Trump Cancels Iran Strikes

• A major de-escalation in the Middle East, with Trump cancelling planned strikes against Iran and announcing a peace deal has been negotiated and could be signed in the coming days, an agreement he says would see the imminent reopening of the Strait of Hormuz.
• The news brought relief to markets globally with Brent dropping below $90/bbl. Bonds rallied, the US 10yr declining from 4.54% to 4.45% and the Australian 10yr down 8 basis points to 4.82%.
• However, US PPI inflation accelerated rising from 5.7% to 6.5% in May, contradicting relief elsewhere as underlying price pressures build, reinforcing the possibility of Fed tightening in the future.
• Locally, consumer inflation expectations fell to 5.5% in June (5.6% in May) but remain elevated and well above late 2025 levels. The decline may reflect easing pressure on consumers due to the fuel excise tax cut, however this cut is scheduled to expire on June 30.