Morning Coffee — Thursday, June 4, 2026

What is moving the markets this morning. Grab a coffee.

Stocks

Futures are bleeding red this morning after Broadcom missed revenue and sank 14% post-close, dragging the entire chip complex with it — Intel, AMD, Qualcomm, and Arm all down 2% to 4% in the pre-market. Wednesday's cash session already snapped a nine-day win streak, with the Dow down 1.21%, the S&P off 0.74%, and the Nasdaq down 0.89%. The twin headwinds — tech earnings disappointment and fresh US-Iran strikes — are forcing traders to reassess whether this rally has any legs with the Fed meeting two weeks out. Six of eleven S&P sectors closed lower Wednesday, led by technology, financials, and consumer discretionary.

Macro

Oil's climb is dragging yields higher across the curve, and a strong ADP report plus ISM Services PMI — with its price gauge hitting a near four-year high — validated expectations of a more hawkish Fed. The market is pricing near-zero chance of a rate cut before July, and Kevin Warsh's first FOMC meeting on June 16-17 will be the real test of whether Powell's dovish lean survives the handoff. The April meeting held rates at 3.5% to 3.75% with an unprecedented four dissents, three of whom wanted the easing bias stripped from the statement. Geopolitical risk premiums are keeping inflation expectations elevated, and markets are bracing for the reality that rate cuts may be off the table entirely if oil stays above $95.

Geopolitics

Iran launched ballistic missiles at US bases in Kuwait and Bahrain overnight, hitting infrastructure and killing at least one, after a US strike on an empty oil tanker bound for Iran. Trump says Iran agreed not to pursue nuclear weapons and floated a possible meeting with Supreme Leader Khamenei, but Iranian media dispute progress on talks, and Israel's Lebanon operations are complicating any deal. The Strait of Hormuz — chokepoint for one-fifth of global oil and LNG — has seen traffic tick up in the past two weeks under US military escort, but flows remain well below pre-conflict levels. US crude inventories fell 7.97 million barrels last week, the sixth straight weekly draw.

Oil

Brent pulled back to around $97 per barrel Thursday after three straight sessions of gains, as traders assess the escalating US-Iran strikes against tightening inventory data. EIA reported a sixth consecutive weekly drawdown in US crude stocks — 7.97 million barrels — approaching minimum operating levels. The EIA's May STEO forecast Brent hit $138 in early April when the strait effectively closed and expects prices around $106 in May-June before moderating to $89 in Q4 as Middle East production recovers. Every dollar oil stays elevated is another quarter-point the Fed can't cut.

Precious Metals

Gold is catching a modest safe-haven bid on the Iran strikes but is battling a stronger dollar and higher real rates that capped upside momentum. Silver is tracking gold's moves but with more volatility as industrial demand signals remain mixed amid the equity selloff. The real question is whether geopolitical risk can override the Fed's hawkish tilt — if Warsh signals no cuts, precious metals will need more than missiles to sustain a rally. Watch the dollar; if DXY breaks higher, metals get squeezed regardless of headline risk.

Natural Gas

US LNG export capacity rose around 0.9 Bcf/d in April with Golden Pass Train 1 shipping and more Corpus Christi Stage 3 output, while global LNG prices remain elevated due to reduced Strait of Hormuz flows. Henry Hub production averaged 120.2 Bcf/d in Q1, up 4% year-over-year, and the EIA expects production to keep climbing through 2027 as higher crude prices support associated gas from oil wells. The wide spread between domestic gas and international LNG prices is creating a goldilocks scenario for US exporters — cheap feedstock, premium export realizations — but infrastructure bottlenecks mean we can't capitalize fully until Corpus Christi Train 6 hits this summer.

US Power

The EIA revised its 2026 utility-scale solar generation forecast 1.4% higher after updating its estimate of capacity online at year-start. Heat-driven demand is colliding with constrained gas supplies in some regions, pushing real-time pricing higher and stressing grids that were already operating with thin reserve margins. India's experience — where soaring LNG costs forced reliance on coal and triggered rolling shortages — is a warning for US ISOs if this summer turns brutal and gas exports keep draining domestic supply. Watch for demand-response programs and battery dispatch to play a bigger role if we see sustained triple-digit temperatures across ERCOT and CAISO territories.

Agriculture

Grains are consolidating after recent volatility, with wheat and corn finding support on concerns that elevated energy costs will lift fertilizer and transportation expenses for the planting season. Softs remain range-bound. The macro story matters more than weather right now — if oil holds above $95 and the dollar strengthens further, ag exports face a double headwind of higher input costs and weaker competitiveness.

On the Radar Today

• FOMC meeting minutes from the April 28-29 meeting — watch for color on the four dissents and how the committee is thinking about the Iran conflict's inflation impact.
• Any headlines out of US-Iran talks or further military escalation — oil will trade on every tweet and missile launch.
• Weekly petroleum status report for further confirmation of inventory draws and refinery utilization amid elevated crude prices.