June Brings a Different Tune in Expectations about When Hormuz Will Reopen
June 1, 2026
(137) Given last week’s optimistic mood regarding negotiations for a lasting ceasefire and reopening of the Strait of Hormuz, todays dour mood has seemingly descended on the financial community without warning. On closer inspection, the shifting prospects for a “deal” was predictable and inevitably timed. Overly optimistic forecasts especially from the U.S. side have happened repeatedly ever since the first days of the conflict, now entering its fourteenth week. Moreover, many of the major events of the Middle Eastern War have happened on weekends, presumably so timed because that’s when news cycles are are lightly followed. The latest setback came from an Iranian news report that that country’s continuing participation in peace talks are contingent on a demand that Israel stop its assault on Lebanon, along with a threat to shut the Strait of Hormuz completely if Israel persists.
June’s shifting news from the war lifted the price of West Texas Intermediate oil to about 7% above its closing level before the weekend. Prices for Bitcoin, gold and silver have sunk 3.1%, 2.9% and 1.9%. Putting its safe-haven hat back on, the dollar has strengthened 1.2% against the kiwi, 1.0% versus the Swiss franc,0.4% relative to the loonie, euro and won, 0.3% vis-a-vis the yen and 0.2% against the peso and sterling. Ten-year sovereign debt yields, in contrast to last week’s declines, have advanced 11 basis points in Italy, 10 bps in France and Great Britain, nine bps in Spain, eight bps in Germany and 7 basis points in the United States.
Among major stock markets, share prices are down between 0.6% and 1.5% in major European exchanges. Asian stock markets have maintained buoyancy, and the major U.S. indices have shown much more resilience than those in Europe.
That resilience is supported by the contrast between May manufacturing sector purchasing manager indices reported today. To wit, the S&P Global U.S. PMI rose 0.6 points to 55.1, well above the 50 threshold between a trend of expansion and one of contraction. The more widely followed index compiled by the Institute of Supply Management climbed 1.3 points to a higher-than-anticipated 54.0 but also signaled lessening production growth than in April and elevated inflation. Both overall PMI readings were at 4-year highs.
Euroland’s PMI slipped to a 2-month low of 51.6 and was associated with rising input costs and lengthening supply delivery times. Euroland’s two major economies, Germany (50.1) and France (49.7) were at 4- and 6-month lows.
The British PMI score of 53.9 was a 48-month high, and Japan’s 54.5 score was at a 52-month high. Australia’s 50.7 reading was a a 2-month low and suggests a pretty stagnant trend, however.
India’s 54.3 reading, although lower than in April, again exceeded China’s of 51.8.
Among other data reported today,
- German retail sales fell 0.3% both on month and year-on-year in April. The 12-month decline was the weakest result in 34 months.
- Indian industrial production in April was 4.9% greater than its year-earlier level.
- Swiss GDP last quarter was only 0.3% above its year-earlier level, well below the 2.6% increase posted between the first quarters of 2024 and 2025.
- Turkish GDP growth last quarter decelerated, edging only 0.1% higher and climbing 2.5% versus a year earlier.
- Bulgarian consumer price inflation of 7.0% in May was at a 33-month high and up from 1.2% in September 2024.
- The British Nationwide house price index slowed to a 1.7% pace in May from 3.0% in April.
- U.S. construction spending expanded 0.4% in April.
Copyright 2026, Larry Greenberg. All rights reserved.
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