Diplomacy
Trump’s tariffs boost interest in German, Japanese bonds

With investors seeking safe havens for investment for the first time in years, US Treasury bonds face serious competition from global funds.
The yields on benchmark 10-year Treasury bonds had fallen by approximately 40 basis points this year. With US President Donald Trump’s barrage of tariffs, which are thought to increase the risk of recession, they briefly fell below 4% on Monday.
According to Bloomberg, similar rates have risen in both Europe and Japan. In Germany, the 10-year bond rose to 2.61%, reflecting expectations that bond issuance will increase as the government increases defense spending.
Meanwhile, the rate on 10-year Japanese bonds has also risen after years around zero, and is currently around 1.25% as investors prepare for tighter monetary policy.
While both are still well below US bond yields, they are at levels that make them appear more attractive than Treasury bonds for European and Japanese investors who are protected from dollar risk when buying US securities.
This may convince investors to shift to their own markets, where the policy outlook is more stable.
“The idea that the administration’s various policies could undermine foreign demand for Treasury bonds is gaining traction,” said Matthew Raskin, head of US interest rates research at Deutsche Bank.
Deutsche Bank also warned of a “confidence crisis” in the dollar, while UBS Group believes the euro would get a “shot in the arm” in its status as a global reserve currency.
On the other hand, some believe this change should be viewed with skepticism. The German government bond, Bund, looked similarly attractive in mid-2023, but an aggressive sell-off in Treasury bonds pushed 10-year US yields to 5%, eroding Europe’s yield advantage.
If tariffs revive inflation, this could push US yields higher again.
But according to Bloomberg, even the discussion of such a shift in flows shows that investors are preparing for Europe to play a bigger role in global markets as competition for capital intensifies.
This could lead to greater fragility in the US Treasury market, which has been under attack from buyers in recent years amid concerns that supply could increase.
One of the early tests will take place on Tuesday, when the US government sells $58 billion of three-year bonds, followed by the sale of 10- and 30-year bonds later this week.
Traditionally, the US budget deficit has been financed in part by a wave of capital flowing into Treasury bonds from around the world.
According to Barclays’ analysis of fund flow data, foreign ownership of US Treasury bonds accounts for about a third of the market, and the foreign sector was the largest source of US bond demand last year.
This reflected net purchases of $910 billion, about half of which were in Treasury bonds.
According to US government data, the vast majority of foreign Treasury assets are in longer maturities. Ales Koutny, international interest rates manager at Vanguard, said this means that as foreign demand decreases, it could steepen the US yield curve, meaning long-term rates will rise relative to short-term rates.
An early indication of how investors are navigating global yield shifts may emerge in a few days. The new fiscal year has just begun in Japan, and this is a period when companies there typically review their allocation strategies.
Japan is a key player in global bond markets due to the Bank of Japan’s decades-long ultra-low interest rate policy, which has pushed investors to seek yield.
Germany initiated the change in early March, announcing plans to allocate hundreds of billions of euros for defense and infrastructure. Bund yields rose as investors priced in bond issuance to cover the spending.
The European Union’s large pool of savings surplus means it is the largest foreign holder of US public debt, while also playing a large role in US corporate finance.
If European countries meaningfully increase their investments, these savings could be kept at home.
Diplomacy
Trump announces ceasefire between Israel and Iran after missile strikes

US President Donald Trump has announced a “complete and total ceasefire” between Israel and Iran, signaling an end to the conflict. Iran’s Fars News Agency also reported that a ceasefire with Israel began at 7:30 AM local time (7:00 AM TRT).
The Fars News Agency announced the development on its Telegram page with the headline, “The Beginning of the Ceasefire.”
Before the ceasefire took effect, Iran launched four waves of missiles at Israel. Iranian media reported, “After Iran’s final missiles found their targets, causing numerous casualties and injuries among the Zionists, the ceasefire was set to begin at 7:30 AM Tehran time.”
According to The Jerusalem Post, missile strikes from Iran killed five people and injured at least 20 others in Beersheba. The attacks triggered sirens across Israel at least six times in just over an hour. Damage was also reported in the northern Sharon region, with injuries in the Hadera area.
On his social media platform, Truth Social, Donald Trump commented on the ongoing conflict between Iran and Israel, extending his “congratulations to all.”
Trump announced that a “full agreement has been reached for a complete and total ceasefire between Israel and Iran.” He noted that the war would be considered “over at this point,” adding that Iran would initiate the ceasefire, with Israel following suit 12 hours later. Trump also stated that within the next 24 hours, the world would “hail” the official end of what he called the “12-day war.”
Stressing that each side would remain “peaceful and respectful” during the ceasefire, Trump remarked, “Assuming everything works as it should, and it will, I want to congratulate both countries, Israel and Iran, for having the fortitude, courage, and intelligence to end what should be called the ’12-day war’.”
Trump suggested the conflict could have lasted for years and devastated the entire Middle East, “But it did not, and it never will! God bless Israel, God bless Iran, God bless the Middle East, God bless the US, and God bless the world.”
“Unlimited ceasefire”
In a phone interview with NBC News, Trump mentioned that many lives had been lost due to the conflict between Israel and Iran. Arguing that the situation could have worsened and “leveled the entire Middle East,” he emphasized the importance of the ceasefire agreement between the two nations.
“It’s a great day for America. It’s a great day for the Middle East. I am very happy to have been able to get the job done,” Trump said.
When asked about the duration of the ceasefire, Trump responded, “I think the ceasefire [between Israel and Iran] is unlimited. It will last forever.” He declared that the conflict between the two countries was “completely over,” adding that he did “not believe they will ever fire at each other again.”
Vance: Nuclear infrastructure destroyed
In an interview with Fox News, US Vice President JD Vance claimed that US strikes had destroyed Iran’s nuclear infrastructure, asserting that Iran “can no longer produce nuclear weapons.”
“We are now in a place we were not a week ago,” Vance said, suggesting that a week earlier, Iran was very close to possessing a nuclear weapon. “Now, Iran cannot produce a nuclear weapon with the equipment it has, because we destroyed it.”
Vance stated that Trump had “truly hit the reset button” with the weekend’s strikes, adding, “Tomorrow is truly a new day, the end of the ’12-day war’.” He concluded, “I believe this is the end of the Iranian nuclear program and the beginning of something truly great for peace in the Middle East.”
Tel Aviv has not yet commented on the ceasefire between Israel and Iran, which Trump announced unilaterally overnight.
Diplomacy
Iranian foreign minister travels to Moscow for Putin talks after US strikes

Iranian Foreign Minister Abbas Araghchi has traveled to Moscow to meet with Russian President Vladimir Putin following US attacks on nuclear facilities in Iran.
Araghchi warned that the aggression by the US and Israel will have serious consequences not only for the Middle East but for the entire world.
Scheduled to meet with President Putin on Monday, Araghchi stated upon his arrival in Moscow that the US attack calls the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) into question and will have negative implications for international security.
“The US attack on Iran’s nuclear facilities has cast doubt on the NPT, shaken the non-proliferation regime, and will have adverse consequences for international security,” Araghchi remarked. “This is a concern now being voiced by many countries.”
On June 22, Russian Foreign Ministry Spokesperson Maria Zakharova confirmed to Sputnik that Araghchi had arrived in Moscow for talks with the Russian administration.
‘Silence on aggression will have consequences’
In a phone call with his French counterpart, Jean-Noël Barrot, Araghchi issued a warning to the international community. “The silence and inaction of the international community in the face of this aggression will have far-reaching consequences for all nations,” the Iranian minister said.
Araghchi emphasized that the actions of the US violate all norms of international law, including the United Nations (UN) Charter.
He asserted that the attacks by Israel and the US can only be described as “aggression,” while the Islamic Republic is acting within the framework of legitimate self-defense.
US attacks and international reactions
Early on Sunday, the US announced it had struck three Iranian nuclear facilities in Natanz, Fordo, and Isfahan. Following the attack, US President Donald Trump stated that Tehran “must agree to end this war, or it will face much more serious consequences.” While Trump later claimed the nuclear facilities were completely destroyed, Iranian military officials declared the US attacks were entirely ineffective and threatened a harsh response.
The US strikes drew widespread international condemnation. UN Secretary-General Antonio Guterres described the attacks as a dangerous escalation and a threat to global peace. Russia strongly condemned the strikes as a grave violation of international law, the UN Charter, and UN Security Council resolutions, calling on the International Atomic Energy Agency (IAEA) to provide an impartial response.
Cooperation with Russia against common threats
Before his visit to Moscow, Araghchi stated that Iran and Russia share common concerns and adversaries.
“We appreciate the Russian Federation’s stance in condemning the attack in the strongest terms,” Araghchi posted on Telegram, noting that the special circumstances in the region necessitate a closer relationship between the two countries.
“We have always had common concerns, common worries, and common enemies with Russia,” the minister added. “We have always shared common beliefs and held close consultations to counter mutual challenges and threats. This is precisely what will be done in the meeting with the Russian President on Monday.”
Iran denies that its nuclear program has a military dimension. On June 18, IAEA Director General Rafael Grossi stated that the agency has not seen any credible evidence that Iran has an active nuclear weapons program.
According to a CNN report on June 17, citing sources familiar with the matter, US intelligence assessments have reached a similar conclusion, indicating that Iran is not actively pursuing nuclear weapons.
Diplomacy
Citigroup warns oil could hit $90 if Strait of Hormuz is closed

According to Citigroup, the closure of the Strait of Hormuz could cause Brent crude oil prices to soar to as high as $90 per barrel. However, the company also argued that a prolonged shutdown of this critical waterway is unlikely.
Analysts, including Anthony Yuen and Eric Lee, referenced the bank’s current optimistic scenario, stating, “The closure of the strait could lead to a sharp increase in prices. However, we believe the process would be brief, not lasting several months, as all efforts would be focused on reopening it.”
The Strait of Hormuz is a narrow waterway at the entrance of the Persian Gulf. Approximately one-fifth of the world’s daily oil production, including from leading OPEC producers Saudi Arabia and Iraq, passes through it.
Citigroup estimates that a disruption could interrupt the flow of about 3 million barrels of oil per day for several months.
According to Citigroup, any interruption in Iran’s crude oil exports might have less of an impact on prices than anticipated. The bank noted that the country’s shipments have already decreased, with Chinese refineries purchasing less.
Brent futures are currently trading at around $77 per barrel.
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