range of 4.25-4.5%. As for Fed members’ rate expectations ahead, the median estimate for -50bps of cumulative cuts by calendar 2025 year end was also unchanged. There was a small hawkish shift however – more Fed members see no cuts at all this year, while the median rate expectation was nudged up for 2026 and 2027.
What does Brooks Macdonald think
Reflecting tariff risks, Fed members nudged up inflation expectations for 2025 and 2026, while economic growth was nudged down. Feeding into our more cautious outlook recently, the risk is that the tariff impact eventually shows up in the economic data, albeit with a lag. As Fed Chair Powell said yesterday, “ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer … we know that because that’s what businesses say, that’s what the data say from the past.”
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Andrew Lloyd
19th June 2025