Geopolitical Tensions, Tariff Risks, and Market Implications

June 12, 2025

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Key Takeaways from Bloomberg’s “The Pulse”

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Geopolitical Escalation: The U.S. ordered embassy staff to depart Baghdad amid Iranian threats to strike American bases if nuclear talks collapse. This raises oil price volatility risks, with Brent crude briefly surpassing $70/barrel.

Tariff Uncertainty: President Trump reiterated plans to impose higher duties on trading partners by July 9, targeting 15+ economies. Deutsche Bank’s Christian Nolting warns:

Tariffs are inflationary, with potential Q3 CPI impacts
Secondary tariffs may emerge, prolonging trade tensions
Market differentiation is key—sectors like tech outperform while autos struggle

Market Positioning:

Gold remains a hedge amid ECB dovishness and dollar risks
Bond steepening trade is consensus, but term premiums remain low historically
Equities show rationality—sector rotation persists despite macro noise

European Challenges: Former Italian PM Mario Monti criticised EU nationalism, urging defence spending reforms and single-market completion. Meanwhile, Czech President Zeman advocated euro adoption, citing trade dependency.

Energy Markets: Goldman Sachs’ Michele Della Vigna sees near-term oil upside from Middle East risks but forecasts a bearish turn by autumn due to OPEC supply surges and seasonal demand dips. LNG faces a supply “avalanche,” pressuring European gas prices.

AI & Tech: Synthesia’s CEO highlighted enterprise AI video adoption, with 20% cost savings for clients like UBS. European tech faces structural hurdles, including unattractive IPO conditions.

Actionable Insight: Monitor Iran nuclear talks (weekend timeline) and July 9 tariff deadline for market catalysts. Energy traders should prepare for potential autumn crude downside despite current geopolitical premiums.

“The central idea in The Black Swan is that: rare events cannot be estimated from empirical observation since they are rare.” – Nassim Nicholas Taleb

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