Middle East: A Ceasefire Plunges Oil
After the U.S. unleashed massive bunker-buster strikes on Fordow, Natanz, and Isfahan on June 21, Iran’s ability to retaliate now appears to have been neutralised. The U.S. imposed a ceasefire on June 23, even as tensions remained high between Tehran and Israel. Brent crude slid below $70 as the Middle East risk premium evaporated. The outlook for energy prices is now tilted to the downside. U.S. supremacy in the region has been reaffirmed, as if we needed a reminder.
A New Era for Spending in Europe
With NATO members committing this week to raise defence spending to 5% of GDP, Germany is leading the charge, front-loading expenditures with defence set to reach 3.5% of GDP by 2029 and infrastructure investment receiving a major boost. Other countries may follow, potentially pushing deficits higher and injecting fresh fiscal stimulus. Still, sentiment is weak: growth may fall short of projections, and key reforms in Germany are unlikely to be addressed.
Algebris Investments’ Global Credit Team
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