Markets underpricing risk that new Fed Chair Kevin Warsh could sound hawkish. He may revamp communication: tear up dot plot, stop SEP. RBA raised rates 3 times this year (most of any major CB), still sounding hawkish. BOE expected to be somewhat hawkish, markets still pricing one rate hike this year due to oil price shock. Iran deal may not change central bank hawkishness.

BOJ hike to 1% (highest since 1995) well-flagged, market reaction muted. Key milestone: BOJ ended paring back of bond purchases, suggesting close to normal purchasing level. Nikkei briefly hit 70,000 for first time. Press conference key: if Uchida points clearly to more hikes, yen stabilizes; if too cautious, yen could slide further. Statement dropped 'interest rates significantly low' language, suggesting closer to neutral rate.

US and Iran still diverging on key terms: Iran says no tolls for 60 days, US says no tolls ever. Blocked assets dispute: Iran says US willing to negotiate $24B, US says no dime. Even if Strait opens Friday, weeks/months needed for pre-war flow levels. 60-day ceasefire period for nuclear negotiations, but Trump document suggests he could return to military strikes if Iran stalls.

European allies skeptical about Strait of Hormuz reopening by Friday. Key concerns: whether timeline is realistic, sanction relief structure, leverage on Iran, and toll question (Iran says toll-free only 60 days). Italy's Meloni may only join de-mining efforts. Ukraine focus: Zelenskyy arrives at G7 to re-engage US after Iran distraction, Trump suggests refocusing on Ukraine war.

China economy developing in K-shape: industrial production outperformed in May driven by global AI boom, but consumer side very weak. Retail sales -0.6% YoY (first contraction since COVID). Youth jobless rate elevated at ~16%, home prices resumed decline creating negative wealth effect. China exporting inflation in AI/telecom equipment while traditional manufacturing slower. Policymakers not in rush to change policy.

Asian stocks rally slows as investors assess US-Iran deal sustainability. BOJ hike to 1% (highest since 1995) was well-flagged, market reaction muted. Key focus is BOJ deputy governor's press conference tone for further hawkishness. China data disappointing: retail sales -0.6% YoY (first contraction since COVID), fixed asset investment weak, showing domestic demand remains fragile while growth driven by exports.