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MORNING BID AMERICAS-Kevin who? MoU trumps Fed
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MORNING BID AMERICAS-Kevin who? MoU trumps Fed
Jun 18, 2026 3:59 AM

(The opinions expressed here are those of the author.)

By Anna Szymanski

June 18 (Reuters) -

What matters in U.S. and global markets today

By Anna Szymanski, Editor-in-Charge, Reuters Open Interest

Markets bristled at the Federal Reserve's hawkish tilt - but

only briefly.

The U.S. central bank began the Kevin Warsh era by keeping

interest rates steady at 3.50%-3.75%, as expected, though

messaging signalled a tightening bias, which initially pushed up

bond yields, spurring a selloff on Wall Street that even Elon

Musk's SpaceX couldn't escape.

But global equities shrugged off that news on Thursday morning,

as the signing of the memorandum of understanding between the

U.S. and Iran sent oil prices tumbling to a

three-and-a-half-month low.

I'll get into that and more below.

But first, listen to the latest episode of the Morning Bid daily

podcast. Subscribe to hear Reuters journalists discuss the

biggest news in markets and finance seven days a week.

KEVIN WHO? MOU TRUMPS FED

The S&P 500 and Nasdaq closed down more than 1% on Wednesday,

and short-term Treasury yields rose to a 16-month high.

The Fed policy statement and press conference both appeared to

signal a hawkish tilt, prompting futures markets to price in a

bigger chance of a rate hike as soon as September.

Warsh told reporters that the central bank would "deliver on

price stability", while new quarterly projections - which he did

not participate in - showed nine of 19 policymakers expected a

rate hike by the end of 2026.

President Donald Trump - who sharply criticized former Fed

Chair Jerome Powell for not lowering rates - appeared to take

this in his stride, saying on Wednesday that he would be guided

by what Warsh wants.

As a reminder, Trump did signal in recent weeks that he

would provide Warsh with some breathing room.

Meanwhile, markets got a preview of the quieter Fed we're likely

to get under Warsh, with a stripped-down Fed statement that

dispensed with forward guidance.

Ultimately, the bigger force moving markets today was not

what happened in Washington yesterday but what investors expect

to happen moving forward in the Middle East.

On Wednesday, the U.S. and Iran released their 14-point

memorandum of understanding, which has been signed by President

Trump and Iranian President Masoud Pezeshkian.

The MoU includes an immediate end to the war on all fronts,

including Lebanon, the full resumption of maritime traffic "with

no charge" in the Strait of Hormuz, the lifting of a U.S.

blockade of Iranian ports, the waiving of U.S. sanctions on

Iran, the unfreezing of its assets and a $300 billion investment

fund for the Islamic Republic's post-war reconstruction.

While it's unclear whether the Strait will remain toll-free

after the 60-day period ends, energy markets certainly appear to

believe that energy shipments will soon be flowing at high

levels through the narrow waterway, as Brent crude fell early on

Thursday to around $78 per barrel.

This, in turn, appeared to lift investor sentiment on Thursday,

with major Asian stock indexes hitting record highs. Wall Street

futures are also in the green before the bell.

Finally, turning back to monetary policymakers, the Bank of

England is expected to hold rates steady at 3.75% on Thursday as

it assesses what the U.S.-Iran agreement could mean for

inflation there. UK May CPI surprised to the downside yesterday.

Chart of the day

UK CPI held at a 13-month low of 2.8% in May as lower food

prices helped offset rising airfares. The print came ahead of

the BoE's policy decision due on Thursday, with rates expected

to be held at 3.75%.

Today's events to watch

* U.S. weekly jobless claims (8:30 a.m. EDT), Philadelphia

Fed Business Index (8:30 a.m. EDT), 5-year TIPS auction (1 p.m.

EDT)

* Bank of England interest rate decision (7 a.m. EDT)

Want to receive the Morning Bid in your inbox every weekday

morning? Sign up for the newsletter here. You can find ROI on

the Reuters website, and you can follow us on LinkedIn and X.

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.

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