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.

“Where you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt. ” – Paul Tudor Jones

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