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Japanese Prime Minister Sanae Takaichi: Will consider reviewing the gasoline subsidy policy

⑴ US heating oil futures rose above $3.70 per gallon in early June, marking a third consecutive trading day of gains, as reports of new conflicts in the Middle East weakened hopes for a breakthrough in US-Iran negotiations.⑵ Both sides carried out new strikes, even as the US stated it is still negotiating with Iran for a potential deal to end the conflict and refuted reports that communications have broken down. Contradictory reports and ongoing strikes have made the market jittery, increasing volatility in energy commodities.⑶ Since the outbreak of conflict in March, distillate exports from the region have been severely disrupted, refineries are under pressure, and heating oil futures hit a record high of $4.60 per gallon that month.⑷ Against this backdrop, industry data shows that diesel and heating oil inventories decreased by 214,000 barrels in the last week of May.

Federated Hermes senior fund manager Deborah Cunningham stated that at the upcoming Federal Open Market Committee meeting scheduled for June 16-17, the likelihood of any changes to the federal funds rate, which is currently in the 3.50% to 3.75% range, is "almost zero".In her latest research report, she pointed out that although persistently rising inflation has not yet fully suppressed consumer spending, market concerns about this risk are gradually intensifying.Cunningham believes that inflation may continue to rise for a period in the future, but as the Iran conflict gradually de-escalates, the pace of its increase is expected to slow down.Looking back at the Summary of Economic Projections released in March, it was suggested at that time there could be room for a 25 basis points rate cut this year. However, she expects that the latest June forecasts will almost certainly maintain the judgment that rates will be unchanged. She added, however, that the dot plot may show signs that some decision-makers are leaning toward a rate hike.