Thoughts from Themes: Saturday Night's Alright for Fighting

Saturday Night’s Alright for Fighting

“Saturday night’s alright for fighting,” crooned Elton John—a line that rang with eerie prescience over the weekend of June 21–22, 2025, as the Middle East ignited with the most intense military escalation in the Israel-Iran conflict to date. In a blistering show of force dubbed Operation Midnight Thunder, the United States launched precision airstrikes on three of Iran’s key nuclear facilities—Fordo, Natanz, and Isfahan—marking its formal entry into Israel’s campaign against Iran’s nuclear program. The strikes, applauded by Israeli leadership but denounced by Tehran as an act of aggression, triggered swift Iranian retaliation: a missile barrage on the U.S.-run Al Udeid Air Base in Qatar, rattling nerves from Doha to Washington. Yet as the dust settled and markets braced for broader fallout, diplomatic backchannels quietly produced a fragile ceasefire—halting the immediate spiral into regional war but leaving behind a volatile calm.

War & Peace

The United States military operation in Iran marked an escalation in the ongoing Israel-Iran conflict, with the U.S. joining Israel’s campaign against Iran’s nuclear program this past weekend. The operation involved over 125 U.S. military aircraft, including seven B-2 stealth bombers deploying 14 GBU-57 Massive Ordnance Penetrators—30,000-pound bunker-buster bombs—and two dozen Tomahawk missiles launched from a submarine. President Donald Trump claimed the strikes "obliterated" Iran’s nuclear enrichment capabilities, though satellite imagery suggests severe damage rather than total destruction, with six craters visible at Fordo. Iran reported evacuating personnel and enriched uranium prior to the strikes, minimizing losses. U.S. Defense Secretary Pete Hegseth called the operation a success, emphasizing no Iranian troops or civilians were targeted. The strikes aimed to curb Iran’s nuclear ambitions, following Israel’s earlier attacks since June 13, but raised fears of broader regional conflict.

Iran vowed swift retaliation, with its Foreign Minister Abbas Araghchi accusing the U.S. of breaching international law. On June 23, Iran launched a missile attack, dubbed "Basharat Fath" (Promise of Victory), targeting the U.S.-run Al Udeid Air Base in Qatar, the largest American military installation in the Middle East. Explosions were reported over Doha, Qatar’s capital, shortly after Iran’s state television announced the attack, accompanied by martial music. A Reuters witness reported hearing blasts in central Doha and Lusail, with projectiles visible in the night sky, likely intercepted by air defenses. Qatar had closed its airspace earlier that day, citing safety concerns, following U.S. and UK advisories for citizens to shelter in place due to a "credible Iranian threat" against Al Udeid since midday.

Iranian media also reported missile strikes on U.S. bases in Iraq, including Ain al-Asad, though no immediate casualty reports emerged. Early reporting stated that all the missiles were intercepted and that there were no deaths or damage.

The international response has been one of alarm. Qatar, Iraq, and Pakistan have condemned the U.S. strikes, warning of regional destabilization. Iran’s allies, including Yemen’s Houthis, pledged continued resistance, while Israel hailed U.S. action.

But by Monday night, a fragile ceasefire had begun to take shape. Brokered through backchannel diplomacy by Oman and Switzerland—with indirect U.S. coordination and UN support—Israel and Iran agreed to a temporary halt in hostilities. The terms reportedly include a cessation of Israeli and U.S. strikes on Iranian territory, a pause in Iranian missile activity targeting U.S. or allied assets in the Gulf, and renewed IAEA monitoring of Iranian nuclear sites, including Fordo and Isfahan. Neither side has publicly acknowledged the deal, allowing both to maintain posturing while stepping back from the brink.

Iranian media framed the pause as a “strategic recalibration,” while Israeli officials have remained tight-lipped, focusing instead on internal security assessments. U.S. officials cautiously welcomed the development as “a necessary de-escalation,” though analysts warn the ceasefire remains precarious. Iranian proxies like Hezbollah and the Houthis were not included in the agreement, and skirmishes continued along Israel’s northern border into Tuesday morning.

Macro Memo

The U.S. stock markets displayed a muted but volatile response to the U.S. missile strikes and Iran’s retaliatory missile strikes on U.S. bases and later responded positively to news of the ceasefire. This suggests markets are absorbing the shock but remain cautious, with the index only 3% below its February 2025 peak.

After initial spikes at the start of the conflict, oil prices plummeted in midday trading Monday, as President Trump confirmed his desire for energy independence posting his famous “drill baby drill” statement. Defense companies maintained gains. After sharp declines in Bitcoin and cryptocurrencies, markets quickly bounced off lows on Monday and maintained into the afternoon. Brent crude futures reversed Monday’s steep losses and stabilized around $82 per barrel, while defense stocks gave back some intraday gains. Gold edged slightly lower as risk appetite returned, and the VIX volatility index fell to a two-week low. Still, the geopolitical premium on oil and defense remains elevated, suggesting investors are not yet convinced that peace will hold.

Trade Agreement Deadline Approaches

Trump’s trade war seems to have taken a backseat to war in the Middle East – and progress feels markedly limited. With the July 9th deadline for finalizing trade deals quickly

approaching, is the US administration running out of time to make good on its Liberation Day promises? So far, the only “breakthrough” deal has taken place between the US and UK at last week’s G7 Summit, reducing trade barriers and increasing market access for

American exports, specifically benefiting agriculture. The US-China framework agreement between Presidents Trump and Xi still awaits final approval, while discussions with Canada and the EU have stalled pending deadline extensions. Trump seems to think that it’s possible to turn stalemates into leverage, maintaining that tariff hikes are fair game after the 90-day pause expires for many of the countries at the negotiating table. Given the dramatic sigh of relief the economy felt after the reduction of tariffs on Chinese goods (from a staggering 145% down to 30%), the consequences of inaction loom heavy with just two weeks to reach agreements. We see this uncertainty reflected in last week’s Fed announcement. The long and short of it: no new trade agreements and rising tariffs keep inflation risk high and the Fed cautious.

Big Win for Digital Assets

In a watershed moment for the digital assets industry, the Senate passed the GENIUS Act last Tuesday, moving to create a regulatory framework for stablecoins, a cryptocurrency which maintains a 1:1 peg with the US dollar. Lack of regulation has long driven consumer skepticism in the crypto space, with proponents expecting clearer legislative frameworks to encourage broader use of stablecoins. Stablecoins are often used to transfer funds between crypto tokens and may become widely useful for sending instant payments once backed by liquid assets, like the US dollar or short-term treasury bills. Some unresolved concerns over presidential conflicts of interest remain a source of tension within the Democratic caucus, leaving hurdles for the bill to clear before landing on Trump’s desk. The enactment of this legislation would be an incredible vote of confidence for digital assets as a legitimate financial sector, and can only mean rapid expansion of an already growing investment vehicle; even amid abundant geopolitical volatility, crypto soared following the bill’s passing, with Circle (CRCL) shares trading at nearly 6x their June 5 IPO price and coins like Bitcoin (BTC) hitting new price highs as well.

This Week’s Major US Economic Reports & Speakers

Monday June 23

9:45 AM S&P flash US services PMI

9:45 AM S&P flash US manufacturing PMI

10:00 AM Existing home sales

Tuesday, June 24

9:00 AM S&P Case-Shiller home price index (20 cities)

9:15 AM Cleveland Fed President Beth Hammack speaks

10:00 AM Consumer confidence

10:00 AM Fed Chair Powell testifies to House Financial Services Committee

Wednesday, June 25

10:00 AM New home sales

Thursday, June 26

8:30 AM Advanced US trade balance in goods

8:30 AM Advanced retail inventories

8:30 AM Advanced wholesale inventories

8:30 AM Initial jobless claims

8:30 AM Durable-goods orders

8:30 AM Core durable-goods orders

8:30 AM GDP (second revision)

9:00 AM Cleveland Fed President Beth Hammack speaks

10:00 AM Pending home sales

Friday, June 27

8:30 AM Personal income

8:30 AM Personal spending

8:30 AM PCE index

8:30 AM PCE (year-over-year)

8:30 AM Core PCE index

8:30 AM Core PCE (year-over-year)

10:00 AM Consumer sentiment (final)

Disclosures:

All data sourced from Bloomberg as of June 24, 2025, unless otherwise cited.

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