โก๏ธWeekly Review
Last weekโs market dynamics were shaped by macroeconomic data and geopolitics.
1. Macroeconomic Data (U.S.):
Consumer inflation slowed in May to +0.1% (vs. +0.2% in April). The annual CPI rose slightly from 2.3% to 2.4%, mostly due to last Mayโs 0% figure dropping out of the base. Starting in August and into early 2026, weโll see high monthly figures from 2023 (+0.2โ0.5%) roll out of the base, potentially keeping annual inflation low โ even with Trumpโs proposed tariffs.
Producer price growth was minimal (+0.1%), and 1-year consumer inflation expectations dropped sharply from 6.6% to 5.1%. In short, inflation anxiety is fading.
Whatโs next?
With the Fedโs rate still at 4.5%, inflation could drift below the 2% target. Even if tariffs are introduced (likely milder than Aprilโs suggestions), the Fed may still need to start cutting rates. Since markets trade on expectations, risk assets could begin rallying well before the first cut is announced.
FOMC โ The Weekโs Key Event:
June 18 will bring two crucial updates:
The Fedโs dot plot, outlining projections for rates, GDP, inflation, and unemployment.
A speech from Chair Powell, where markets will look for signals on future monetary easing.
2. Geopolitical Tensions:
Israelโs missile strike on Iranโs nuclear facilities shook sentiment and overshadowed positive inflation news. Market reaction was mild but highlighted ongoing sensitivity.
The Middle East remains a risk factor โ especially with Iran threatening to block the Strait of Hormuz, a vital oil transit route. Rising oil prices could reignite inflation concerns and complicate the Fedโs path to rate cuts.
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