Notes for Mon, Jun 15, 2026

Hormuz unwind drove a tactical bull steepener; we'd fade aggressive front-end longs into Warsh's first meeting.

The session

Iran-deal tape did the work. <cite index="320687-1">WTI broke sub-$81 and Brent printed $83, stripping roughly $15/bbl of war premium out of crude^[1]</cite>, and the front end took the bait, <cite index="320687-2,320687-3">2yr yields 5-7bp lower toward a 4.00 handle, with Dec hike odds compressing to 60-65% from fully priced Friday^[2]</cite>. Curve steepening hard on the unwind of the energy shock that flattened it 200bp+ since March. UBS framing is the consensus take: <cite index="320676-1">yields, USD, and oil lower while equities higher^[3]</cite>.

We're with the directional read, tactical bull steepener, energy-shock unwind. We're not chasing the more aggressive version of this trade. One sell-side is calling <cite index="320692-3">a 50-75bp dovish front-end reprice by week-end if this holds^[4]</cite>; we mark that at 15-25bp at best, and only if WTI actually breaks into the low $60s. The MOU is unsigned, <cite index="320792-1">WoodMac sees 70% Hormuz throughput recovery in three months, 90% in six, with Iraqi flows potentially a year out^[5]</cite>, and Trump has flagged he resumes strikes if nuclear talks fail. This isn't Fed-reaction-function repricing yet; it's risk premium evacuation on a binary headline.

More telling for how we lean into tomorrow: the activity side hasn't softened to justify a sustained dovish lean. <cite index="319921-1">Activity composite flat week-over-week at +1.0σ, manufacturing restocking and AI spending offsetting demand softness^[6]</cite>, and <cite index="315656-2">the market is already pricing two hikes by mid-2027 with the front end vulnerable if services strength sticks^[7]</cite>. The Hormuz tail leans inflationary not recessionary if the deal collapses, which means the front-end rally is asymmetric to the downside on headline risk. View breaks if WTI prints sub-$70 and stays, then add flatteners. Assumes Friday signing holds and crude doesn't snap back on Israeli-Hezbollah escalation.

Warsh on Wednesday — the pin

<cite index="320682-1,320682-2">Warsh's inaugural FOMC is the pin: the market will parse whether he drops forward guidance entirely, and DB expects three participants on the dots signaling hikes into 2026^[8]</cite>. He's signaled skepticism of explicit guidance for a while, if he reframes the statement toward data-dependence and structural narrative, the outer curve reprices higher and today's bull steepener gets sold. <cite index="320682-3">Retail sales +0.4-0.5% Wednesday morning sets tone, but the presser is the real wildcard^[9]</cite>.

Our read into the meeting: market is leaning dovish-Warsh on the energy backdrop. We think that's wrong-footed. The combination of his communication style and the DB three-dot expectation argues the surprise is hawkish, not dovish, and the bar for him to validate a 50-75bp dovish move via guidance softness is high when activity is still printing hot. We'd lighten or fade front-end longs into Wednesday. View breaks if Warsh leans explicitly into the energy-shock-as-transitory framing and the dots compress; assumes he doesn't burn his first meeting trying to anchor the front end.

Plumbing & supply

Money markets quiet. <cite index="316765-1">SOFR 3.60%, EFFR 3.62%, both hovering near IORB at 3.65%, with foreign-bank arb at 3bps^[10]</cite>, nothing dislocated. <cite index="316765-2">TGA sits $100bn below target at $800bn ahead of $79bn coupon settlement tomorrow and $166bn bill/coupon issuance Mon-Thu; reserve balances popped $66.8bn to $3.08trn since Wednesday^[11]</cite>, which reads as decent cash positioning into the supply wall.

Specials worth flagging. <cite index="seclend_observations-912797TM9-2026-06-15">912797TM9 (B 01/21/27) cleared at 142.9bp with $1.53B accepted at today's auction^[12]</cite>, well above floor and the largest live special on the board. The 5/13/27 bill printed even tighter earlier in the week. We're watching whether the Jan-27 bid persists through coupon settlement; if it does, that's a positioning signal in itself, not just a financing quirk.

Sources read

8 sources read

• Commentary items: 8

Citations

1. [1]WTI broke sub-$81 and Brent printed $83, stripping roughly $15/bbl of war premium out of crude (WTI sub-$81 and Brent $83 strip out ~$15/bbl war premium) — Commentary · zerohedge.com
2. [2]2yr yields 5-7bp lower toward a 4.00 handle, with Dec hike odds compressing to 60-65% from fully priced Friday (2yr yields 5-7bp lower toward 4.00 handle. Fed hike odds compressed to 60-65% by year-end vs. fully priced Friday) — Commentary · zerohedge.com
3. [3]yields, USD, and oil lower while equities higher (UBS notes yields, USD, and oil lower while equities higher is the base case) — Commentary · zerohedge.com
4. [4]a 50-75bp dovish front-end reprice by week-end if this holds (If this holds, front end reprices 50-75 bps dovish by week-end) — Commentary · zerohedge.com
5. [5]WoodMac sees 70% Hormuz throughput recovery in three months, 90% in six, with Iraqi flows potentially a year out (WoodMac expects 70% recovery in 3mo, 90% in 6mo, with Iraq potentially taking a year) — Commentary · zerohedge.com
6. [6]Activity composite flat week-over-week at +1.0σ, manufacturing restocking and AI spending offsetting demand softness (Activity composite flat week-over-week at +1.0σ; manufacturing restocking and AI spending offsetting any demand softness) — Commentary · employamerica.org
7. [7]the market is already pricing two hikes by mid-2027 with the front end vulnerable if services strength sticks (Market repricing two hikes by mid-2027, front end vulnerable if this data sticks) — Commentary · employamerica.org
8. [8]Warsh's inaugural FOMC is the pin: the market will parse whether he drops forward guidance entirely, and DB expects three participants on the dots signaling hikes into 2026 (Warsh's inaugural FOMC Wednesday is the pin: market will parse whether he drops forward guidance entirely (likely) and whether dots show hikes into 2026 (DB expects 3 participants signaling this)) — Commentary · zerohedge.com
9. [9]Retail sales +0.4-0.5% Wednesday morning sets tone, but the presser is the real wildcard (Retail sales +0.4 - 0.5% Wednesday morning will set tone, but Warsh communication style is the real wildcard) — Commentary · zerohedge.com
10. [10]SOFR 3.60%, EFFR 3.62%, both hovering near IORB at 3.65%, with foreign-bank arb at 3bps (SOFR 3.60%, EFFR 3.62%, both hovering near IORB (3.65%), with foreign-bank arb at 3bps) — Commentary · conks.plumbing
11. [11]TGA sits $100bn below target at $800bn ahead of $79bn coupon settlement tomorrow and $166bn bill/coupon issuance Mon-Thu; reserve balances popped $66.8bn to $3.08trn since Wednesday (TGA sits $100bln below target at $800bln ahead of $79bln coupon settlement tomorrow and $166bln in bill/coupon issuance Mon - Thu; reserve balances popped $66.8bln to $3.08trln since Wednesday) — Commentary · conks.plumbing
12. [12]912797TM9 (B 01/21/27) cleared at 142.9bp with $1.53B accepted at today's auction (912797TM9 (B 01/21/27) at 142.9 bp, $1.53B accepted) — Observation · observation:seclend_observations:912797TM9:2026-06-15

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