Mission Grey Daily Brief - June 29, 2025
Executive Summary
The past 24 hours have witnessed a cascade of major shifts in the global political and business landscape. Three headline-making developments define the moment: First, U.S. President Donald Trump has capped a transformational week by executing massive military strikes against Iranian nuclear sites, brokering a fragile Israel-Iran ceasefire, and finalizing a landmark peace deal in Central Africa. Second, the world’s trade and supply chains are in turmoil as sweeping new American tariffs, legal disputes, and retaliatory moves reshape global commerce, creating intense volatility for businesses and investors. Third, climate crisis and war remain perilously intertwined, as unprecedented heatwaves hit Europe and a new climate report underscores the deepening links between ecological catastrophe and international conflict. In the swirl of these forces, the role of democratic leadership—and the vulnerabilities of autocratic regimes—are playing out in stark relief.
Analysis
1. United States: Assertive Power Projection and Its Global Ripples
President Trump’s foreign policy over the past week has been nothing short of assertive, with direct U.S. military intervention in Iran, rapid mediation of the Middle East conflict, and a dramatic hand in NATO and African peace processes. The operation saw the first-ever use of some of America’s most powerful bunker-buster bombs on Iranian nuclear sites. While officially declared a military success, analysts urge caution: U.S. strikes may have set back but not destroyed Iran’s nuclear capabilities. Intelligence suggests that a significant amount of enriched uranium remains and could be weaponized within months. Moreover, Iran’s regime, caught off guard and publicly humiliated, is likely to double down on nuclear ambitions in secrecy.
The international fall-out is immediate. The Israel-Iran ceasefire—brokered by Trump following intense and blunt diplomacy—appears to be holding, averting a wider war for now. Across the Atlantic, NATO allies, under intense U.S. pressure, have pledged to raise defense spending to 3.5% of GDP, a dramatic step toward meeting American demands for European burden-sharing and strategic autonomy. Finally, the U.S.-mediated peace agreement between Congo and Rwanda puts Washington at the center of African diplomacy and critical mineral access.
What does this assertiveness mean for business? The U.S. is simultaneously flexing hard power and leveraging economic tools. With the world’s attention on American action, countries caught between the U.S. and revisionist powers such as China and Russia face renewed pressure to align with democratic standards and responsible state conduct. However, the risk of ongoing instability—especially if Iran’s regime reacts asymmetrically or doubles down on repression—remains high. U.S. influence is ascendant, but so is uncertainty in the regions it touches most directly [New realities o...][Trump's strikes...][The best week o...][Trump Scores 3 ...].
2. Global Trade and Supply Chains Under Siege
Simultaneous with its military moves, the U.S. is upending global commerce. Recent days have brought an escalation in Trump Administration tariffs, with live disputes now targeting Canada, China, and the European Union. The threat of a “tariff wall” is no longer rhetorical; U.S. tariffs on steel and aluminum were doubled to 50%, and the White House has signaled more sector-specific duties are imminent. Trade negotiations with Canada have all but collapsed over disputes about digital taxes, and the U.S. has clinched a temporary truce with China—but uncertainty hangs heavy.
Court battles add further volatility: A recent decision by the U.S. Court of International Trade briefly struck down the Trump tariffs, only to see them immediately reinstated pending appeal. Businesses are left without clarity, paying elevated duties while watching for more legal back-and-forth. Companies have rushed to import goods before higher tariffs set in, driving up shipping rates and overfilling warehouses—especially in the U.S., where costs are now historically high and smaller importers are squeezed out by giants able to front-load inventory. Supply chain leaders report that only 8% feel fully in control of their risks, and 63% have incurred higher-than-expected losses from supply chain disruptions [Global Markets ...][June 2025 Marke...][Trump tariffs l...][From Shock to S...][June 2025 Logis...][Geopolitical Ri...][How big drop in...].
Meanwhile, retaliatory measures loom. The prospect of a global return to protectionism drives businesses to rethink geographic exposure, diversify supplier bases, and invest in greater resilience. Regulatory risk and the need for transparency in sourcing and compliance are rising: companies relying on markets in China, Russia, and other non-democratic states will face ongoing—and likely intensifying—disruption.
3. The New Multipolar Order: Democracy in Question, Alliances Shifting
The world’s balance of power is realigning at speed. This week saw fresh evidence of Europe’s push for strategic independence: leading nations within the EU have solidified the “Weimar+” alliance, signaling a refusal to rely solely on U.S. leadership. These moves are driven by America’s erratic trade policy, a desire for independent energy and defense postures, and a reaction to ongoing authoritarian aggression from Russia and Iran. Nonetheless, Europe is struggling to balance the demands of Washington with its own constraints, including sluggish economic performance and high energy prices.
Elsewhere, China has doubled down on calls for open global markets even as it quietly strengthens trade pacts with the Global South and pushes back against western technology restrictions. The Eurasian Economic Union, led by Russia and including new observer Iran, is pressing for deeper regional economic ties, but with regimes facing legitimacy crises at home—Turkey is rocked by anti-authoritarian protests, and Russia’s economy remains under pressure as it seeks to weaponize grain and forge south-south alliances with BRICS nations [The New World O...][Top Geopolitica...][Pres. Pezeshkia...][World News | TV...]. These moves create a fractured multipolarity, with democratic and authoritarian models locked in stark competition.
4. Climate Change as Conflict Multiplier and Business Disruptor
Finally, a new climate report and ongoing heatwaves across Europe reinforce the deeply destructive intersection between climate catastrophe and global security. Copernicus data confirm the Earth has now breached the 1.5°C “safe” threshold, and 84% of global coral has already perished since 2023. Every 1°C rise in temperature is projected to reduce yields of key crops by up to 22%, threatening food systems and fueling social unrest in already volatile regions, from the Sahel to South Asia. Recent wars have exacerbated this destruction, with the Russia-Ukraine conflict alone responsible for 230 million tonnes of CO₂ emissions. Military and conflict-driven environmental destruction, especially by non-democratic states, is a rising driver of supply chain and market risk [Global Warming ...].
Conclusions
As June closes, global business finds itself on unstable ground: American leadership is bold but risky, trade walls are rising, alliances are reforming, and the intertwined crises of climate and conflict are escalating. For responsible companies and investors, now is the time to double down on supply chain resilience, ethical portfolio review, and alignment with transparent, democratic partners. Exposure to autocratic and high-risk jurisdictions is more dangerous—and less rewarding—than ever.
Can the diplomatic momentum achieved by the U.S. this week hold, or will it trigger new cycles of asymmetric response and instability? Are businesses truly prepared for a world where economic policy is a battlefield and climate shocks are the norm? What bold steps will Europe and other democracies take to secure autonomy without fracturing global coordination even further? And finally: as climate change accelerates, will international action match the scale of the challenge, or will war, autocracy, and environmental decline reinforce one another?
The answers to these questions will shape the second half of 2025—and the decade beyond.
Further Reading:
Themes around the World:
Political Divestment Impact
Norway's sovereign wealth fund's politically motivated exit from Israeli companies highlights the tension between ethical considerations and economic returns. Despite Israel's robust economic indicators and resilient tech sector, such divestments can reduce foreign capital inflows, impacting investment strategies and signaling geopolitical risks to global investors.
Trade Tensions and Market Volatility
Renewed U.S.-China trade tensions and U.S.-Canada disputes have heightened market volatility, affecting investor sentiment and equity valuations. Tariff threats and geopolitical risks disrupt supply chains and global trade flows, prompting investors to adopt defensive strategies and reassess exposure to Canadian equities and commodities.
Economic Slowdown and Fiscal Risks
Thailand faces a significant economic slowdown with GDP growth projected at 1.8% in 2025 and 1.4% in 2026. Fiscal challenges include volatile baht appreciation and a negative credit outlook from Fitch and Moody's, driven by sluggish revenue growth and rising public debt nearing 65.4% of GDP. These factors constrain investment and trade competitiveness.
Monetary Policy and Inflation Dynamics
Brazil's central bank maintains a hawkish stance with high interest rates (around 15%) to combat inflation, which remains above target. Recent inflation acceleration due to energy cost increases complicates the outlook. Persistent inflationary pressures and tight monetary policy constrain economic growth and affect business costs and consumer demand.
Digital Infrastructure Expansion
Brazil is investing heavily in digital infrastructure, including the construction of major data centers like TikTok's upcoming facility. This expansion supports technological innovation, attracts foreign investment, and enhances Brazil's position in the digital economy, fostering new business opportunities and supply chain modernization.
China's Expanding Green FDI Strategy
China's surge in outward foreign direct investment, especially in green manufacturing and clean energy projects across Asia, Africa, and Latin America, signals a shift toward profit-driven, private-sector-led global economic expansion. This wave supports industrial dominance, technology transfer, and sustainable development but also raises geopolitical and competitive considerations for host countries.
Anticipated GBP/USD Market Stagnation
Bank of America forecasts a period of stagnation for the GBP/USD currency pair ahead of the UK Budget, reflecting policy uncertainty and risk aversion. This cautious market stance limits currency volatility but signals investor hesitation, affecting forex trading strategies and cross-border investment decisions.
German Economic and Industrial Decline
Germany is experiencing a structural economic downturn marked by industrial production losses of nearly 25% since 2018, widespread insolvencies, and significant job cuts in manufacturing. The hospitality sector also suffers declining revenues. This deindustrialization trend threatens the broader economy, reducing consumer spending and undermining Germany's global competitiveness.
Budget 2026 Uncertainty and Economic Impact
The 2026 budget proposal faces delays and political contention, with lowered deficit reduction targets and contested tax measures. Uncertainty over fiscal policy constrains corporate investment and consumer spending, particularly affecting SMEs. The inability to present a credible budget undermines market confidence and risks further credit rating downgrades, complicating France's fiscal trajectory.
Climate Change Vulnerability and Economic Impact
Pakistan’s high vulnerability to climate change exacerbates economic risks by damaging infrastructure and disrupting production. This environmental instability adds to investment risk, complicates long-term planning, and deters foreign investors concerned about asset security and operational continuity.
Currency Depreciation and Financial Stability
Ukraine's hryvnia is projected to weaken to a five-year low due to delayed international financial aid and increased government spending amid economic contraction. Currency depreciation exacerbates inflationary pressures, complicates debt servicing, and undermines financial stability, posing challenges for foreign investors and domestic economic recovery.
Amazon Oil Exploration Controversy
Petrobras received approval to drill in the Foz do Amazonas basin, marking a significant frontier for oil exploration. While promising for future production and export revenues, this move raises environmental concerns ahead of COP30, potentially affecting Brazil's climate leadership and investor sentiment in sustainable sectors. The balance between energy development and environmental commitments remains a critical challenge.
Economic and Social Impact of Sanctions
Sanctions exacerbate inflation, currency devaluation, and social strain, eroding the middle class and increasing corruption and social instability risks. While large-scale conflict remains unlikely due to national unity, economic hardship fuels radicalization and civil unrest potential, posing challenges to internal stability and governance amid external pressures.
Public Investment Fund's Strategic Shift
The PIF is transitioning from heavy domestic spending to enabling private sector investment, aiming to seed value chains and clusters. With assets exceeding $900 billion, the fund is recalibrating its strategy to support sustainable growth and economic diversification. This shift is crucial for optimizing capital allocation and attracting private and foreign investments.
Political Instability and Its Economic Implications
Israel is experiencing its most severe political crisis, marked by government instability, international criticism, and withdrawal of foreign investments. This domestic uncertainty risks undermining economic confidence, deterring foreign direct investment, and complicating policy implementation critical for sustained economic growth.
Mining Sector Growth Constraints
Economic growth in key mining regions like Central Papua and West Nusa Tenggara is hampered by export delays due to incomplete smelter construction. This bottleneck restricts value-added processing, reduces export revenues, and impacts national economic growth targets, highlighting infrastructure and regulatory challenges.
Stock Market Volatility and Corporate Earnings
Saudi Arabia's Tadawul stock index shows mixed performance influenced by corporate earnings reports and oil price fluctuations. Key sectors like banking and utilities experience gains, while others face declines. Market direction remains sensitive to oil price trends and earnings outcomes, impacting investor confidence and capital flows.
Political Instability and International Relations
Israel faces its most severe political crisis, with international isolation deepening due to diplomatic tensions and legal challenges. Withdrawal of investments by entities like Norway's sovereign wealth fund and cancellations of international projects threaten economic stability. Political uncertainty and governance issues may deter foreign investors and complicate trade relations, increasing country risk for business operations.
Financial Sector Earnings as Economic Indicators
Major US banks' earnings reports provide critical insights into consumer spending, credit quality, and investment banking activity. These results serve as a barometer for economic health amid trade tensions and political uncertainties, influencing market sentiment and guiding investment decisions in the financial sector and broader economy.
China's Rare Earth Export Controls
China's tightened rare earth export restrictions, including new licensing and scrutiny on products with Chinese-origin materials, threaten Taiwan's manufacturing sectors, especially motors, drones, and semiconductors. Although Taiwan sources many rare earths from Japan, the indirect reliance on Chinese materials and refining processes could cause supply chain disruptions and cost increases, impacting production and competitiveness.
Gulf Investment in Real Estate
Gulf investors increasingly view Egypt’s real estate market as a strategic gateway for growth, attracted by large-scale urban development projects and favorable government policies. This influx of capital supports infrastructure expansion, urbanization, and economic diversification, while offering high returns and strengthening regional economic integration.
Foreign Direct Investment Surge
FDI inflows reached record highs in 2025, with $21.5 billion registered, predominantly in manufacturing and electronics. This surge reflects Vietnam's favorable investment climate, government incentives, and strategic positioning in global supply chains, encouraging localization and long-term operations by international enterprises, including significant Chinese investment diversification beyond export processing.
Environmental and Energy Policy Tensions
Petrobras received approval to drill exploratory wells near the Amazon, ending a prolonged standoff but raising environmental concerns ahead of COP30. This move highlights Brazil's balancing act between energy expansion and climate commitments, with potential reputational risks affecting trade relations and foreign investment, especially in environmentally sensitive sectors.
Digital Infrastructure and Technological Growth
Brazil is advancing its digital infrastructure with significant investments, including the construction of major data centers like TikTok’s. This expansion supports the digital economy and attracts Asian and global technology investors, enhancing Brazil’s competitiveness in the technology sector and fostering innovation-driven growth.
Shipping Tariff Increases and Transport Sector Strain
Entrepreneurs in Indonesia's ferry transportation sector express frustration over outdated tariff regulations that fail to reflect rising operational costs and currency fluctuations. The fixed tariff structure hampers service quality and safety investments, potentially disrupting domestic logistics and supply chains critical for trade and economic activity across Indonesia's archipelago.
Geopolitical and Trade Tensions Impact
Rising geopolitical tensions, particularly between the US and China, and trade disputes involving tariffs and export controls, create an uncertain external environment for Japan. These dynamics influence supply chains, export markets, and currency fluctuations. Japan’s strategic emphasis on defense and technology sectors aligns with broader global economic security trends, potentially reshaping its trade and investment relationships.
Impact of Internet Blackouts on Digital Economy
Government-imposed mobile internet suspensions during protests halt digital services, crippling gig economy workers and IT freelancers who rely on connectivity. This results in significant income losses, disrupts e-commerce, and undermines Pakistan’s growing digital sector and foreign exchange earnings.
Market Valuation Risks and Financial Stability
The Bank of England warns of stretched valuations in AI-focused technology stocks and potential systemic risks from corporate defaults and credit market vulnerabilities. Challenges to central bank independence, particularly in the US, add to global financial volatility risks, which could spill over into UK markets, affecting investor confidence and capital flows.
Demographic and Innovation Advantages
Israel's young, growing workforce and strong culture of innovation, particularly in technology and cybersecurity, sustain its economic competitiveness. Military service fosters entrepreneurial skills, supporting a dynamic startup ecosystem that attracts global investment despite geopolitical headwinds, reinforcing Israel's strategic economic position.
Central Bank Monetary Policy Adjustments
Turkey's central bank signals a cautious approach to interest rate cuts amid sticky inflation around 33%. Slower easing aims to stabilize the lira and control inflation, but uncertainty remains over future policy direction. Monetary policy decisions will critically influence investor sentiment, borrowing costs, and economic growth prospects.
Regional Government Budget Utilization
Despite substantial funds allocated to regional governments (Rp234 trillion idle in banks), budget absorption remains slow, delaying development projects. This inefficiency poses risks to regional economic growth and infrastructure development, affecting investment climate and public service delivery.
Mining Sector Global Partnerships
Saudi Arabia is advancing its mining sector as a key pillar of economic growth under Vision 2030, emphasizing sustainability and global collaboration. The Kingdom ranks highly for political stability and regulatory environment, fostering investor confidence. Strategic partnerships aim to secure mineral supply chains vital for renewable energy, defense, and technology industries.
Rising Reliance on International Debt
Saudi Arabia is increasingly dependent on international debt markets due to domestic liquidity constraints and ambitious mega-project financing, such as NEOM costing $8.8 trillion. Sovereign and corporate bond issuances have surged, with Saudi issuances now significant constituents in emerging market bond indices. This structural shift heightens exposure to global financial market volatility and foreign investor sentiment.
Internal Political Infighting and Governance Strains
Political rivalries within Iran's ruling elite intensify amid economic hardship and sanctions pressure. This infighting hampers coherent policy responses, undermines reform efforts, and fuels public discontent, thereby increasing country risk for investors and complicating long-term economic planning.
Currency Risk and Global Diversification
Currency depreciation poses inevitable risks in global investments, but diversification across markets mitigates portfolio volatility. Despite the Indian rupee's recent weakness, investing globally offers access to high-growth sectors like AI and semiconductors, which are underrepresented domestically, providing strategic advantages for investors.
Political Instability Risks
Potential resignation of Shadow Chancellor Rachel Reeves poses significant market risks, threatening investor confidence and policy clarity. ING warns such political shocks could trigger market volatility, GBP depreciation, and uncertainty in fiscal policy, complicating investment strategies and economic forecasts amid an already fragile UK economic environment.