President Donald Trump formally requested $87.6 billion in supplemental appropriations from Congress, covering U.S. military operations against Iran, farm economic relief, and the Ebola response in Central Africa, according to ZeroHedge citing the White House request. The package represents a direct fiscal commitment to sustaining the posture that has kept Hormuz transit volumes depressed.
Iran's IRGC is proceeding with a toll enforcement protocol for Strait of Hormuz transit, and Iran's chief negotiator is seeking Beijing's approval for the scheme, according to ZeroHedge. Secretary of State Rubio, meeting with Gulf Cooperation Council allies in Bahrain, stated there is "zero support" among Gulf states for the toll mechanism. The IRGC warned vessels not complying with the protocol "will be dealt with." The standoff remains in an unresolved operational state, not a declared closure.
Core PCE rose 0.3% month-over-month and 3.4% year-over-year in May, the highest reading since November 2023, according to ZeroHedge citing Bureau of Economic Analysis data. Services costs were the primary driver. The savings rate remains near cycle lows.
Initial jobless claims fell to 215,000 for the most recent week, below the 225,000 consensus expectation and back to 2021 levels, according to ZeroHedge citing Labor Department data. Continuing claims, however, rose to three-month highs, indicating that workers displaced are staying unemployed longer even as new layoffs declined.
FRED data as of June 23–24 shows the 10Y Treasury yield at 4.50%, the 2Y at 4.16%, producing a 10Y-2Y spread of 30 basis points. The 10Y inflation breakeven fell to 2.18% as of June 24, down from 2.23% in the prior cycle, compressing the real 10Y yield to approximately 2.32%. SOFR stands at 3.62%, with the Fed Funds Rate at 3.63%, indicating negligible spread between the policy rate and overnight secured funding. HY credit spreads remain at 2.71%, unchanged from the prior cycle. VIX printed 18.63 on June 24.
Anthropic alleged that Alibaba illicitly extracted capabilities from its Claude AI model, according to a report that scored 632 points on Hacker News. OpenAI separately unveiled its first custom silicon, built in partnership with Broadcom (AVGO), in a disclosure that drew 769 Hacker News points. Both items sustain the ongoing platform competition across the AI infrastructure layer.
Venezuela suffered twin earthquakes that the USGS warned could produce a death toll approaching 100,000, according to ZeroHedge. Trump stated the U.S. is "ready to help." A Venezuelan sovereign debt or restructuring event in this context would affect EM debt desks with existing Venezuela exposure.
The structural position this cycle: real yields at approximately 2.32% (10Y nominal 4.50% minus breakeven 2.18%) are elevated and the breakeven is compressing, not expanding — the same configuration that produced SPY outperformance over QQQ in the June 23 cycle per prior desk memory. Simultaneously, the 10Y-2Y spread at 30 basis points is well below the 60 basis point threshold the contrarian input identifies as a steepening signal. The fiscal mechanism is now clearer: the $87.6 billion supplemental request adds long-end supply pressure structurally, while the Fed — facing 3.4% core PCE but rising continuing claims against a 4.3% unemployment print — has limited room to move short rates in either direction. That combination is the steepener's setup: long-end repricing for deficit supply, short end anchored by a Fed that cannot hike into a softening labor market. The Hormuz toll standoff entering a grey-zone enforcement phase, rather than resolving, means energy supply uncertainty remains priced in without a clean catalyst to remove it.
I expect the 10Y-2Y Treasury spread to widen beyond 40 basis points within the next two weeks, driven by long-end yield drift from supplemental funding supply pressure, with the 2Y held near current levels by the Fed's constrained posture.