The briefing for Thursday, June 18.

The United States and Iran formally signed their memorandum of understanding Wednesday at the G7 summit in France, officially launching a 60-day negotiating period to hammer out a final peace agreement. President Trump signed the document at a dinner at the Palace of Versailles, while Iranian President Masoud Pezeshkian also added his signature, according to the White House. The signing starts the clock on intensive negotiations to resolve major outstanding issues, including technical details of Iran's nuclear program, a proposed $300 billion reconstruction fund, and the future of Israeli operations in Lebanon.

The 14-point agreement commits Iran to "downblending" its stockpile of highly enriched uranium under International Atomic Energy Agency supervision and declares an immediate end to military operations on all fronts, including Lebanon. The US will begin removing its naval blockade within 30 days, and Iran has already sent three oil tankers past the blockade line days ahead of the scheduled formal signing. Ship-tracking data shows the tankers Diona, Hero II, and Sonia I crossed into the Arabian Sea carrying a combined 3.8 million barrels of crude oil, marking Iran's first oil exports in two months.

Despite Trump's claims that the deal ensures Iran will never develop nuclear weapons, the text falls short of that guarantee and leaves critical details to be negotiated in the coming weeks. The agreement mentions a $300 billion reconstruction fund but uses vague language about whether the US will contribute any money, potentially creating political problems for Trump who has criticized Obama's payments to Iran. The deal also barely addresses Iran's support for regional proxy groups like Hezbollah or its missile program, both of which Trump had identified as priorities at the start of the war.

Complications have already emerged, with Israel launching fresh strikes in southern Lebanon on Wednesday despite the agreement's extension of the ceasefire to include Lebanon. Trump criticized Israeli Prime Minister Netanyahu at the G7, saying he "didn't like that he did an attack" and that Israel had been fighting Hezbollah for "too long." Iran's military command warned Israel of a "harsh response" if it doesn't end operations in southern Lebanon, while Hezbollah leader Naim Qassem called the deal a "great victory" and said Lebanon should focus on securing the withdrawal of Israeli troops from its territory.

The Federal Reserve held its key interest rate steady Wednesday, but nearly half the central bank's policymakers indicated they could support raising rates later this year, marking a sharp reversal from March when the committee forecast cuts. In quarterly projections released alongside the decision, nine of the 18 officials on the Fed's rate-setting committee signaled support for higher rates in 2026, with six backing two or more quarter-point increases. The unexpectedly hawkish shift reflects heightened concerns about persistent inflation, which reached its highest level in three years at 4.2% in May.

New Fed Chair Kevin Warsh, appointed by President Trump, used his first news conference to underscore the central bank's determination to bring inflation down to its 2% target. "We've missed on inflation for five years and we're going to fix that," Warsh said, suggesting he will take a hawkish approach as chair. The Fed's brief statement dropped language that had suggested the next move would be a rate cut, reflecting Warsh's influence and his previous criticism of the Fed for commenting too broadly on the economy. The shift disappointed investors and President Trump, who has pushed for lower rates.

The policy change comes as markets digest the implications of falling oil prices following the tentative Iran deal. Brent crude fell 1.9% to $78.05 per barrel Thursday, still above its pre-war level of around $70 but well below the $100-plus prices from recent weeks. Despite optimism about eventual supply relief, Fed officials appear concerned that inflation pressures remain too strong to justify cuts. Stock markets reacted negatively Wednesday, with the S&P 500 dropping 1.2%, the Dow falling 1%, and the Nasdaq sinking 1.3% as investors recalibrated expectations for monetary policy.

US Defense Secretary Pete Hegseth told NATO allies Thursday that Europe must take the lead on defending its own continent, calling for a transformation to "NATO 3.0" as a "real hard-line military alliance" with genuine military capabilities. Speaking at a meeting of NATO defense ministers in Brussels, Hegseth emphasized that the United States would invest $1.5 trillion in its own defense in 2027, creating an "arsenal of freedom" that would primarily protect American interests while also backstopping NATO strength. The remarks came weeks after the US informed allies it would no longer supply certain warships, aircraft, and other military assets if one of them comes under attack.

NATO's supreme allied commander, US Gen. Alex Grynkewich, is working on backup plans to defend Europe after the Pentagon signaled on June 3 that it would hold back an aircraft carrier and support ships, aerial refueling planes, and dozens of fighter jets, among other military assets, in a crisis. The Trump administration insists it needs to plan for two simultaneous conflicts and wants more military resources available should a conflict break out with China in the Indo-Pacific region. NATO Secretary-General Mark Rutte downplayed the impact Wednesday, saying the changes affect who would provide what assets in an Article 5 situation rather than current troop deployments in Europe.

Despite the cutbacks, the US has expressed interest in establishing a permanent military base in Poland, according to Polish Deputy Defense Minister Cezary Tomczyk. "The Americans are interested in the Polish offer to place a permanent base here," Tomczyk told the Associated Press, noting it would be financed by both countries. Around 10,000 US troops are typically stationed in Poland, mostly on a rotational basis, and the Polish government hopes to see thousands permanently stationed as the US rethinks its European presence. The potential base would be on NATO's eastern flank, though US Defense Department officials said they had nothing new to announce.

As part of the restructuring, NATO announced Friday it will reduce its security force in Kosovo by more than 1,000 personnel. US forces, currently the second-largest contingent with 590 troops, are expected to be among those leaving. The reductions come as the alliance navigates tensions between Trump's demands that European allies spend more on their own defense and concerns about maintaining credible deterrence against potential threats.

Israel launched fresh strikes on southern Lebanon Wednesday despite the US-Iran agreement that explicitly extends the ceasefire to Lebanon, according to Lebanon's National News Agency. Israeli drone strikes injured several people in Mansouri and Aaziyyeh, while jets attacked Nabatieh al-Fawqa and Kfar Tebnit. Israel's military has not commented on the strikes, but it did report that five soldiers were injured in a drone attack by Hezbollah. The continued military operations threaten to complicate the tentative peace agreement and drew sharp criticism from President Trump at the G7 summit.

Trump told fellow G7 leaders Tuesday that Israeli Prime Minister Netanyahu "didn't like that he did an attack" and said the strike "was too much." The president added that Israel had been fighting Hezbollah for "too long and too many people are being killed" and that Netanyahu needed "to be more responsible with respect to Lebanon." Trump emphasized his support for Israel, saying "Without the United States, there would be no Israel. Without me, there would be no Israel," but made clear his frustration with the continued military operations that could upend the Iran deal.

Iran's military command responded to the strikes by warning Israel of a "harsh response" if it doesn't end its "malice" in southern Lebanon. A spokesperson for Iran's Ministry of Foreign Affairs said any continuation of Israeli military operations in Lebanon would constitute a "violation of the understanding" and that "necessary measures will be taken." More than 3,800 people have been killed in Lebanon during the four-month conflict, according to Lebanon's health ministry, while Israeli authorities report 30 soldiers and four civilians killed on both sides of the border.

Hezbollah leader Naim Qassem declared in a televised address Wednesday that the US-Iran agreement was a "great victory" and urged Lebanon to focus negotiations with Israel on "mutual security" issues and securing the withdrawal of Israeli troops from Lebanese territory. Lebanese President Joseph Aoun said Lebanon was pursuing an "independent path" in its Washington negotiations with Israel while welcoming support from countries including Iran. Netanyahu stated Monday that Israeli forces would remain in Lebanon "for as long as necessary," setting up potential conflict with the terms of the US-Iran deal that commits to respecting Lebanon's territorial integrity and sovereignty.

American shoppers increased their spending in May with retail sales rising 0.9%, surpassing economists' expectations and demonstrating continued consumer resilience despite elevated inflation. The Commerce Department reported Wednesday that the May figure represented an acceleration from a revised 0.4% gain in April. Excluding sales at gas stations, retail sales rose 0.7%, with broad-based gains across multiple categories including clothing stores, furniture stores, and online retailers. The data came as temperatures warmed and gasoline prices began to cool from their recent peaks.

Sales received a boost from generous government tax refunds distributed in both April and May, though economists note that cash cushion is starting to fade. The retail sales figures aren't adjusted for inflation, so higher prices likely contributed to the nominal gains, but economists pointed to healthy underlying spending with increases across most sectors. Clothing and accessory stores posted a 0.3% gain, home furnishing and furniture stores rose 1%, and online sales jumped 1.5%. Weakness appeared in electronics and appliance stores, which fell 0.5%, and restaurants, which declined 0.1%.

The so-called control group, which excludes food services, autos, building materials, and gas stations and is used to calculate GDP growth, rose 0.7%, suggesting solid underlying economic momentum. Sam Tombs, chief US economist at Pantheon Macro, suggested the restaurant decline might reflect consumers cutting back on driving to eating establishments due to high gas prices earlier in the month. Despite inflation running at 4.2% in May compared to last year, the highest level in three years, consumer spending continues to drive most of the nation's economic growth.

Gas prices have fallen about a penny to $4.02 per gallon, down 11% from $4.51 a month ago, according to AAA, though still well above the below-$4 levels last seen in March. The tentative US-Iran deal to reopen the Strait of Hormuz offers hope for further price relief, but industry experts caution that even after oil starts flowing again from the Middle East, it could take time for the supply crunch to fully ease. Some analysts believe consumers may maintain behaviors adopted during the price spike, such as filling up at big-box stores like Costco and Sam's Club that offer member discounts, even as prices moderate.