Original|Odaily Planet Daily(@OdailyChina)
Author|Wenser(@wenser2010 )
Following the US military's sudden strikes on Iran, and Trump's threat to "take tough action" against Iran which was subsequently canceled, Trump for the 38th time proclaimed that a "final deal is imminent". Financial markets worldwide, including the US stock market, jolted awake and once again experienced a "TACO-style surge".
This morning, all three major US stock indices closed higher, with the Dow Jones up 1.90%, the Nasdaq up 3.42%, and the S&P 500 up 1.73%. Crypto-related stocks rose across the board, with COIN up 4.99% intraday and HOOD up 7.40% intraday. Japanese and South Korean stock markets opened higher. The South Korean KOSPI index opened up 519.25 points, a 6.69% gain, at 8283.2 points, triggering a trading halt at one point, with gains later widening to 8%. The Nikkei 225 index opened up 880.53 points, a 1.37% gain, at 65097.80 points. Possibly influenced by this news, oil prices fell sharply by 4.3%, while gold prices rebounded by 3.1%.
As the US-Israel-Iran conflict enters its fourth month, global financial markets, particularly the US stock market, are pricing in positive developments such as the end of the war in advance, leading to a series of recent "news-driven rallies".
Macro Background: Trump's "Negotiation for Change", US CPI Hits 3-Year High, Fed Rate Hike Expectations Dim
Overall, the macro backdrop for today's stock market rally primarily includes the potential for peace talks in the war situation, the release of US CPI data, and the diminished expectations for a Fed rate hike.
Trump's Comments Again Show "TACO Power"
According to the latest news overnight and this morning, Trump first canceled the planned strikes and bombing operations against Iran scheduled for that evening. He subsequently posted, stating that related consultations had been submitted to and approved by Iran's highest leadership; the final terms (both in overall concept and specific details) had been approved by all relevant parties, including the US, Israel, Saudi Arabia, the UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, Egypt, and others. Although Iran and Israel later denied this, the market chose to embrace it.
Furthermore, Trump stated regarding the Iran issue that an "excellent agreement" had been reached, noting the relevant documents were in the final drafting stage and could be finalized in the coming days, ready for signing. He added that the agreement might be signed in Europe, possibly this weekend, with US Vice President Vance in attendance. He also said, "Once Iran signs the agreement, the Strait of Hormuz will be opened." Despite the Iran negotiations "taking too long", financial markets are currently choosing to "believe first".
US Core CPI Annual Rate Hits 3-Year High
This Wednesday, the US May CPI data was released, showing:
- Seasonally Adjusted CPI MoM: 0.5%, expected 0.50%, previous 0.60%.
- US May Seasonally Adjusted Core CPI MoM: 0.2%, expected 0.30%, previous 0.40%.
- US May Unadjusted CPI YoY: 4.2%, expected 4.20%, previous 3.80%, the highest since April 2023.
- US May Unadjusted Core CPI YoY: 2.9%, expected 2.90%, previous 2.80%, the highest since September 2025.
Some analysts believe that US inflation returning to the "4% range" suggests the peak of war-related inflation may be over. CPI rising sharply for the third consecutive month highlights the increasing pressure on household spending, as signs indicate more consumers are tapping into savings to cover expenses. After the data release, the probability of the Fed holding rates steady in June rose to 96.3%, greatly easing earlier Fed rate hike expectations. Trump responded to this data by boasting, "I love inflation."
Expectations for Fed Rate Hike This Year Significantly Eased
Following the CPI data release, the latest information shows the market no longer fully prices in a Fed rate hike this year.
Seema Shah, Chief Global Strategist at Principal Asset Management, stated, "US inflation remains uncomfortably high at 4%, but the weaker-than-expected core reading does relieve some pressure. With energy price increases being the main driver and housing costs easing, we haven't seen clear signs of broader second-round effects yet, which should allow the Fed to remain patient."
Afonso Borges, an analyst at Julius Baer, also pointed out that the modest rally led by short-term Treasuries after Wednesday's CPI report "makes sense," as the better-than-expected inflation data should reduce the risk of a Fed rate hike later this year.
Japanese and South Korean Markets: Retail Investors Borrow to Buy the Dip, Yen Continues to Depreciate
Shifting focus to Japanese and South Korean stock markets, they are currently in a phase of significant rebound after recent declines.
On June 10th, according to Yonhap News Agency, influenced by negative news from the US stock market and the sharp drop in semiconductor stocks, the Korea Composite Stock Price Index (KOSPI) experienced two days of severe adjustments. During this period, the overdraft account balances at major commercial banks increased by over 600 billion won (approximately 2.67 billion RMB). Analysis suggests this indicates retail investors, expecting a market rebound after the plunge, began using overdraft accounts for "borrowing to invest."
According to Nikkei News, the Bank of Japan (BoJ) is expected to raise its short-term policy rate from 0.75% to 1.0% at its monetary policy meeting on June 15th-16th, which would be the highest policy rate level since 1995. Possibly influenced by this news, USD/JPY rose 0.2% intraday, with the current exchange rate at 160.168.
Overall, funds in Japanese and South Korean stock markets continue to grow steadily, but a BoJ rate hike could gradually tighten liquidity in the Japanese capital market. Bank of America analyst Shusuke Yamada stated that if the BoJ takes a hawkish stance and raises rates at next week's meeting, it is expected to support the Yen. He noted that the market has already priced in the rate hike expectation.
Future Outlook: War Situation Uncertain, Institutions Warn of Deep Correction, Markets Face Liquidity Test
Although global stock markets surged today stimulated by Trump's unpredictable "positive news", examining various dynamic factors reveals market sentiment remains cautiously optimistic, with precautions for a deep correction.
No Turnaround in US-Iran Situation
Ali Akbar Dareini from the Tehran Strategic Studies Center stated that despite Trump announcing the cancellation of strikes against Iran, the situation hasn't changed. From Iran's perspective, before any negotiations begin or Iran is ready to discuss nuclear issues, the US first needs to take confidence-building measures, which hasn't happened. Reality shows the US hasn't taken any steps to ease tensions. Iran's position is not to compromise under coercion.
Institutional Bulls Turn Cautious, Warn of Deep Correction
Alex Altmann, Barclays' Head of Global Equity Strategy, who has often advocated "holding stocks" during market volatility and accurately timed rebounds, recently issued a rare cautious warning. In his latest market analysis, he stated that due to the combined pull of technical overbought conditions, overheated sentiment, and macro-environmental pressures, he has turned bearish on the short-term outlook for US stocks. He believes the US stock market is currently in the "middle of a structural correction," with the biggest hidden danger being the severe disconnect between retail sentiment and macroeconomic reality. He even bluntly stated, "The S&P 500 could face a total correction of 6%-7%."
Recent data from the American Association of Individual Investors (AAII) sentiment survey shows the bearish proportion among investors surged to 47.7% last week, nearing the year's high of 52% (March 18th) and well above the historical average of 31%.
Furthermore, several institutions have recently expressed bearish views: Previously, BofA Securities stated investors should be cautious about US stocks, as an increasing number of bearish signals suggest the market is nearing a top.
A team of strategists led by Savita Subramanian wrote in a report dated June 5th that about 70% of bear market signals have now been triggered, consistent with average levels during historical market peaks. The S&P 500 appears statistically overvalued on 17 out of 20 valuation metrics, with 8 indicators above levels seen during the tech bubble. Additionally, high P/E stocks significantly outperforming low valuation stocks is seen by the strategists as a sign of excessive speculation. Within the tech sector, the gap between the best and worst performing quintiles has widened to its highest level since February 2000.
Of course, this view has been openly opposed by the "new stock god" Serenity, who believes Bank of America's bearish rhetoric should be viewed cautiously, as a flood of negative news often appears when institutions need liquidity.
Regarding the South Korean stock market, on June 10th, the open interest in put options for the Kospi 200 index has recently surged sharply relative to call options, nearing levels that have historically preceded market declines. By the previous trading day's close, the ratio of protective put options used to hedge declines to speculative call options approached 2.5 times, hitting a five-year high. This indicator has only breached this threshold a few times before. Notably, South Korean retail investors sold over 1 trillion won worth of overseas stocks in the first week of June, potentially signaling a return of domestic investors to the local market.
SpaceX IPO Looms, US Market Faces Liquidity Test
The latest news indicates that retail subscription for the SpaceX US IPO has exceeded $100 billion. Combined with earlier information that "SpaceX plans to raise $75 billion, with 30% of shares offered to individual investors," the retail subscription is now over 4 times oversubscribed.
US investment manager Jim Chanos stated that investors are pricing in grand narratives rather than realistic profit prospects, with SpaceX's valuation multiples far exceeding those of Tesla (TSLA.O). Furthermore, institutions like Franklin Templeton, and sovereign wealth funds from Saudi Arabia and Kuwait have joined the IPO subscription frenzy. According to foreign media reports, several institutional investors have each placed orders for about $10 billion or more of shares. Two days ago, the SpaceX IPO had already attracted over $250 billion in investment demand, exceeding its planned fundraising of $75 billion, with oversubscription nearing 4 times. Based on market trend projections, by the official listing this Friday, the oversubscription ratio is expected to climb to 10 times.
"Wall Street's Oracle" and Bitmine Board Chairman Tom Lee commented on this, stating that at this stage, US stock investors are actively selling their existing holdings to raise cash to participate in this blockbuster IPO. This ongoing capital diversion effect might be the culprit behind the recent weakness in US stocks. Christophe Boucher, Chief Investment Officer at ABN Amro Investment Solutions (part of Dutch bank ABN Amro), also said, participating in the SpaceX IPO is similar to buying cryptocurrency about 15 years ago—either you could lose your entire principal or potentially achieve exponential returns.
Although the SpaceX IPO has raised concerns about market liquidity shortages, according to market news, S&P Dow Jones Indices believes SpaceX is eligible for rapid inclusion in certain indices. At that point, SpaceX could become a "phenomenal giant" in the US stock market.
In summary, global stock markets will continue to face influences such as capital liquidity, domestic market policies, and changes in the global situation like the US-Israel-Iran conflict. In the short term, be wary of Trump potentially staging another round of market manipulation with "intimidation-induced bearishness" and "TACO-style bullishness".
