Trump's 38th Call for an "Impending Agreement" Triggers TACO-Style Surge in Global Stock Markets

Original｜Odaily Planet Daily (@OdailyChina)

Author｜Wenser (@wenser2010 )

After the U.S. military launched a surprise attack on Iran, and Trump threatened "tough measures against Iran" only to cancel them again, Trumpfor the 38th time declared that a "final deal is imminent," prompting global financial markets, including U.S. stocks, to awaken as if from a daze and once again experience a "TACO-style rally."

This morning, the three major U.S. stock indices closed higher. The Dow rose 1.90%, the Nasdaq gained 3.42%, and the S&P 500 increased by 1.73%. Crypto-related stocks also rallied, with COIN up 4.99% and HOOD up 7.40% on the day. Japanese and South Korean stock markets opened higher. South Korea's KOSPI index opened up 519.25 points, a 6.69% increase, reaching 8283.2 points, triggering a circuit breaker before expanding gains to 8%. Japan's Nikkei 225 index opened up 880.53 points, a 1.37% increase, to 65097.80 points. Possibly influenced by this news, oil prices fell sharply by 4.3%, while gold prices rebounded by 3.1%.

As the conflict involving the U.S., Israel, and Iran enters its fourth month, global financial markets, particularly U.S. stocks, are pre-pricing positive catalysts like the end of the war, leading to a recent wave of consecutive "news-driven rallies."

Macro Background: Trump's "Negotiation for Change," U.S. CPI Hits 3-Year High, Fed Rate Hike Expectations Fade

Overall, the macro backdrop for today's stock market rally primarily includes a turning point in peace talks for the war, the release of U.S. CPI data, and fading expectations for a Fed rate hike.

Trump's Remarks Show "TACO Power" Again

According to the latest news from last night and this morning, Trump first canceled the planned strikes and bombing operations against Iran for that evening. He later stated that relevant consultations had been submitted to Iran's highest leadership and approved. The final terms (both in overall concept and specific details) have been approved by all relevant parties, including the U.S., Israel, Saudi Arabia, the UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, and Egypt. Although Iran and Israel subsequently denied this, the market accepted it.

Furthermore, Trump commented on the Iran issue, saying "an excellent deal has been reached" and that relevant documents are in the final stages of drafting, expected to be finalized and signed within the next few days. He also indicated the agreement might be signed in Europe, possibly this weekend, with Vice President Vance in attendance. And "once Iran signs the agreement, the Strait of Hormuz will open." Although negotiations with Iran have been "overly lengthy," financial markets have currently chosen to "believe first."

U.S. Core CPI Annual Rate Hits 3-Year High

This Wednesday, the U.S. May CPI data was released, showing:

• Seasonally adjusted CPI MoM: 0.5%, vs. 0.50% expected, 0.60% prior.
• U.S. May seasonally adjusted Core CPI MoM: 0.2%, vs. 0.30% expected, 0.40% prior.
• U.S. May unadjusted CPI YoY: 4.2%, vs. 4.20% expected, 3.80% prior, marking the highest since April 2023.
• U.S. May unadjusted Core CPI YoY: 2.9%, vs. 2.90% expected, 2.80% prior, marking the highest since September 2025.

Some analysts believe that U.S. inflation has returned to the "4-handle" level, and the peak of war-related inflation may be in the past. The third consecutive significant monthly rise in CPI highlights the increasing spending pressure on households, as signs suggest more consumers are dipping into savings to cover expenses. Following the data release, the probability of the Fed maintaining rates unchanged in June stood at 96.3%, significantly easing previous expectations of a rate hike. Trump responded to this data by stating: "I love inflation."

Expectations for a Fed Rate Hike This Year Ease Significantly

After the CPI data release, latest news indicates that the market has fully priced out expectations of a Fed rate hike this year.

Seema Shah, Chief Global Strategist at Principal Asset Management, commented, "U.S. inflation remains uncomfortably high at 4%, but the weaker-than-expected core data did alleviate some pressure. With rising energy prices as the main driver and housing costs easing somewhat, we haven't seen clear signs of broader second-round effects yet, which should allow the Fed to remain patient."

Afonso Borges, an analyst at Bank Julius Baer, also pointed out that the modest rally led by short-term Treasuries following Wednesday's CPI report "makes sense" because the better-than-expected inflation data should reduce the risk of a Fed rate hike later this year.

Japan and South Korea Markets: Retail Investors Borrow to Buy the Dip, Yen Continues to Weaken

Turning to the Japanese and South Korean stock markets, after the decline of the past two days, they are currently in a phase of significant rebound.

On June 10, according to Yonhap News Agency, South Korea's KOSPI index experienced two days of sharp adjustments due to negative U.S. stock news and a plunge in semiconductor stocks. During this period, overdraft account balances at major commercial banks increased by over 600 billion won (approximately 2.67 billion yuan). Analysts believe this is because retail investors, anticipating a market rebound after the sharp drop in stock prices, started using overdraft accounts for "leveraged investments."

According to Nikkei, the Bank of Japan (BoJ) is expected to raise its short-term policy rate from 0.75% to 1.0% at its monetary policy meeting on June 15-16, marking the highest policy rate level since 1995. Possibly influenced by this news, the USD/JPY pair rose 0.2% intraday, currently trading at 160.168.

Overall, capital flows into Japanese and South Korean stock markets are still steadily increasing, but the BoJ's rate hike could gradually tighten liquidity in Japan's capital markets. Shusuke Yamada, an analyst at Bank of America, stated that if the BoJ adopts a hawkish stance and raises rates at its meeting next week, it is expected to support the yen. He noted that the market has already priced in the rate hike expectation.

Looking Ahead: Unclear War Situation, Institutions Warn of Deep Corrections, Stock Markets Face Major Liquidity Test

Although today's volatile "positive news" from Trump stimulated rallies across multiple global stock markets, a closer look at various dynamic factors reveals that market sentiment remains in a phase of cautious optimism and hedging against deep corrections.

No Turning Point in U.S.-Iran Situation

Ali Akbar Dareini of the Tehran Strategic Research Center stated that despite Trump announcing the cancellation of strikes on Iran, there has been no change in the situation. From Iran's perspective, before any negotiations begin and Iran prepares to discuss the nuclear issue, the U.S. first needs to take confidence-building measures, which has not happened. The reality shows that the U.S. has taken no steps to de-escalate tensions. Iran's stance is that it will not compromise under coercion.

Institutional Bulls Shift to Caution, Warning of Deep Corrections

Alex Altmann, Barclays' Global Head of Equity Strategy, who has previously called for "holding steady" during market volatility and precisely timed the rebound, recently issued a rare prudent warning. In his latest market assessment, he stated that due to technical overbought conditions, overheated sentiment, and macro-environmental pressures, he has turned bearish on the short-term outlook for U.S. stocks. He believes U.S. stocks are currently at the "midpoint" of a structural correction, and the biggest lurking worry is the significant disconnect between retail sentiment and macro reality. He even stated directly, "The S&P 500 may face a total correction of 6%-7%."

Recent data from the American Association of Individual Investors (AAII) sentiment survey showed that the proportion of bearish investors surged to 47.7% in the past week, approaching the year's high of 52% (March 18), far exceeding the historical average of 31%.

Additionally, several institutions have recently expressed bearish views: Previously, BofA Securities stated that investors should remain cautious about U.S. stocks, as an increasing number of bearish signals suggest the market is nearing a top.

A strategist team led by Savita Subramanian wrote in a report dated June 5 that currently about 70% of bear market signals have been triggered, consistent with the average level during historical market tops. The S&P 500 shows statistically significant overvaluation in 17 out of 20 valuation metrics, with 8 metrics exceeding levels seen during the tech bubble. Additionally, stocks with high P/E ratios have significantly outperformed low-valuation stocks, which strategists see as a sign of excessive speculation. Within the tech sector, the gap between the best and worst-performing quintiles has widened to its highest level since February 2000.

Of course, this view faced open opposition from the "new stock guru" Serenity, who argued that BofA's bearish tone should be viewed cautiously, as a flood of negative news often appears when institutions need liquidity.

In the South Korean stock market, as of June 10, open interest in put options on the Kospi 200 index has surged sharply relative to call options recently, approaching levels that in the past have preceded market declines. As of the end of the previous trading day, the ratio of protective puts (used to hedge against declines) to speculative calls approached 2.5 times, the highest level in five years. This indicator has only touched this threshold a few times before. Notably, South Korean retail investors sold over 1 trillion won worth of overseas stocks in the first week of June, potentially signaling a return of domestic investors to their home market.

SpaceX IPO Approaches, U.S. Stock Market Faces Liquidity Test

Latest reports indicate that retail investor subscriptions for the SpaceX U.S. IPO have surpassed $100 billion. Combined with previous news that "SpaceX plans to raise $75 billion, with 30% of shares offered to individual investors," the current retail subscription ratio has exceeded the offering by over 4 times.

U.S. investment manager Jim Chanos stated that investors are pricing in grand narratives rather than realistic profit prospects, and SpaceX's valuation multiple has far exceeded that of Tesla (TSLA.O). Furthermore, institutions like Franklin Templeton and sovereign wealth funds from Saudi Arabia and Kuwait have joined the IPO subscription wave. According to foreign media reports, multiple institutional investors have each placed orders for approximately $10 billion or more worth of shares. Two days ago, the SpaceX IPO had already attracted over $250 billion in investment demand, exceeding its planned $75 billion fundraising target, with oversubscription nearing 4 times. Following market trends, the oversubscription ratio could climb to 10 times by the time of its official listing this Friday.

Tom Lee, "Wall Street's Oracle" and Chairman of Bitmine, commented on this, stating that U.S. stock investors are actively selling their existing holdings and accumulating cash to participate in this heavyweight IPO. This capital diversion effect continues to ferment and may be the primary culprit behind the recent weakness in U.S. stocks. Christophe Boucher, Chief Investment Officer at ABN Amro Investment Solutions, also stated that participating in the SpaceX IPO is similar to buying cryptocurrencies about 15 years ago: you could either lose your entire principal or achieve exponential returns.

Despite concerns about market liquidity shortage triggered by the SpaceX IPO, market sources suggest that S&P Dow Jones Indices believes SpaceX is eligible for rapid inclusion in some of its indices. If so, SpaceX could become a "phenomenal mega-cap" in the U.S. stock market.

In summary, global stock markets will continue to be influenced by factors such as capital liquidity, domestic market policies, and global geopolitical changes, including the U.S.-Israel-Iran conflict. In the short term, beware of Trump's potential market manipulation tactics, oscillating between "intimidation-driven bearishness" and "TACO-style bullishness."