Oil shock, no job shock: the 1970s playbook breaks

The 1970s taught markets that oil shocks meant twin disasters: inflation surged and jobs vanished. That playbook is breaking. New research from the Federal Reserve Bank of Boston finds that an energy disruption the size of what the Iran war has produced would push inflation materially higher while having far smaller effects on employment than the historical precedent would predict.

The implication is direct. If energy shocks no longer reliably crater labor markets, the central bank's problem shifts from managing stagflation risks to guarding against renewed price pressures in an economy that refuses to cool. Early signs of renewed labor market strength during the Iran conflict support the Fed's conclusion. The inflation costs remain, but the employment risks appear far smaller than they did 50 years ago.

Elsewhere, Macron's €110 billion AI infrastructure ambition is running into the constraint that matters most: local opposition and approval timelines. France's data centre build-out is testing whether European tech ambitions can survive the frictions of permitting and community resistance. Investors are signaling caution, according to the Financial Times.

On the geopolitical layer, Trump confirmed attendance at the July NATO summit in Turkey. Secretary of State Marco Rubio made the announcement, easing near-term concerns across alliance capitals after weeks of friction over reluctance to support US military actions in Iran. The summit timing sits inside the window when energy markets will either stabilize or reprice again.