There’s a Task Force for That

President Trump announced that he and Iranian President Masoud Pezeshkian signed a 14-point Memorandum of Understanding on Wednesday, announcing a 60-day cease-fire. Highlights include commitments to open a toll-free Strait of Hormuz and the “termination of military operations on all fronts, including Lebanon.”¹ Major energy markets sold off on the peace news, including crude oil and natural gas, yet most major hydrocarbon prices remain well above pre-battle levels, suggesting a conflict premium may endure.

Supply disruptions and nuclear accord overhangs may perpetuate that conflict premium. Before addressing energy supply considerations, vessel passage — including commercial ships and oil tankers — is a challenging logistical issue. Although the draft framework calls for the naval blockade to end in the strait within 30 days, mines need to be swept, insurers underwriting delivery convinced to return to market, and current logjams released.² On the supply front, at a recent industry conference pre-peace accord, Exxon Mobil executive Neil Chapman noted that oil inventories are at extremely low levels: “We’re approaching unheard of inventory levels.” That lack of supply cushion could keep prices elevated. Finally, given that Iran’s nuclear ambitions remain unresolved in the current accord and the 60-day détente may go quickly, we do not expect that conflict premium to dissipate in rapid succession.

The variables we are paying closest attention to include pass-through policies by companies, specifically how much of the energy price reductions (should they emerge) wind up benefiting consumers. As we have shared in past communications, this remains a highly promotional consumer environment, and price increases have had a cumulative impact on consumers.

Some retail analysts assert that discounts and promotions are not cyclical or ephemeral, but instead have become more structural.³ 83% of consumers note that coupons influence their buying decisions, and 92% of online shoppers seek special offers before making a purchase.⁴ We have heard from several companies, including Walmart, Target, Ross Stores and other retailers that shoppers across income cohorts seek discounts and are crossing over to lower cost brands and outlets.

On the positive front, less Middle East tension could spawn more confidence in CFO spending outside of the AI ecosystem buildout. We are currently between earnings seasons for most large cap domestic companies, so this could be a news vacuum on official earnings guidance so early in the new quarter, but analyst conferences and other mediums could produce some insights. Similar to our views on AI, markets will reward companies with credible growth plans centered on returns on capital, and a broadening of industry participation would likely be well-received by markets.

Although Chair Warsh removed the explicit forward guidance from the Fed’s post-meeting statement, markets interpreted a more hawkish tone. The Fed still releases a Summary of Economic Projections, where voting members submit their individual expectations for employment, growth and interest rates. Warsh did not participate in that exercise and noted it is subject to change, but those who did submit forecasts posited interest rate increases for the balance of the year from the previous rate-cut posturing.⁷ While somewhat anticipated by markets, this was a clear policymaker about-face.

The U.S. 2-year Treasury note, an instrument sensitive to Federal Reserve policy and by definition a shorter-term interest rate, touched its highest yield level Wednesday since February 2025. Typically, when shorter maturity bond yields jump higher, assets with large cash flows or dividends sell off. However, yesterday the assets with the largest negative moves included silver, palladium, crypto, public real estate and consumer staples, reflecting a broader message from markets: cash flows or not, assets sensitive to Fed tone changes are subject to lower prices. To be sure, markets are not pricing in sharp Fed interest rate increases; in fact, not even two 0.25% hikes through April 2027, but we will remain focused on incremental change.⁸

As expected, Japan raised its target interest rate to the highest level since 1995 in a 7-1 vote. Further, market participants expect Japan to raise interest rates one more time before year-end, which would bring its target rate to 1.2% by mid-December.⁹ While these rates are high on a relative basis for Japan, on a global scale, they remain paltry in nominal terms.

Japan’s central bank highlighted that despite the rate increase, “accommodative financial conditions are expected to be maintained after the change in the policy interest rate, continuing to firmly support economic activity.”¹⁰ Japan is seeing a growth resurgence, but yen weakness and demographic challenges persist, so policymakers need to walk a fine line. Further, Japan’s susceptibility to hydrocarbon prices remains high and, should the conflict premium endure, cost pass-through to consumers bears watching.

The Bank of England kept interest rates steady at 3.75% despite two dissenting opinions who wanted to push rates up to 4%. In their official communication, the BOE highlighted that “demand for workers isn’t very high right now, so employers may feel less pressure to increase salaries; and interest rates are still higher than before the war broke out; this could contain the effects of the energy price rises and help reduce inflation over time.”¹¹ The BOE further emphasized how uncertain utility and energy prices are, even from elevated prices; on a recent trip to the UK, I can share firsthand that filling up a rental car with North Sea crude is not light on the wallet.

¹ Popli, Nik and Ventura, Tiago. “Read the Full Text of the 14-Point Agreement Between the U.S. and Iran.” Time Magazine. June 17, 2026. https://time.com/article/2026/06/17/us-iran-peace-deal-agreement-leaked-draft-text/. Accessed 18 June 2026.

² Container News. “Iran Confirms US Deal as Strait of Hormuz Set to Reopen.” June 18, 2026. Iran confirms US deal as Strait of Hormuz set to reopen - Container News. Accessed 18 June 2026.

³ Shnoco. “Discount and Promotion Statistics for 2026.” Marketing Statistics. Discount and Promotion Statistics for 2026: Consumer Behavior, Coupon Usage, BOGO Data, Flash Sales, Free Shipping, Loyalty Programs, Promotional Pricing Impact, and Brand Perception. Accessed 18 June 2026.

⁴ Ibid.

⁵ Chen, Brian X. “Apple Registers Trademark for ‘There’s an App for That.’” Wired. October 11, 2010. https://www.wired.com/2010/10/app-for-that/. Accessed 18 June 2026.

⁶ U.S. Federal Reserve. “Transcript of Chairman Warsh’s Press Conference Opening Statement, June 17, 2026.” https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20260617.pdf. Accessed 18 June 2026.

⁷ U.S. Federal Reserve. “Summary of Economic Projections, June 17, 2026.” https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20260617.pdf. Accessed 18 June 2026.

⁸ Northern Trust Wealth Management Research, Bloomberg. World Interest Rate Policy Calculator accessed on terminal, 18 June 2026. 

⁹ Ibid

¹⁰ Bank of Japan. “Change in the Guideline for Money Market Operations.” June 16, 2026. https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2026/k260616a.pdf. Accessed 18 June 2026.

¹¹ Bank of England. “Our Latest Decision: Bank Rate Held at 3.75%.” Interest Rates and Bank Rate: Our Latest Decision. June 18, 2026. https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate. Accessed 18 June 2026.