Thursday's session compressed three of the most consequential macro themes of 2026 into a single trading day: a PPI print that confirmed the persistence of wholesale inflation, a fresh escalation in the Iran conflict that pushed oil above $90 per barrel, and the ECB's first rate increase in nearly three years, all arriving hours before the Federal Reserve's June 16-17 meeting.

Key Highlights

  • PPI at 6.5% YoY, CPI at 4.2%: Back-to-back inflation prints confirmed that price pressures are running well above target and accelerating, putting upward pressure on rate expectations across major central banks.
  • WTI crude at $90.78, Brent at $93.51: Oil rose on Trump's threat to strike Iran again and seize Kharg Island, as Iran declared the Strait of Hormuz completely closed to commercial shipping.
  • ECB raises to 2.25%: The European Central Bank delivered a unanimous 25bp rate increase citing the Iran war's inflationary impact, becoming the first major central bank globally to tighten in response to the conflict.
  • Equities recovered; Dow up 250 points: Despite the inflation data and geopolitical escalation, U.S. equities gained, with semiconductor stocks leading as U.S. Central Command announced it had completed its latest round of Iran strikes.

Macro trading days rarely deliver the density of simultaneous data, events, and market moves that Thursday produced. By session end, the U.S. had released a hotter-than-expected wholesale inflation report, the ECB had raised rates for the first time in nearly three years, President Trump had threatened fresh strikes on Iran and announced plans to seize its primary crude export terminal, Iran had declared the Strait of Hormuz fully closed, and U.S. equities had nonetheless closed higher.

The inflation data set the tone. May PPI rose 6.5% year-on-year, the highest since November 2022, with a 1.1% monthly gain that exceeded the 0.7% market estimate. The reading followed Wednesday's CPI showing 4.2% year-on-year consumer price growth. Both prints confirmed that energy-led inflation from the Iran war has now broadened: the underlying PPI measure excluding food, energy, and trade services rose 0.8%, its largest monthly gain since March 2022. Markets responded by pushing the probability of a Federal Reserve rate hike before year-end to approximately 70%.

Oil added its own upward pressure on inflation expectations. WTI crude climbed to $90.78 per barrel, with Brent reaching $93.51, as Trump posted his "VERY HARD TONIGHT" threat on Truth Social and Iran's IRGC declared the Strait of Hormuz completely closed. U.S. crude inventories had fallen 7.2 million barrels the prior week, providing additional fundamental support.

The ECB's 25bp rate move, lifting its deposit rate to 2.25%, added a further layer of policy tightening to global fixed income markets. European bond yields edged lower post-announcement as the market read the move as in line with expectations rather than a harbinger of faster tightening.