Trump's 38th "Deal Imminent" Statement Sparks Global Market Rally

Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser2010 )

After the U.S. military launched a surprise strike on Iran, and following Trump’s threat to “take strong action against Iran” only to cancel it again, Trump for the 38th time declared that a “final deal is imminent,” prompting global financial markets, including U.S. stocks, to awaken as if from a dream and experience another “TACO-style rally.”

This morning, the three major U.S. stock indices closed higher: the Dow rose 1.90%, the Nasdaq gained 3.42%, and the S&P 500 increased 1.73%. Cryptocurrency-related stocks surged broadly, with COIN rising 4.99% and HOOD climbing 7.40% intraday. Asian markets opened higher: the South Korean KOSPI index opened up 519.25 points, or 6.69%, at 8,283.2, briefly triggering a circuit breaker, with its gain expanding to as much as 8% afterward; the Nikkei 225 opened up 880.53 points, or 1.37%, at 65,097.80. In response to these developments, oil prices dropped 4.3%, while gold rebounded 3.1%.

As the U.S.-Israel-Iran conflict enters its fourth month, global financial markets, particularly the U.S. stock market, are prematurely pricing in positive developments such as the end of the war, leading to a series of recent "news-driven rallies."

Overall, the macroeconomic backdrop for today’s stock market rally primarily stems from developments in the war situation showing signs of progress toward peace talks, the release of the U.S. CPI data, and a diminished expectation of further Fed rate hikes.

Trump's remarks once again demonstrate the "TACO effect"

According to the latest reports from last night and early this morning, Trump first canceled the planned strike and bombing operations against Iran for that evening; he then posted that the related negotiations had been submitted to and approved by Iran’s highest leadership; the final terms, both in overall concept and specific details, have been approved by all relevant parties, including the United States, Israel, Saudi Arabia, the UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, and Egypt. Although Iran and Israel subsequently denied this, the market accepted it.

In addition, Trump stated that “an excellent agreement has been reached” on Iran, noting that the relevant documents are in the final drafting stage and are expected to be finalized and signed within the coming days. He also mentioned that the agreement may be signed in Europe, possibly this weekend, with U.S. Vice President Vance attending. He added that “once Iran signs the agreement, the Strait of Hormuz will open.” Although negotiations with Iran have “taken too long,” financial markets have currently chosen to “believe for now.”

U.S. core CPI annual data reached a three-year high

This Wednesday, the U.S. May CPI data was released, with:

• Seasonally adjusted CPI monthly rate: 0.5%, expected 0.50%, previous value 0.60%.
• The U.S. seasonally adjusted core CPI monthly rate for May was 0.2%, compared to the expected 0.30% and the previous value of 0.40%.
• The U.S. May unadjusted CPI annual rate came in at 4.2%, matching expectations of 4.20% and rising from the prior value of 3.80%, reaching the highest level since April 2023.
• The U.S. May year-over-year core CPI, not seasonally adjusted, came in at 2.9%, matching expectations of 2.90% and rising from the prior value of 2.80%, reaching the highest level since September 2025.

Some analysts believe that U.S. inflation has returned to the "4% range," and the inflation peak tied to the war may already be behind us; the CPI rose sharply for the third consecutive month, highlighting growing financial pressure on households, as evidence suggests more consumers are drawing down savings to cover expenses. After the data release, the probability of the Federal Reserve holding rates steady in June rose to 96.3%, significantly easing prior expectations of further rate hikes. Trump publicly declared: "I love inflation."

Expectations for Fed rate hikes this year have significantly eased

After the CPI data release, the latest updates show that the market no longer fully prices in the expectation of a Fed rate hike this year.

Seema Shah, Chief Global Strategist at Principal Asset Management, said, “U.S. inflation remains at an unsettlingly high level of 4%, but the weaker-than-expected core data has eased some pressure. Since energy price increases have been the main driver and housing costs have eased, we have not yet seen clear signs of broader second-round effects, which should allow the Fed to remain patient.”

Afonso Borges, an analyst at BGC Partners, also pointed out that the mild rebound led by short-term Treasuries following the Wednesday CPI report was “reasonable,” as the better-than-expected inflation data should reduce the risk of a Fed rate hike later this year.

Japan and Korea markets: Retail investors borrow money to buy the dip, yen continues to depreciate

Attention turns to the Japanese and Korean stock markets, which are currently in a strong rebound phase after two days of market declines.

On June 10, according to Yonhap News Agency, the Korea Composite Stock Price Index (KOSPI) experienced a two-day sharp correction due to negative news from U.S. markets and a sharp decline in semiconductor stocks. During this period, overdraft balances at major commercial banks increased by over 600 billion Korean won (approximately RMB 2.67 billion). Analysts believe this reflects retail investors, following the market plunge, beginning to use overdraft accounts for "leveraged investing" in anticipation of a market rebound.

According to Nikkei News, the Bank of Japan (BoJ) is expected to raise the short-term policy rate from 0.75% to 1.0% at its monetary policy meeting on June 15–16, marking the highest policy rate since 1995. Affected by this news, the USD/JPY rose 0.2% today, trading at 160.168.

Overall, funding in the Japanese and Korean stock markets continues to grow steadily, but interest rate hikes by the Bank of Japan may gradually tighten liquidity in Japan’s capital markets. Bank of America analyst Shusuke Yamada said that if the Bank of Japan adopts a hawkish stance and raises rates at next week’s meeting, it is expected to support the yen. He noted that the market has already priced in the rate hike expectations.

Although global stock markets rose today due to Trump's erratic "positive news," a closer look at various dynamic factors shows that market sentiment remains cautiously bullish, with caution against a deep correction.

The situation between the U.S. and Iran has not seen any transformative change.

Ali Akbar Dareini of the Tehran Strategic Research Center stated that despite Trump’s announcement of canceling strikes against Iran, there has been no change in the situation. From Iran’s perspective, before any negotiations begin and before Iran is prepared to discuss nuclear issues, the United States must first take confidence-building measures—but this has not occurred. The reality shows that the United States has taken no steps to ease tensions. Iran’s position is that it will not compromise under coercion.

Institutional longs are turning, beware of deep pullbacks

Alex Altmann, Head of Global Equity Strategy at Barclays, who has repeatedly urged investors to "hold through market volatility" and accurately timed market rebounds, has recently issued a rare cautious warning, stating in his latest market analysis that due to a confluence of technical overbought conditions, excessive sentiment, and macroeconomic pressures, he has shifted to a short-term bearish outlook on U.S. equities. He believes the current U.S. market is midway through a structural correction, with the greatest concern being the severe disconnect between retail investor sentiment and macroeconomic realities. He even bluntly stated, "The S&P 500 could face a total correction of 6%-7%."

Recent data from the American Association of Individual Investors (AAII) sentiment survey shows that the percentage of bearish investors surged to 47.7% over the past week, nearing this year's high of 52% (March 18) and significantly above the historical average of 31%.

In addition, several institutions have recently expressed bearish views: Previously, BofA Securities stated that investors should remain cautious about the U.S. stock market, as an increasing number of bearish signals suggest the market is nearing a peak.

Savita Subramanian’s team of strategists wrote in a report dated June 5 that approximately 70% of bear market signals have been triggered, consistent with the historical average during past market tops. The S&P 500 shows statistically significant overvaluation in 17 out of 20 valuation metrics, with eight of those metrics exceeding levels seen during the tech bubble. Additionally, high P/E stocks have significantly outperformed low-valuation stocks, a sign the strategists interpret as evidence of excessive speculation. Within the technology sector, the performance gap between the top and bottom quintiles has widened to its highest level since February 2000.

Of course, this view was openly challenged by "New Stock God" Serenity, who believes that the Bank of America's bearish stance should be viewed with caution, as an abundance of negative news often arises when institutions need liquidity.

In the Korean stock market, on June 10, the open interest of put options on the Korea KOSPI 200 Index has surged sharply relative to call options, reaching levels previously associated with market declines. As of the close of the last trading day, the ratio of protective puts to speculative calls approached 2.5-to-1, the highest level in five years. This metric has only reached this threshold a few times in the past. Notably, Korean retail investors sold over 1 trillion Korean won in overseas stocks during the first week of June, potentially signaling a return of domestic investor capital to the local market.

SpaceX IPO approaches, testing liquidity in the U.S. stock market

Latest news indicates that retail investor subscriptions for SpaceX's U.S. IPO have exceeded $100 billion. Given the earlier announcement that SpaceX plans to raise $75 billion, with 30% of shares allocated to individual investors, retail demand has now surpassed the offering by more than four times.

U.S. investment manager Jim Chanos said that investors are pricing in grand narratives rather than realistic profit prospects, with SpaceX’s valuation multiples far exceeding those of Tesla (TSLA.O). Additionally, institutions such as Franklin Templeton, the sovereign wealth funds of Saudi Arabia and Kuwait have joined the IPO subscription rush; according to foreign media reports, multiple institutional investors each placed orders to subscribe for approximately $10 billion or more in shares. Two days ago, SpaceX’s IPO had already attracted over $250 billion in investment demand, surpassing its planned fundraising target of $75 billion, with oversubscription nearing fourfold; based on current market trends, the oversubscription ratio could rise to tenfold before its official listing this Friday.

Tom Lee, chairman of Bitmine and known as the "Wall Street Oracle," stated that U.S. stock investors are currently selling their existing holdings to raise cash in order to participate in this major IPO, and the resulting capital diversion effect continues to intensify, potentially serving as a key factor behind recent weakness in the U.S. stock market. Christophe Boucher, Chief Investment Officer at ABN Amro Investment Solutions, a subsidiary of ING Bank, also noted that participating in the SpaceX IPO is similar to buying cryptocurrency about 15 years ago—either you could lose your entire principal, or you could achieve exponential returns.

Although the SpaceX IPO has raised concerns about market liquidity constraints, according to market sources, S&P Dow Jones Indices believes SpaceX is eligible for rapid inclusion in certain indices. At that time, SpaceX could become a "phenomenal giant" in the U.S. stock market.

Overall, global stock markets will continue to be affected by factors such as liquidity, domestic market policies, and global developments like the Israel-Iran conflict. In the short term, be cautious of potential market manipulation tactics by Trump, such as repeating his “intimidation-based bearish” and “TACO-style bullish” strategies.