Softer Dollar, Bitcoin and Oil Price; Mixed Equity Moves; and Lower Sovereign Debt Yields
June 4, 2026
Middle Eastern geopolitics continues to impact financial market activity in multiple ways. There is the guessing game about when an enduring ceasefire and will be reached, which pivots with each ensuing pronouncement from officials or rumor/news scoop that hits the wires. Seemingly lost in this focus on the timing of a deal is the reality that was prominent in the conflict’s early days that if extended beyond just a couple of weeks, it will likely take extra time to considerable time after the Strait of Hormuz becomes safe for traffic for commerce to return to normal volume. The passageway has been effectively out of service well beyond the point where fixing damaged infrastructure will create additional delay.
Today’s fresh news highlight involves a report that officials in Israel and Lebanon have reached an accord to end hostilities but if and only if Hezbollah also stops its attacks. Meanwhile, Russia’s heavy pounding of Kyiv serve as a reminder that news of coming peace in the Middle East rarely pans out, and the wisest course of action in the part of the world is to not get involved in the first place.
Another dimension through which Middle Eastern politics are impacting daily financial market activity is being channeled through scheduled economic data releases. One consideration here concerns how severely growth prospects this year been dampened and how the path of inflation might compare to what transpired in 2021-3. A related consideration involves how different central banks will react with their monetary policies.
Putting this uncertain stew of forces together, financial markets keep shifting mood from day to day. One interesting result has been that split personality between what happens in Asia’s day from what happens during trading in Europe and the Western Hemisphere later on the same day. Share prices today sank 1.4-1.8% in Japan, Hong Kong, South Korea, Taiwan and Singapore and Indonesia but show gains in Euroland of 0.5-1.0%. Among themselves, major U.S. stock market indices are presenting a mixed front, with the DOW and Russell 2000 currently up more than 1% but the SPX and Nasdaq hardly changed compared with yesterday’s closing levels.
The dollar rose yesterday but is down today with losses of 0.5% against the Swiss franc and 0.3% versus the euro. The yen remains very close to 160 per dollar. Indonesia’s rupiah touched yet another all-time low overnight (18,078 per dollar) but is currently 0.4% firmer on net for the day. At $92.75 per barrel, the price drop of West Texas Intermediate oil is 3.3% lower on the day but over 60% more expensive than levels six months ago.
Crypto continues to lose value, touching a low overnight of $61,459 versus a peak last October slightly north of $124,300.
Ten-year sovereign debt yields slipped today by three basis points in the U.K. and U.S. and a basis point in France, Italy, Spain, and Switzerland. Silver and gold have recouped about 1%.
A downwardly revised 0.3% rise of U.S. nonfarm labor productivity between the final quarter of 2025 and last quarter was a half percentage point lower than its earlier estimated increase and the weakest reading in four quarters, but the year-0n-year advance remained strong at 2.8%. Unit labor costs also got revised significantly lower to show rise of 1.8% quarter-on-quarter and merely 0.5% from the first quarter of 2025. Other U.S. data out today shows 1) the biggest increase in new jobless insurance claims (225k) in 16 weeks; and 2) 97k job cuts last month, most in four months.
Retail sales volume in the euro area during April fell 0.4% on month and to the smallest year-on-year increase in 21 months of only 1.0%.
Construction purchasing manager indices fell in the U.K. to a 72-month low of 38.2 but rose above April’s 20-month low of 41.7 to a 2-month high of 43.7.
Ireland’s composite purchasing managers index in May printed at a 3-month high of 52.5. Singapore’s private PMI reading in May was 56.7, a 2-month low.
Industrial production in Spain slid 0.4% in April and was associated with a 2.0% year-on-year increase.
Swiss consumer price inflation did not accelerate in May as analysts were expected but instead held steady at April’s 16-month high of a mere 0.6%. Core inflation of 0.3% matched its lowest point since mid-2021.
the Cypriot and Czech consumer price inflation rates in May of 2.6% and 2.1% were lower than April readings.
After posting an average increase last year of 12.3%, Irish GDP slumped 12.1% on quarter and by a record 17.1% on year in the first quarter of this year.
Yesterday’s Federal Reserve Beige Book of recent regional economic conditions found economic activity to be expanding at a slight to modest pace in ten of the dozen districts, the exceptions being flat activity in the San Francisco district and a slight deterioration in the Philadelphia district. This picture was a little better than in the prior Beige Book and associated with a steadying labor market picture but also higher inflation.
Reserve Bank of Australia Governor Bullock sees increased inflationary risk because of the Middle East chaos but believes that a wage-price spiral will not ensue and a 1970’s-like stagflation can be avoided.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: British and Euroland construction PMI results, RBA Governor Bullock, U.S. productivity and unit labor costs
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