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Markets Drift Sideways - Here’s What Markets Quietly Priced In
Will Softbank's $1 trillion megaplex become a reality?
INSIGHT WEEKLY: June 22, 2025
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🌐 Markets Overview
📈 Markets This Week: Markets drift sideways with hopes of Middle East negotiations
The major indexes were flat or mixed as sentiment remained undecided on how the conflict in the Middle East might play out. That was this week.
Last night, the US attacked Iran’s nuclear sites at Fordo, Natanz and Isfahan. How will the markets react next week?
Looks like:
No summer rate cuts from either the Fed or the Bank of England - both held rates steady and gave cautious guidance. Markets now expect:
Fed: Two cuts by year-end, with September now favored for the first cut
BOE: One cut, possibly delayed until later in Q3 or Q4.
Middle East tensions (Hormuz risk) remain unresolved but haven’t escalated. Markets seem to have discounted an oil shock. But after last night’s developments?
AI equity fatigue despite positive news (e.g., Micron, ARM, AMD gains), big tech mostly drifted, suggesting high expectations are fully priced.
Bond yields inched higher, not because of inflation surprises, but due to lingering fiscal concerns and weak auction demand.
Retail sales and macro data in the US and UK came in soft enough to suggest cooling, but not enough to trigger a policy pivot.
Tech stocks this week
Apple posted a modest gain and a poor YTD performance (-19.7%). It’s still under pressure from soft iPhone demand in China, regulatory scrutiny over App Store policies, and skepticism about its generative AI roadmap. With the AI-enhanced device refresh cycle this year, will the stock recover?
AMD was the standout this week, jumping over 10% on bullish sentiment around AI server chips, particularly the MI300 series, which has reportedly gained traction with hyperscalers. But it still remains far behind Nvidia in terms of total volume.
ARM continues to ride the wave of enthusiasm around AI on the edge. Gains this week reflect optimism around its role in powering next-gen smartphones and low-power AI devices, as well as licensing revenue growth tied to new chip architectures.
What is AI on the edge? Artificial intelligence algorithms directly on local devices (the “edge” of the network) rather than in centralized cloud data centers.
Micron’s surge is tied to the strengthening demand for DRAM and NAND used in AI servers, while excess inventory from the last downcycle is finally easing. Investors are now positioning for a rebound in pricing, especially in high-bandwidth memory tied to AI infrastructure.
Intel saw a decent bounce this week after lagging for most of the year. However, the move appears technical rather than fundamental, driven by value investors rotating into beaten-down names. Its foundry strategy continues to face execution risk, and sentiment remains fragile.
Macro Watch: This Week’s Economic Developments
🌍 Global Outlook
Markets were on edge this week due to geopolitical tensions in the Middle East, sparking safe-haven flows initially into gold and then to the dollar and to Treasuries. After last night’s US attacks on Iran, will safe haven assets see an increased inflow?
Global equity funds recorded outflows of -$19.82 billion, while global bond funds (including Treasuries) saw + $13.13 billion in inflows, marking a ninth straight week of safe-asset demand.
🇺🇸 United States
Fed holds rates steady as widely expected. The updated dot plot showed that a majority of FOMC members still expect two rate cuts in 2025, down from three projected in March. Chair Powell stressed that while inflation has eased from its peak, progress has been uneven and decisions will remain data-dependent. The Fed also flagged risks from tariffs and geopolitical instability in its updated policy statement.
What is the dot plot?
The “dot plot” is a chart published by the Federal Reserve four times a year (after every other FOMC meeting). It shows where each member of the Federal Open Market Committee (FOMC) thinks the federal funds rate should be at the end of:
the current year
the next two years
and over the longer run
The last 5 years:
Retail sales: May data surprised to the downside with a -0.9% MoM drop, marking the sharpest decline in four months. The slump was driven largely by a pullback in vehicle purchases and cooling spending on discretionary items.
Leading indicators: The Conference Board’s Leading Economic Index (LEI) slid to 99.0, extending its decline into a sixth month. A persistently falling LEI over six months typically triggers a “recession signal”. However, broad economic activity remains slow but stable.
🌐 Europe:
Eurozone:
Core inflation dropped to 1.9% - below the ECB’s 2% target - but weak industrial data continued to drag on sentiment.
April industrial production fell 2.4%, and export volumes were hit by rising trade barriers and softer Chinese demand. ECB officials reiterated a cautious pace of rate cuts.
United Kingdom:
Bank of England held its base rate at 5.25%, maintaining a cautious tone despite a recent drop in headline inflation. Policymakers noted progress toward their 2% target but opted to wait for stronger confirmation before cutting.
Retail sales fell –2.7% MoM in May, the largest drop since December 2022. The decline was broad-based, including food, clothing, and department stores.
UK government borrowing was at £15 bn in May, higher than forecast, and separate data showed a rise in company insolvencies, particularly in the retail sector.
🌏 Asia
Japan:
The Nikkei rose 1.5% as the Bank of Japan kept policy unchanged and downplayed rate hike urgency. The 10-year JGB yield fell to ~1.40% on coordination between the BoJ and Ministry of Finance.
China:
Price pressures remained soft, with CPI barely positive and PPI still deflationary. Early signs of U.S.-China trade truce talks gave a modest lift to equities, though confidence remains fragile. Industrial production and retail sales showed tepid growth.
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🌐 Artificial Intelligence and Tech
This cover has been designed using assets from Freepik.com
SoftBank Dreams Big: $1 Trillion AI+Robotics Megaplex? Details are still emerging, but the scale is jaw-dropping. According to reports, this moonshot would include AI chip foundries, robotics factories, and a network of research labs - basically, Son wants to build the physical and computational backbone of the future.
Son has indicated that AI is the “final invention” humans will make and he’s determined to own a sizable part of its foundation.
Mira Murati’s AI Startup Rockets to $10B Valuation. The former CTO of OpenAI has set up a new company, Thinking Machines Lab, which has just raised $2 billion, valuing the company at $10 billion in its first funding round. That kind of number is rare even by AI’s frothy standards.
Investors weren’t deterred by the lack of a product roadmap. What mattered was the pitch: AI that is truly agentic, secure, and capable of abstract reasoning, without racing toward AGI. Murati’s reputation clearly carries weight, and the startup is now seen as a next-gen contender alongside Anthropic and Safe Superintelligence Inc.
Meta Can’t Buy Safe Superintelligence, so it Tries to Hire the CEO Meta reportedly tried to buy Safe Superintelligence Inc, Ilya Sutskever’s new venture, for $32 billion, but the bid failed. But rather than walk away, Meta has shifted its strategy - recruit the CEO instead.
Sutskever, a co-founder of OpenAI, launched Safe Superintelligence Inc. with a clear mission: to build AI systems that are aligned with human values and goals, meaning they act safely, predictably, and in ways that genuinely reflect our intentions. Crucially, SSI is structured to avoid commercial pressures that could compromise that mission. Meta’s interest in acquiring the startup, and now, reportedly, its CEO, signals how urgently it wants to position itself at the forefront of safe, next-generation AI development. If Meta can’t buy the vision, it seems determined to hire the visionary.
Gemini Voice Assistant Rolls Out Across Android phones, marking a major leap in the company’s assistant strategy. Instead of just issuing commands, users can now have natural conversations with their phones, complete with context retention and follow-ups.
This isn’t just a UX update. It’s a power move in the AI assistant race, taking aim at Apple’s Siri and Amazon’s Alexa. With Gemini embedded deeper into Android, Google is betting that the assistant will become your default interface for daily tasks and AI search.
Meta’s $100M Talent Poaching Attempt Fails, Says Altman According to Sam Altman, Meta attempted to poach OpenAI talent with $100M offers and failed. Speaking publicly this week, Altman said the offers were “generous but misaligned,” and implied that OpenAI staff stayed for the mission, not just the paycheck.
Get your free guide to AI
🌐 Crypto Corner
Top 10 cryptos:
The digital asset market faced broad pressure this week, with most major tokens logging notable declines. Bitcoin fell –2.5% to ~$103,500, while Ethereum and other Layer 1s suffered deeper losses. Risk appetite appears subdued following Fed hawkishness and weak altcoin flows, as capital briefly shifted to safer assets.
Ethereum (ETH):
Ethereum declined –5.8% this week to ~$2,430, extending its month-long slump (–3.7%) and deepening year-to-date losses (–27%). Despite a strong multi-year gain, ETH has struggled under reduced on-chain activity and competition from faster chains like Solana. Sentiment remains fragile amid delayed ETF momentum and stalling DeFi volumes.
Cardano (ADA):
Cardano posted one of the steepest weekly losses among major coins, falling –9.3% to $0.58. The token is now down –30.9% YTD. While development continues in the background (e.g., Hydra scaling efforts), investor interest has waned, and price action reflects a rotation out of underperforming altcoins.
Polkadot (DOT):
Polkadot dropped –10.3% to $3.45, making it the worst performer this week among the top 10 non-stablecoin tokens. The network’s interoperability focus hasn’t translated into price resilience, with DOT now down nearly –50% YTD and –38% over the past year. Analysts cite a lack of near-term catalysts and persistent outflows from ecosystem projects.
See the previous spotlight on Bitcoin halving
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Stay tuned for more insights and updates each week.