Paul Tudor Jones and J. Gundlach Speak Out...
- Marc Bentin
- Jun 16
- 6 min read
BentinPartner Weekly
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Please find below our latest Weekly Trend Report.
Have a nice start of the week.
Marc Bentin,
Bentinpartner GmbH
US stocks dropped marginally last week (by less than 1%), despite being supported in the first half by favorable inflation data and more evidence that the US economy is weakening, raising the odds that interest rates will also be cut in the US in a not too distant future. Initial gains were shed in the second part of the week and in particular on Friday, following the outbreak of the war between Israel and Iran which propelled oil 8% higher, contributing to sap risk appetite.
US CPI rose 0.1% MoM in May, less than the 0.2% expected while core CPI also rose 0.1%, less than expected (base effects will likely start to kick in in the next three months making the picture less rosy for inflation).
The World Bank also slashed its global growth forecast for 2025 by 0.4% to 2.3%, saying higher tariffs and heightened uncertainty posed a "significant headwind" for nearly all economies, lending some support to bonds as well.
The piece of positive news came from US small-business confidence improving in May, according to the National Federation of Independent Business, reporting its index increased three points to 98.8 last month, rising for the first time since December.
Sentiment was also supported in the first half of the week by the US and China agreeing on terms for a truce on trade.
Paul Tudor Jones and J. Gundlach delivered two insightful interviews at a Bloomberg credit conference last week, in which both emphasized the risks posed by the US fiscal situation (and the likely policy response that is likely to ensue with sharply lower Fed rates next year, a further 10% drop in the USD and the revival of a QE policy following the appointment by President D. Trump of an “uber-dovish” Fed Chair next year to succeed J. Powel upon the expiration of his term.
On that note, Japan said it was already considering buying back some super-long government bonds issued in the past at low interest rates, underscoring its focus on reining in any abrupt rises in bond yields.
Elsewhere, the Trump administration escalated its response to anti-deportation protests in Los Angeles by mobilizing 700 Marines who joined the 2100 National Guard troops, ratcheting up tensions with Democratic leaders trying to contain the repression.
With the dollar dropping -1.1% on the week, it reached a new low for the year and precious metals continued their march higher.
Up until Thursday, the world (and secondarily the markets) were facing a trade war problem, a “global” debt problem and one hot war problem (for which no peace negotiations are in sight). Events unfolding on Thursday, are leaving the world facing another hot war, directly between Israel and Iran.
With Hamas and Hezbollah meaningfully degraded by earlier assaults, to the point of having only scant defense capabilities for Iran’s position (and its proxies), the lack of progress in the nuclear negotiation convinced the Israeli Government to proceed with the attack. The Israeli government which was given some domestic political breathing space after winning a no-confidence vote last week, likely also felt the urge to act, following D. Trump administration’s fading support for B. Netanyahu policy. D. Trump recently made public that he had rejected an Israeli proposal to kill Iran's Supreme Leader, Ayatollah Ali Khamenei and set aside a government member who was too closely aligned with Israel’s stance.
By taking down Iran’s top nuclear scientists, a number of generals and over the week end, by striking oil and gas fields, the power grid (forcing hundreds of thousands to flee Teheran), taking air dominance over Teheran, and by targeting the Ministry of oil, the Ministry of Intelligence, the Police HQ and the Supreme Court, Israel’s intention has, in all logic, expanded beyond taking down Iran’s nuclear facilities.
So far, the US has urged to make a deal, refusing to engage beyond defending Israel against Iran’s retaliatory missiles attacks but this could change any time.
D. Trump has called for more “nuclear” negotiation (Sunday’s planned discussion were cancelled). Beyond the benefit of still defending a conciliatory stance, it is hard to imagine what there is to negotiate at this stage for Iran’s government, leaving President Trump to say that “sometimes they need to fight it out…but there is a good chance there will be a deal”.
The market reaction this morning has been calm, with US futures recovering swiftly from some early additional losses. Gold gained another 8USD while bonds were mostly flat while the dollar eked out some gains.
Highlights this week will include a Fed meeting starting on Wednesday.
Over the past week, the S&P500 dropped -0,4% (1,9% YTD) while the Nasdaq100 dropped -0,6% (3,1% YTD). The US small cap index dropped -1,4% (-5,5% YTD). AAPL sold off by -3,7% (-21,6%).
The Equally Weighed SP500 dropped -0,7% (1,2% YTD), underperforming the S&P500 by-0,4%. The median SP500 YTD return closed the week at 1,3%.
Cboe Volatility Index rallied 24,2% (20,0% YTD) to 20,82.
The Eurostoxx50 sold off by -2,6% (10,2%, Z-score -2,5), underperforming the S&P500 by -2,2%.
Diversified EM equities (VWO) gained 0,3% (9,9%), outperforming the S&P500 by 0,6%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies dropped -1,0% (-7,6%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,1% (6,2%).
10Y US Treasuries rallied -11bps (-17bps) to 4,40%. 10Y Bunds dropped -4bps (17bps) to 2,54%. 10Y Italian BTPs dropped -2bps (-4bps) to 3,48%, underperforming Bunds by 2bps.
US High Yield (HY) Average Spread over Treasuries climbed 8bps (21bps) to 3,08%. US Investment Grade Average OAS climbed 0bps (5bps) to 0,92%.
In European credit markets, EUR 5Y Senior Financial Spread climbed 2bps (-2bps) to 0,62%.
Gold rallied 3,7% (31,4%, Z-score 2,4) while Silver dropped -1,3% (25,6%). Major Gold Mines (GDX) rallied 5,5% (60,6%).
Goldman Sachs Commodity Index rallied 4,6% (5,9%, Z-score 3,1). WTI Crude rallied 14,3% (4,1%, Z-score 2,7).
Overnight in Asia…
S&P future +11 points; Hong Kong -0.2%; Nikkei+1.0%; China +0.1%; Oil +1%
Better sentiment in Japan and Chinese retail sales unexpectedly jumping most since 2023 (+6.4% YoY vs. 4.9% expected) encouraged buying across Asia after a mixed start.
Trump travelled to Alberta, for the first big international summit of his second term. Wary of opening new rifts with the US president, other G-7 leaders won’t even try for a statement of unity on matters such as Ukraine or climate change, Bloomberg reported.
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