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US stock futures slipped as lingering tariffs weighed on sentiment, while Japan’s super-long bond yields hit a 25-year high following a poor auction. Oil prices surged above $66 a barrel on reports of a potential Israeli strike on Iran, stoking Middle East supply fears. Meanwhile, Google unveiled Gemma 3n, an AI model capable of running on low-powered devices, alongside health-focused and accessibility tools, cementing its edge in edge computing. Lastly, bearish bets against the dollar hit record levels amid fiscal concerns and Moody’s downgrade, signaling investor caution on US economic stability.

US Futures Slide as Tariffs Weigh on Sentiment

US stock futures dipped Wednesday, with the Dow, S&P 500, and Nasdaq all down 0.3% as lingering tariffs dampened optimism over recent trade developments. While markets rallied last week on news of a temporary rollback in US-China duties, concerns are growing that current tariff levels—the highest since 1939—are curbing economic growth. Retail earnings, including Walmart’s warning of higher prices and Home Depot’s pledge to hold steady, have spotlighted the strain on consumer sentiment. Investors now await Target and Lowe’s results for further clues on retail resilience amid muted economic forecasts.

Investment Insight: The market’s response underscores the fragility of recent gains, as trade and pricing pressures remain key risks. Investors should temper enthusiasm for short-term rallies and focus on defensive sectors like consumer staples and utilities, which may offer stability amid heightened tariff uncertainty and cautious consumer spending trends.

Japan’s Super-Long Bond Yields Stay Elevated Amid Auction Woes

Japanese government bonds (JGBs) saw little recovery Wednesday after a lackluster auction sent 20-year yields to 2.57%, their highest since 2000. The selloff, fueled by rising U.S. Treasury yields and concerns over potential fiscal stimulus ahead of July elections, underscores challenges for the Bank of Japan’s efforts to taper debt purchases. Analysts warn sentiment will remain pressured with 30- and 40-year bond auctions looming. Meanwhile, above-target inflation and calls for consumption tax cuts are compounding upward pressure on yields, raising alarm over Japan’s fiscal sustainability.

Investment Insight: The JGB market faces heightened volatility, reflecting global trends of rising term premiums and shifting monetary policy. Investors should exercise caution with exposure to ultra-long bonds, favoring shorter durations or inflation-protected assets as Japan navigates fiscal and monetary uncertainties.

Oil Surges Amid Geopolitical Tensions Over Potential Israeli Strike on Iran

Oil prices climbed sharply after reports suggested Israel is preparing a potential strike on Iranian nuclear facilities, heightening geopolitical risks in the Middle East. Brent crude rose above $66 a barrel, and WTI jumped as much as 3.5% before paring gains. The uncertainty surrounding US-Iran nuclear talks, coupled with fears of escalating unrest in a region supplying a third of the world’s crude, has injected a risk premium into oil markets. Analysts warn that any disruption to Iranian supply—recently boosted by one million barrels per day—could significantly lift prices, even as concerns over oversupply linger into the year’s second half.

Investment Insight: The geopolitical backdrop underscores the importance of hedging against oil price volatility. Investors should monitor developments in the Middle East closely while considering energy equities and commodities with upside exposure to sustained geopolitical risk. Diversifying into alternative energy or defensive sectors may also safeguard against prolonged market uncertainty.