SPEAKER_01 0:00

Imagine waking up and finding out that 25% of the world's seaborne oil is just abruptly trapped in a war zone.

SPEAKER_00 0:08

Yeah, it's a massive shock.

SPEAKER_01 0:09

Right. And then you combine that geopolitical shock with a US jobs report that is so hot it like completely derails everything we thought we knew about interest rates.

SPEAKER_00 0:18

Exactly. We're looking at extreme forces just pulling global asset prices in totally opposite directions this morning.

SPEAKER_01 0:26

So welcome to today's deep dive. We're unpacking how this weekend of Middle East escalation and you know that shocking economic print are rapidly resetting the commodity and futures markets.

SPEAKER_00 0:38

Yeah, our mission today is to really figure out the underlying mechanics of these conflicting signals for you based on the June 8th, 2026 pre-market briefing.

SPEAKER_01 0:46

Right. And we definitely need to give credit to the author Eli Levy at Canon Trading Company. You can actually reach him via email at Eli at Canon Trading.com. But uh before we get into the weeds, please listen to this important disclosure, disclaimer. Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. So let's start with the most immediate threat, which is physical oil supply.

SPEAKER_00 1:34

Right, because overnight we saw those strikes between Israel and Iran.

SPEAKER_01 1:37

And the Hoofy attacks, too, right?

SPEAKER_00 1:39

Yeah, combined with Houthie attacks, they have effectively blocked the Strait of Hormuz. That is a single choke point that handles a quarter of all seaborne oil.

SPEAKER_01 1:46

Which is just staggering. But then, right in the middle of all this chaos, OPEC Plus is still pushing forward with a production hike.

SPEAKER_00 1:54

They are. A hike of 188,000 barrels per day starting in July.

SPEAKER_01 1:58

See, I mean, that feels like driving down the highway and slamming on the gas and the brakes at the exact same time. How do traders even digest a scheduled supply hike right in a conflict zone?

SPEAKER_00 2:10

Well, right now the fear of losing transit is just it's completely overpowering the promise of future supply.

SPEAKER_01 2:15

The risk premium.

SPEAKER_00 2:16

Exactly. That risk premium is why Brent crude is suddenly spiking up to $97.15 a barrel. The market is basically betting the disruption matters more.

SPEAKER_01 2:26

Wow.

SPEAKER_00 2:27

Goldman Sachs actually has a severe case scenario projecting Brent could average $115 in the fourth quarter.

SPEAKER_01 2:33

Wait, $115?

SPEAKER_00 2:34

Yeah. If Middle East production losses hit $2 million barrels a day.

SPEAKER_01 2:38

And if oil spikes to $115 a barrel, that energy cost I mean, it bleeds into absolutely everything.

SPEAKER_00 2:43

It acts as a massive inflation multiplier.

SPEAKER_01 2:46

Which brings us directly to Friday's Friday's massive jobs report.

SPEAKER_00 2:49

Right. So the economy added $172,000 payrolls.

SPEAKER_01 2:52

That's double the consensus expectation, isn't it?

SPEAKER_00 2:55

Double. So when the economy is running that high and you have inflation risks rising from oil, the Federal Reserve really can't lower interest rates. Or stuck. Totally stuck. The 10-year treasury yield immediately jumped to 4.54%.

SPEAKER_01 3:09

Oh man.

SPEAKER_00 3:10

And investors are looking at futures contracts now and betting the Fed will actually hike interest rates by the end of 2026.

SPEAKER_01 3:17

Okay, wait. I have to push back here. With a major global conflict erupting, shouldn't gold be booming? I mean, it is the classic safe haven, you know, when the world gets chaotic.

SPEAKER_00 3:27

You would totally think so. But gold actually fell to an 11-week low.

SPEAKER_01 3:31

Really? Why?

SPEAKER_00 3:33

It comes down to how investors get paid. Look, gold doesn't offer a yield, it just sits there. But that hot jobs report forced the prospect of higher interest rates.

SPEAKER_01 3:41

Oh, so treasury bonds suddenly offer a really high guaranteed payout.

SPEAKER_00 3:45

Exactly. High interest rates are just sucking global capital away from assets like gold and into bonds. The high yield is completely overpowering the geopolitical safe haven bed.

SPEAKER_01 3:54

So the US dollar is basically acting like a financial black hole right now.

SPEAKER_00 3:58

Yeah, perfectly put. And speaking of metals acting unexpectedly, we also have those new Section 232 copper tariffs taking effect today.

SPEAKER_01 4:07

Right. The 50% tariff on certain imports. That basically forces companies to source locally and uh artificially squeezes the domestic supply. So with energy and metals acting so crazy, are we seeing that same tension in agricultural markets?

SPEAKER_00 4:24

We are, but in the completely opposite direction. Grands are dropping fast. July corn just hit a contract low.

SPEAKER_01 4:30

Wait, is that because of the warm weather?

SPEAKER_00 4:32

Yeah. Specifically because warm weather accelerates crop development, so it guarantees a massive yield.

SPEAKER_01 4:38

Oh, so if you remove the risk of bad weather ruining the harvest, you remove the weather risk premium from the price.

SPEAKER_00 4:43

Exactly. The market price is at an oversupply and values just crash. We're seeing the exact same thing with Arabica coffee dropping on a record harvest coming out of Brazil.

SPEAKER_01 4:52

Man, so what does this all mean for you listening? If the Fed is now leaning toward hiking rates and geopolitics are threatening to send oil blasting past $100 a barrel, how might a sudden energy-driven inflation spike alter your broader portfolio strategy for the rest of 2026?

SPEAKER_00 5:08

It's definitely the ultimate question when markets are hitting the gas and the break simultaneously.

SPEAKER_01 5:13

Disclaimer. Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.