Week commencing 15 June 2026

US equities stabilise on easing tensions

With just one session left in the week, United States (US) equity markets are on track to finish near the flatline, having successfully clawed back their early weakness. The turnaround was driven by a swift improvement in risk sentiment after President Trump announced he had cancelled planned strikes on Iran, hinting that a peace deal could be signed as early as this weekend. While technology stocks naturally led the charge, the relief rally was broad-based, fuelled by oil prices dropping to eight-week lows and a welcome easing in Treasury yields.

The week that was: highlights

• US headline inflation rose to 4.2% year-on-year (YoY) in May, matching the consensus forecast and accelerating from 3.8% in the previous month
• Core consumer price index (CPI) edged higher to 2.9% YoY from 2.8% prior, as expected
• May producer price index (PPI) rose 1.1% month-on-month (MoM), pushing the annual rate to 6.5%, its largest increase in three-and-a-half years
• However, the more important core PPI reading, which typically feeds directly into core personal consumption expenditures (PCE) inflation, came in at 4.9% YoY, well below the 5.4% expected
• Initial jobless claims rose by 229,000 last week, hitting their highest level in three months, while continuing claims edged 24,000 higher to 1,795,000
• China’s (CN) trade surplus widened significantly to $105.43 billion in May, exceeding the $92.1 billion consensus forecast, driven by a robust 19.4% YoY surge in exports
• Chinese headline inflation held steady at 1.2% YoY in May, slightly below the 1.3% forecast, while producer prices matched expectations by rising 3.9% YoY
• Japan’s (JP) finalised Q1 annualised gross domestic product (GDP) growth was revised higher to 1.8%, exceeding the 1.3% consensus and improving from the preliminary 0.7% reading
• The United Kingdom (UK) British Retail Consortium (BRC) retail sales monitor rose 3.4% YoY in May, sharply above the 0.6% forecast and reversing the 3.4% drop in the prior month
• Euro area economic sentiment edged lower to 96.6, missing expectations for 96.8 and declining from the previous month’s 98.2.
• The European Central Bank (ECB) raised its key lending rates by 25 basis points (bp) as widely expected
• West Texas Intermediate (WTI) crude oil dropped 4.55 to $86.41.
• The US dollar index (DXY) eased 0.28% to 99.78
• Bitcoin was unchanged at $63,581
• Gold fell 2.83% to $4205
• Wall Street’s gauge of fear, the volatility index (VIX), fell to 19.43 from 21.50 the previous week.

Key dates for the week ahead

China & Japan

• CN – house price index YoY (May): Tuesday, 16 June at 9.30am SGT
• CN – industrial production YoY (May): Tuesday, 16 June at 10.00am SGT
• CN – retail sales YoY (May): Tuesday, 16 June at 10.00am SGT
• CN – fixed asset investment YoY (May): Tuesday, 16 June at 10.00am SGT
• JP – Bank of Japan (BoJ) interest rate decision: Tuesday 16 June at 11.00am SGT
• JP – CPI (May): Friday, 19 June at 7.30am SGT
• JP – BoJ meeting minutes: Friday, 19 June at 7.50am SGT

United States

• US – National Association of Home Builders (NAHB) housing market index (June): Monday, 15 June at 10.00pm SGT
• US – building permits preliminary (May): Tuesday, 16 June at 8.30pm SGT
• US – housing starts (May): Tuesday, 16 June at 8.30pm SGT
• US – retail sales (May): Wednesday, 17 June at 8.30pm SGT
• US – pending home sales (May): Wednesday, 17 June at 10.00pm SGT
• US – Federal Reserve (Fed) interest rate decision: Thursday, 18 June at 2.00am SGT

Europe & United Kingdom

• UK – CPI (May): Wednesday, 17 June at 2.00pm SGT
• UK – unemployment rate (April): Thursday, 18 June at 2.00pm SGT
• UK – Bank of England (BoE) interest rate decision: Thursday, 18 June at 7.00pm SGT
• UK – retail sales MoM (May): Friday, 19 June at 2.00pm SGT

Key events for the week ahead

JP: BoJ interest rate decision

Date: Tuesday, 16 June at 11.00am SGT

At its April meeting, the BoJ held its short-term policy rate steady at 0.75% in a 6-3 split vote, the most divided outcome since 2016. Three board members dissented in favour of a hike, highlighting growing internal pressure to normalise policy further. The BoJ also revised up its core inflation forecast, citing the impact of higher crude oil prices on energy and goods costs, while trimming its growth outlook.

The macro backdrop has become even more complicated since then. Governor Kazuo Ueda firmed his tone in a key speech earlier this month, stressing that a temporary energy shock can become entrenched if it feeds through to wages, inflation expectations and broader price-setting behaviour. He noted that upside risks to prices now appear to outweigh downside risks to economic activity, even with uncertainty around the Middle East conflict, and explicitly said the BoJ must thoroughly discuss the pros and cons of raising the policy rate if that assessment holds. These comments have pushed markets to price in roughly a 90% chance of a 25 bp hike to 1.00% next week.

This would take the policy rate to its highest level in more than 30 years and help narrow the yield gap with the US, supporting the yen. Markets will watch closely for any fresh guidance from the statement and post-meeting comments, with Ueda hospitalised, Deputy Governor Shinichi Uchida is expected to lead proceedings, on the pace of future normalisation, bond tapering and how the Bank views the balance between inflation risks and growth.

BoJ Interest rate chart

US: Fed interest rate decision

Date: Thursday, 18 June at 2.00am SGT

At its April meeting, the Federal Open Market Committee (FOMC) maintained the target range for the federal funds rate at 3.50% - 3.75%, emphasising a data-dependent approach while acknowledging added uncertainty from the Middle East conflict and higher energy prices.

This will be the first FOMC meeting chaired by Kevin Warsh, who was sworn in as Chair on 22 May. Since the April meeting, firmer-than-expected US data has shifted market expectations. May CPI showed headline inflation accelerating to 4.2% YoY, while the May employment report saw non-farm payrolls rise 172,000 versus expectations around 85,000, with unemployment steady at 4.3%.

Furthermore, recent manufacturing purchasing managers’ indices (PMIs) have also surprised to the upside, pointing to improving factory activity. These stronger data points have seen the US rates market now pricing in a 25 basis point rate hike by December.

No change is expected next week, with futures pricing in a near-100% probability of a hold. However, all eyes will be on Chair Warsh’s first press conference and any signals on policy direction. The shift toward pricing in a December hike reflects a more cautious outlook than earlier in the year, when 50 bp of rate cuts were priced.

Fed Funds rate chart

UK: BoE interest rate decision

Date: Thursday, 18 June at 7.00pm SGT

At its last meeting in April, the BoE held the official bank rate steady at 3.75% on an 8-1 vote. One member, Huw Pill, preferred a 25 bp hike to 4%. The Committee struck a notably cautious tone as it grappled with the ongoing Middle East conflict and the associated surge in global energy prices. It highlighted significant uncertainty around the scale and persistence of the energy supply shock, revised its near-term inflation projections higher, and published three scenarios in the Monetary Policy Report to illustrate the range of possible outcomes.

'The Committee will continue to monitor closely the situation in the Middle East and its impact on global energy supply and energy prices. It stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.'

The annual inflation rate in the UK slowed to 2.8% in April 2026 from 3.3% in March, coming in below market expectations of 3.0% and marking the lowest reading since March last year. The UK’s annual core inflation rate eased further to 2.5% from 3.1% the prior month, slightly below expectations of 2.6%. This marked the lowest core reading since July 2021, driven by a sharp slowdown in core services inflation, which fell to 3.2% from 4.5%.

The softer core numbers have helped push back market expectations of the first rate hike until September. That said, the May CPI release, due the day before the decision, remains important and, if it comes in stronger than expected, it may see a rate hike pulled forward to the July meeting.

BoE bank rate chart