On Friday, the talks were postponed (likely due to Israel’s renewed attack on Lebanon). On Saturday, Iran announced that it would close the Strait of Hormuz again. Yet senior US and Iranian officials still met at Switzerland’s Bürgenstock resort on Sunday, to kick off the 60-day negotiation period. They said the talks went well. Meanwhile, US President Trump continued to post threats on social media. And here we are, Monday morning.

US crude kicked off the week with a small jump above $78pb but rapidly retraced its gains. US and Japanese yields moved higher, though that didn’t prevent the Nikkei from advancing to a fresh high thanks to:

The USDJPY spiked to nearly 161.70 this morning, moving above what is widely seen as the pain threshold for Japanese officials. Finance Minister Katayama said authorities stood ready to take action against excessive currency moves at any time, but we have yet to see any intervention. CFTC data confirms that the market remains heavily crowded with speculative short yen positions, meaning that if the Bank of Japan (BoJ) intervenes, we could see a sharp move lower that clears part of those positions. However, it would not necessarily change the medium-term selling pressure on the yen. Even last week’s BoJ rate hike – and expectations of another one later this year – were not enough to bring yen bulls back to the market.

On the yields front, 10- and 30-year JGB yields are sharply higher this morning as investors realise that the US/Iran peace talks may not lead to a concrete agreement, with Israel appearing increasingly difficult to restrain. Interestingly, however, multi-decade-high yields in Japan are not necessarily attracting big domestic buyers such as insurers and pension funds. Many believe that the BoJ’s normalisation process will not be fast enough to contain inflation, which in turn could continue to weigh on real yields and make Japanese government bonds less attractive than nominal yields suggest.

Indeed, Japanese insurers were net buyers of government bonds in April – for the first time since last July – but turned sellers again in May. This somewhat tempers reverse-carry concerns, but it does not solve other issues such as stretched valuations in certain technology stocks and growing bubble concerns.

The Nasdaq 100 closed Thursday 2.50% higher, recovering most of the losses triggered by the early-week technology selloff, and the week has started with strong appetite for tech stocks, as mentioned earlier. LG Electronics gained more than 10% on news that some of its executives will visit Nvidia’s headquarters today to discuss potential cooperation in physical AI and robotics – areas that sit at the heart of Nvidia’s latest ambitions.

But volatility in Korean technology stocks is mind-blowing. LG Electronics rose more than 240% in May, only to lose half of its value over the past three weeks. Physical AI is undoubtedly a promising area, and Asian companies are unquestionably ahead of the game when it comes to robotics. But the AI story comes with wild price swings that investors must be prepared to endure if they want to capture potential long-term gains.

That’s the major challenge.

This week, Micron, one of the hottest AI stocks of the year, heads to the earnings confessional with expectations running sky-high. Analysts expect quarter revenue of around $33.5–34.7 billion, adjusted EPS near $19–20, and gross margins above 80%, all thanks to strong demand for high-bandwidth memory (HBM) used in AI servers.

The latest technology wobble sent Micron on a roller-coaster ride since the end of May, with double-digit price swings both up and down within individual sessions. But patience has paid off so far, as Micron closed last Friday at a fresh all-time high. One share now costs more than $1’130, compared with around $125 at this time last year. That is a tenfold increase, driven by a strong belief that the current boom cycle in memory chips could last indefinitely.

But it may not. New and more efficient technologies could eventually slow memory demand and force investors to scale back future revenue expectations. Therefore, the real test will not be the quarter itself but whether Micron can convince investors that the AI memory boom still has room to run. At current valuations, anything less than a blockbuster forecast could disappoint a market that has become accustomed to perfection.

On the data front, the final week of June will be marked by the US final Q1 GDP estimate and May inflation figures, with the Federal Reserve’s (Fed) preferred inflation gauge – the PCE data – due on Thursday. Last week, the new Fed Chair Kevin Warsh placed clear emphasis on price stability, while the quarterly dot plot showed Fed members turning more hawkish in their outlook, with many favouring at least one rate hike and some seeing a growing need for two hikes in the second half of the year.

As such, stronger-than-expected inflation figures could reinforce hawkish Fed expectations, push US yields and the US dollar higher, and potentially weigh on risk appetite.

In FX, the US dollar rose to its highest level in more than a year following last week’s hawkish Fed announcement. However, much of the hawkish Fed repricing appears already reflected in market prices. Looking ahead, a stronger US dollar will keep imported inflation pressures outside the US contained even with lower oil prices. That dynamic could help establish a floor for the EURUSD in the 1.1350–1.1400 range.

As for Cable, which is struggling near a critical Fibonacci support level, further downside is becoming increasingly plausible amid rising geopolitical uncertainty and questions surrounding Andy Burnham’s spending plans as he is coming for Keir Starmer’s seat.