. While the headline figure points to the inflationary impact of rising oil and commodity prices, the softer core reading suggests broader price pressures remain somewhat contained for now. The report reinforces concerns that businesses are facing rising input costs that could eventually be passed on to consumers, keeping inflation elevated and strengthening the case for the Fed to maintain a hawkish stance.
Stuck between a rock and a hard place. The ECB raised interest rates by 25 bps to 2.25%, marking its first rate hike since 2023 as policymakers respond to rising inflation driven by higher energy prices from the Iran war. With inflation now expected to run hotter than previously thought, the central bank noted that the economic outlook remains much more uncertain, risking both slower growth and more persistent price pressures. Officials are concerned that inflation is spreading beyond energy into the broader economy, forcing them to take action despite weakening growth prospects. Markets are now expecting another quarter-point increase later this year, likely in September. The move makes the ECB the first major central bank to respond to the latest inflation rise, while the Fed and BoC remain on hold for now.
Speaking of Europe, the region is facing a growing problem. Strategists are noting that Europe appears unable to reform quickly enough to address structural economic weaknesses. The EU’s traditional growth model, built on cheap Russian energy, German manufacturing strength, Chinese demand, and U.S. security guarantees, has broken down. Adding to this, political fragmentation, institutional gridlock, high energy costs, weak innovation, and aging demographics are preventing growth. Although countries such as Spain, Poland, and parts of Eastern Europe are outperforming, they are not large enough to offset stagnation in larger economies like France and Germany. From an investment perspective, many remain cautious on Europe, with the region likely headed for a prolonged period of low growth and gradual relative decline unless these core issues can be addressed.
Private-credit markets are showing a divide between equity and debt investors. While shareholders have been pulling money from private-credit funds amid concerns about software-sector exposure, unclear valuations, and rising redemption requests, bond investors have been moving in the opposite direction, attracted by yields that reached multi-year highs. Business development companies raised roughly $8.4 billion through bond sales in April and May, with major players like Blackstone, Ares Management, and Blue Owl Capital seeing strong demand for their debt offerings. Bond investors appear to be betting that BDCs can continue servicing their debt even if they are forced to cut dividends, and many view redemption gates as a positive because they preserve liquidity for creditors. Still, many remain concerned around valuations, earnings quality, and liquidity risks continuing across the $1.8 trillion private-credit market. And while the recent rally in BDC bonds may reflect confidence that the sector’s problems are manageable, many analysts caution that it is too early to declare a full recovery, especially as fund redemptions continue to exceed historical norms.
The passive bid. The upcoming SpaceX IPO this week is expected to be a test of how much influence passive investing has on stock prices. Because index providers such as Nasdaq, MSCI, and FTSE Russell plan to fast-track SpaceX into their indexes, passive funds may end up owning ~30% of the company’s public float within just two weeks of trading. This can potentially create a feedback loop where investors buy shares ahead of expected index-fund demand, pushing the stock price higher, which in turn increases its index weighting and forces passive funds to buy even more shares. Some researchers estimate that fast-tracked IPOs outperform by roughly 5% before index inclusion but often give back those gains afterward as the temporary demand fades. The concern isn’t necessarily that SpaceX is overvalued, but that mechanical buying from index funds could temporarily distort price discovery during an important phase of the stock’s public-market debut. For investors, this means SpaceX’s initial trading performance may be driven as much by index mechanics and fund flows as by the company’s underlying fundamentals.
Trump said the U.S. will not renew the Canada-United States–Mexico Agreement by the July 1 review deadline, confirming expectations that the agreement will instead move into annual reviews while remaining in force for up to another decade unless one country formally withdraws. The decision sets the stage for prolonged negotiations over key industries like autos, steel, and manufacturing, with the Trump administration looking to bring more production back to the U.S. While the move does not immediately threaten the trade deal itself, it does raise uncertainty for businesses across North America, particularly in Canada and Mexico, whose economies are deeply integrated with U.S. supply chains. For Canada, the biggest risk is continued uncertainty around auto exports, steel, aluminum, and future tariff policy, which could weigh on investment decisions. However, because CUSMA-compliant goods largely remain exempt from broad U.S. tariffs and the agreement stays in place, the announcement seems to be more of a negotiating tactic.
The closest Raptors fans will get this year. The Knicks pulled off one of the most dramatic wins in NBA Finals history last night, overcoming a 29-point deficit to complete the largest comeback in finals history. Former Raptor OG Anunoby capped the rally with a game-winning tip-in with 1.2 seconds remaining, giving New York a 107-106 victory over the Spurs and moving the Knicks within one win of their first championship since 1973. For Raptors fans looking for something to root for in June, Anunoby’s big role for the Knicks may be the closest they’ll get to the Finals this year. The former Toronto forward is no stranger to clutch moments, hitting a buzzer-beating three against the Celtics in the 2020 playoffs. While Anunoby missed the Raptors’ 2019 title run after having an emergency appendectomy, he still earned a championship ring, remains a fan favourite in Toronto, and is now helping New York chase one of its own.
Diversion: Oops
