WS #11150

Eurozone inflation fell more than expected to 2.8% in June, down from 3.2% in May and below the 3.0% consensus, driven by easing energy prices as Middle East tensions de-escalated. This strengthens the case for the ECB to hold rates steady, boosting European equities and rate-sensitive sectors. However, the dominant macro narrative is shifting: fed funds futures are now pricing in a potential rate hike as soon as July, a previously unthinkable move that could derail risk assets. Bitcoin dipped to a 21-month low near $57,700 amid hawkish Fed rhetoric and record $4.5B outflows from US spot Bitcoin ETFs in June, with options traders loading up on $50,000 puts signaling further downside. The crypto selloff is broad-based, with gold futures also flashing a death cross. Meanwhile, the Getty-Shutterstock merger has collapsed after UK regulators required Shutterstock to divest its editorial unit, a negative for both stocks. Microsoft is reportedly planning layoffs affecting under 2.5% of its workforce, adding to negative sentiment for MSFT and the broader tech sector. Iran's foreign minister issued a new threat against the US and Israel, and a foreign container ship ran aground in the Strait of Hormuz after bypassing Iran-approved routes, signaling that Hormuz tensions remain elevated despite the ceasefire. The USMCA review suggests the US is unlikely to extend the free trade deal, a negative for Mexico and Canada. On the positive side, Tesla registrations in Europe showed strong June gains in France, Sweden, and Denmark, supporting a potential Q2 delivery beat. MSC Industrial Direct reported a Q3 earnings beat, a positive signal for industrial demand.