The briefing for Tuesday, June 16.

President Donald Trump announced Monday that a preliminary deal to end the war with Iran has been signed electronically, with the Strait of Hormuz scheduled to reopen on Friday when the agreement is formally inked in Geneva. The deal extends the ceasefire for another 60 days, during which negotiations will continue on Iran's nuclear program and sanctions relief. Senior US officials said technical talks on the nuclear issue will begin this week, with any sanctions relief dependent on Iran meeting commitments under the agreement.

A critical disagreement has emerged over the scope of the ceasefire. Pakistan's Prime Minister Shehbaz Sharif, whose nation mediated the deal, said it includes "the immediate and permanent termination of military operations on all fronts, including in Lebanon." But US officials clarified that while Lebanon is covered by the framework, Israeli withdrawal from Lebanese territory is not a condition. Israeli Prime Minister Benjamin Netanyahu said Monday that Israeli forces would remain in security zones in Lebanon, Syria and Gaza "as long as necessary," directly contradicting Iran's interpretation.

Iranian Foreign Minister Abbas Araghchi insisted Tuesday that Israel's continued occupation of southern Lebanon would violate the memorandum of understanding, calling the end of war in Lebanon "an inseparable part" of the complete agreement. The fundamental disagreement over whether the deal requires Israeli withdrawal from Lebanon raises questions about whether both sides are operating under the same understanding, potentially threatening the accord's viability even before Friday's ceremonial signing.

Global financial markets rallied Monday on news of the US-Iran agreement, with the S&P 500 jumping 1.7% and oil prices falling 4.8% to $83 per barrel. The Dow Jones Industrial Average climbed 468 points to a record, while the Nasdaq composite surged 3.1%. Companies with large fuel bills saw immediate gains, with United Airlines rising 3.9% and Royal Caribbean jumping 6.6%. The rally reflects hopes that reopening the Strait of Hormuz will ease the energy crisis that has driven global inflation for months.

Despite the market optimism, economists and industry analysts warn that consumers should not expect immediate relief at gas pumps, grocery stores, or airports. Even after oil starts flowing again from the Middle East, it will take weeks for cheaper crude to work through refineries and reach consumers. Airlines typically buy fuel in advance and adjust schedules gradually, meaning lower oil prices could take weeks or months to translate into cheaper airfares. Industry experts say fuel surcharges added by some airlines outside the US are likely among the first areas where passengers might see relief.

The war's effects on food prices will also persist well into the coming months. Fuel accounts for roughly 15% to 30% of total food costs, and it typically takes months for energy shocks to wind through the supply chain and affect grocery prices. "We're likely still looking at inflationary pressure on food in the coming months," said David Ortega, a professor of food economics at Michigan State University. Businesses across sectors expect higher costs to linger, meaning consumers in many countries may continue facing elevated prices for essentials even as the underlying causes begin to resolve.

The Bank of Japan raised its benchmark interest rate to 1% on Tuesday, the highest level in three decades, citing inflationary pressures from the Iran war and a weakening yen. The quarter-point increase from 0.75% marks the continuation of the central bank's effort to normalize monetary policy after decades of keeping rates near or below zero. Japan, which imports almost all its oil and gas, has been particularly hard hit by soaring energy prices, with wholesale prices climbing more than 6% in May from a year earlier—the fastest pace in three years.

The rate hike came despite the absence of BOJ Governor Kazuo Ueda, who has been hospitalized for treatment of an infected liver cyst and did not attend the policy board meeting. Deputy Governor Shinichi Uchida took his place. The central bank acknowledged that rising crude oil prices due to "the situation in the Middle East" will push down corporate profits and household incomes, but said the economy is expected to continue growing moderately with help from government measures and private business activity.

The move reflects a delicate balancing act for Japanese policymakers. While higher rates can help control inflation—which remains below the BOJ's 2% target at 1.4% in April—they also make borrowing costlier for the government and businesses. The bank warned of potential risks from developments in the Middle East, foreign exchange markets, and global AI-related demand, underscoring the uncertainty facing Japan's economy even as it attempts to exit decades of ultralow interest rate policy.

Federal Reserve Chair Kevin Warsh will hold his first policy meeting Wednesday since taking over from Jerome Powell, with markets watching closely for signals about whether he will prioritize fighting inflation or heed President Trump's calls for rate cuts. Warsh is expected to keep the Fed's key rate unchanged at about 3.6%, where it has remained since December, but any hints about future direction could significantly impact bond markets and the broader economy. The meeting comes at a challenging time, with inflation at a three-year high of 4.2% but oil prices falling sharply on news of the Iran deal.

Economists expect Warsh to take a neutral approach in his first outing as chair, largely because the Fed's rate-setting committee is split on whether rate increases will be necessary. The Fed will likely drop language suggesting its next move will be a rate cut and adopt more neutral wording instead. Several Fed policymakers have recently indicated the central bank's most likely next move is a hike rather than a cut, despite Trump's insistence that "there's no reason to raise rates." The quarterly economic projections released Wednesday are expected to show no rate changes in 2026, with perhaps one or two cuts in 2027.

Warsh's approach to communication may differ markedly from Powell's relatively straightforward style. People who have worked with Warsh say he wants Fed policymakers to give fewer speeches, have more debates behind closed doors, and will likely avoid commenting on daily economic fluctuations. Fed watchers will pay close attention to whether Warsh participates in the quarterly economic projections—his previous criticism of providing too much "forward guidance" suggests he may seek to eliminate them entirely in coming months, which would represent a significant shift in how the central bank communicates with markets.

China notched a record $1.2 trillion global trade surplus last year despite eight years of US tariffs, redirecting exports away from American markets toward more open economies in Europe and elsewhere in Asia. The shift threatens to create a European sequel to the "China Shock" that eliminated hundreds of thousands of US factory jobs in the 2000s and contributed to the political upheaval that twice put Donald Trump in the White House. French President Emmanuel Macron warned earlier this year that Chinese exports are "literally killing a large part of the European industry," acknowledging Europe was "slow to see that."

The issue is taking center stage at the G7 summit in Évian-les-Bains, France, where leaders of rich democracies are seeking to coordinate a response to China's export surge. French officials indicated they hope to emerge from the summit with a plan to tackle the China threat, potentially including higher EU tariff walls against Chinese imports. Currently, the EU imposes relatively low tariffs on China under World Trade Organization rules, though it hits specific products like electric vehicles with duties up to 35%. European leaders also hope to persuade Trump to stop targeting US allies with punitive tariffs and work with them instead to counter China.

China's manufacturing prowess has evolved dramatically since the first China Shock began around 2001. The country now accounts for 16% of global goods exports—the highest in the world—up from just 4% in 2000. More significantly, China has moved up the value chain, exporting sophisticated products like electric vehicles, batteries, advanced machinery, and scientific instruments that directly compete with exports from the world's richest countries. Chinese exports now compete with nearly 58% of euro zone exports, up from 46% in 2000, according to Federal Reserve research. Economist Maurice Obstfeld warned that "China's export surge, unless its leaders rein it in, will provoke a protectionist wave against Chinese imports worldwide."

The Supreme Court agreed Monday to decide whether states can use six-person juries in criminal cases instead of the traditional 12, potentially overturning a 1970 precedent. The case involves Florida chiropractor Hamed Kian, who was convicted of practicing with a suspended license by a six-person jury. Kian argues that the smaller jury violates his Sixth Amendment right to "a speedy and public trial, by an impartial jury." Florida uses six-person juries for all criminal cases not involving the death penalty, while five other states—Arizona, Connecticut, Indiana, Massachusetts and Utah—also conduct some criminal trials with six-member juries.

The Sixth Amendment does not explicitly specify jury size, but Kian's lawyers contend the word "jury" could only have meant a body of 12 people when the amendment was adopted in 1791. The Supreme Court ruled in the late 1800s that juries must have 12 people, but reversed course in 1970 in a 7-1 decision that found the number 12 was not sacrosanct. That ruling also came from a Florida case, with Justice Thurgood Marshall as the lone dissenter. In recent years, the court has placed renewed emphasis on the original understanding of the Constitution when interpreting its provisions.

The court's willingness to revisit the issue follows its 2020 ruling that juries must be unanimous in criminal cases, which effectively overturned a 1972 decision allowing non-unanimous convictions in Louisiana and Oregon. Kian's lawyers argue "the same reasoning applies to the historical right to a jury of twelve." Florida Attorney General James Uthmeier countered that the 1970 case was correctly decided and warned that "overruling it also would imperil thousands of criminal convictions in Florida and five other states that for more than 50 years have relied on its rule." Arguments will be heard in the fall.