Home › Market News › Coffee Prices, Commodity Allocations, and More Geopolitical Risk
The Economic Calendar:
MONDAY: Fed Waller Speech (2:00a CT), S&P Global Composite PMI Flash (8:45a CT), Existing Home Sales (9:00a CT), Fed Bowman Speech (9:00a CT), Fed Goolsbee Speech (12:10p CT), Fed Kugler Speech (1:30p CT)
TUESDAY: Current Account (7:30a CT), Redbook (7:55a CT), House Price Index (8:00a CT), S&P/Case-Shiller Home Prices (8:00a CT), Fed Hammack Speech (8:15a CT), Consumer Confidence (9:00a CT), Fed Chair Powell Testimony (9:00a CT), Richmond Fed Manufacturing Index (9:00a CT), Richmond Fed Services Index (9:00a CT), Fed Williams Speech (11:30a CT), 2-Year Note Auction (12:00p CT), Money Supply (12:00p CT), Fed Collins Speech (1:05p CT), Fed Barr Speech (3:00p CT)
WEDNESDAY: MBA Mortgage Applications (6:00a CT), Building Permits (7:00a CT), Fed Chair Powell Testimony (9:00a CT), New Home Sales (9:00a CT), EIA Petroleum Status Report (9:30a CT), 5-Year Note Auction (12:00p CT)
THURSDAY: Fed Barkin Speech (7:00a CT), Chicago Fed National Activity Index (7:30a CT), Jobless Claims (7:30a CT), Corporate Profits (7:30a CT), Durable Goods (7:30a CT), GDP (7:30a CT), Real Consumer Spending (7:30a CT), Retail/Wholesale Inventories (7:30a CT), Fed Hammack Speech (8:00a CT), Pending Home Sales (9:00a CT), EIA Natural Gas Report (9:30a CT), Kansas Fed Manufacturing Index (10:00a CT), 7-Year Note Auction (12:00p CT), Fed Barr Speech (12:15p CT), Fed Balance Sheet (3:30p CT)
FRIDAY: Fed Williams Speech (6:30a CT), Core PCE (7:30a CT), Fed Cook Speech (8:15a CT), Fed Hammack Speech (8:15a CT), University of Michigan Consumer Sentiment (9:00a CT), Baker Hughes Rig Count (12:00p CT)
Key Events:
The early call is for stocks to open down by 1.5-2%.
Oil watchers are also expecting crude oil futures to gain 5% or more on Iran’s closure of the Strait of Hormuz. JPMorgan’s chief commodity strategist, Natasha Kaneva, recently outlined this in a “worst-case scenario.” The note cautioned that a severe outcome could send oil prices into the $120-$130 per barrel range.
Ships set to cross the Strait of Hormuz made a 180-degree U-Turn at around 8:15 AM CST Sunday, about 10 minutes after the announcement by Iran’s parliament.
BTC and ETH spot markets are the only markets open at the time of writing and are lower by 4% after the U.S. bombing of alleged Iranian nuclear sites.
Source: X.com
We are seeking any monetary clues or bias changes from Fed Chair Powell.
Powell is scheduled to testify before Congress this week. He will appear before the House Financial Services Committee and the Senate Banking Committee on Tuesday and Wednesday, respectively. This semiannual testimony allows lawmakers to question Powell about the current state of the economy, the Fed’s monetary policy, and its outlook.
Global financial markets are in a holding pattern, with traders on edge as geopolitical developments and central bank caution continue to dictate sentiment.
JPMorgan’s trading desk has issued a renewed call for caution, echoing a similar warning from March. Andrew Tyler, a strategist at JPMorgan, highlighted a likely near-term market pullback, citing the rapid shift in geopolitics and the impending deadline for trade deal expirations. President Trump is expected to set new tariff levels this week or next.
As a result, JPMorgan’s Market Intelligence desk is adjusting its view to “tactically cautious.” The firm anticipates an increasing risk of a pullback driven by an assumed spike in volatility across multiple asset classes and increasingly stretched market positioning. While Tyler maintains that much of the long-term bullish case remains intact, he advises a more conservative approach to risk until greater clarity emerges.
Key areas of concern include the extent of U.S. involvement in the Middle East, the potential for energy price spikes, the subsequent impact on bond yields and the U.S. dollar, and whether any escalated conflict might accelerate a broader move away from dollar-denominated assets.
Traders are piling into options as geopolitical risk explodes. Global oil markets experienced extreme volatility following attacks that sent oil prices surging, with some analysts speculating that such a strike could push crude beyond $100 a barrel.
Traders aggressively acquired bullish call options in the days leading up to the attacks. The way speculators play it is to buy whatever calls are on the screen as fast as possible with no regard for how much they are paying,” commented Robert Yawger, director of the energy futures division at Mizuho Securities USA. This provides an opportunity for the nimble trader.
The market moved from an unusual “hockey-stick” shape, which had reflected fears of a future oil glut, to a state of backwardation, where traders are now willing to pay a premium for immediate delivery.
Source: TradingView
In a widely anticipated decision, the Federal Reserve’s monetary policy committee opted to maintain its key policy rate at current levels. While the committee’s updated economic projections for 2025 indicate two rate cuts, accompanying revisions showed increased expectations for economic growth and upward adjustments to both unemployment and inflation estimates.
During the post-meeting press conference, Fed Chair Jerome Powell emphasized that the level of uncertainty stemming from ongoing tariffs remains “extremely high.” He affirmed the central bank’s readiness to adhere to a “wait-and-see” approach, closely monitoring economic data for the full impact of these tariffs to materialize before making any policy adjustments. The Fed’s stance underscores its cautious approach amidst a complex economic landscape.
Source: CME Group
In its current commodity allocation overview, the UBS CIO Active Commodity Strategy has shifted its stance on broad commodities to neutral from a previously low weighting. This adjustment comes as momentum signals for key commodity sectors have improved, albeit amidst elevated volatility.
Source: UBS
Coffee prices have recently fallen to their lowest levels in months, with both arabica and robusta beans experiencing significant declines.
This downturn is primarily attributed to an improving supply outlook, particularly from Brazil, the world’s largest coffee producer.
Arabica coffee futures have dropped below $3.40 per pound, reaching a five-month low, a level not seen since January 21st. Robusta prices have also declined substantially, with some contracts hitting thirteen-month lows.
This decline is primarily due to favorable weather conditions in Brazil, which have fostered expectations of a plentiful and high-quality harvest, easing prior concerns about supply shortages.
Source: TradingView
The U.S. Senate has successfully passed the GENIUS Act, a landmark piece of legislation poised to establish a comprehensive regulatory framework for stablecoins. This development marks a significant step towards federal oversight of dollar-backed digital assets. It could particularly benefit entities like Circle (CRCL), the recently public company behind USDC, one of the most dominant stablecoins in the market.
The bill is now set to advance to the House of Representatives, where it may be integrated with other pending cryptocurrency legislation, including the STABLE Act. Industry observers anticipate the bill could become law before August.
Circle (CRCL) emerges as a significant long-term holding opportunity for investors, but valuation might be priced to perfection at these levels. Despite a substantial rally since its initial public offering, the company is positioned to be a significant beneficiary of the new regulatory clarity.
While acknowledging meaningful risks inherent in the sector, analysts suggest investors consider establishing exposure while retaining capital to acquire additional shares on price dips.
