Good morning. U.S. equity markets rose again Thursday, lifted by another soft inflation print and steady jobless claims, though investors remained watchful amid rising tensions in the Middle East. Here’s a quick X thread from Alexander Stahel to make sense of the latest between Israel, the US, and Iran’s Nuclear Program:

The S&P 500 continued its near-relentless climb, up in four of the last five sessions and trading near record levels. Utilities and tech led sector gains, while consumer names lagged. Treasuries extended their rally, the dollar slid to 2022 lows, and gold surged as investors balanced favorable macro data against the risk of escalating conflict between Israel and Iran.

On the economic front, May's PPI data came in slightly cooler than expected, and initial jobless claims remained steady, reinforcing the view that inflation is moderating while the labor market cools only gradually. Traders now see a near 80% chance of a Fed rate cut in September, with a second cut in play for October.

Israel Launches Strike on Iran Without U.S. Support
The Economist details Israel's decision to strike Iranian nuclear targets in Natanz and other sites without U.S. involvement, escalating geopolitical tensions.
Read Full Story

Iran Confirms Natanz Among Sites Hit in Israeli Strike
WSJ Live Coverage reports IAEA confirmation that Iranian nuclear facilities were targeted, increasing pressure on U.S. diplomacy.
Read Full Story

Trump’s Iran Strategy: The Sensible Gamble?
The Economist revisits Trump’s earlier attempts at deal-making with Iran, placing current events in broader policy context.
Read Full Story

Markets Volatile on Iran, Trade, and Tech Headlines
WSJ Live tracks sharp swings in equities, gold, and oil as investors process Iran tensions and trade headlines.
Read Full Story

Oil Could Hit $120 if Conflict Escalates
MarketWatch highlights JPMorgan's warning that oil prices could spike if Israel-Iran tensions worsen.
Read Full Story

Bond Yields Fall as Safety Trade Returns
CNBC reports Treasury yields slipping on risk-off moves driven by Middle East headlines.
Read Full Story

China Defends Support for Unprofitable Firms
Bloomberg explores Xi’s rationale for subsidizing weak companies to preserve jobs and prevent unrest.
Read Full Story

U.S. stocks notched another win Thursday, as the S&P 500 and Nasdaq both closed higher amid a calm response to geopolitical headlines and encouraging inflation data. The producer price index (PPI) rose just 0.1% in May, below forecasts of 0.2%. Core PPI also undershot expectations, falling to 3.0% y/y. Jobless claims were unchanged at 248,000. The Dow also ended higher despite losses in Boeing shares following a plane crash in India.

Bond yields declined, with the 10-year Treasury falling to 4.35% and the 2-year to 3.88%. A strong 30-year bond auction capped the week for Treasury issuance, drawing healthy demand. Meanwhile, the dollar index (DXY) fell to 97.60—its lowest since March 2022—on softer inflation and dovish rate expectations.

Gold surged 1.76% to $3,402.40/oz amid Iran-Israel headlines, while platinum and the Swiss franc also rallied. Oil retreated slightly after nearing 8-week highs, with WTI closing at $68.04/bbl.

Markets continue to defy gravity, brushing off macro and geopolitical risks alike. With inflation moderating and the Fed likely on hold through summer, sentiment remains upbeat despite narrow breadth. But the Israel-Iran situation bears close watching, as energy prices and safe-haven flows could quickly reprice risk.