Week commencing 22 June 2026

Ceasefire lifts US equities

In a holiday-shortened week, United States (US) equity markets finished with strong gains, boosted by the US–Iran ceasefire and a welcome retreat in energy prices. Investors also continued to aggressively chase technology stocks, brushing aside concerns around potential rate hikes under new Federal Reserve (Fed) Chair Kevin Warsh.

The week that was: highlights

• The Fed held its benchmark interest rate steady at 3.75%, matching market consensus, and sounded hawkish
• US headline retail sales jumped 0.9% month-on-month (MoM) in May, comfortably exceeding the 0.5% consensus forecast
• The closely watched retail control group rose 0.7% MoM against expectations of a 0.4% increase
• US pending home sales surged 3.8% MoM in May, smashing the 0.8% consensus forecast and marking a sharp acceleration from the downwardly revised 0.3% rise in the prior month
• US housing starts plummeted by 15.4% MoM to an annualised rate of 1.177 million in May, falling well short of the 1.43 million consensus
• Initial jobless claims fell to 226,000 last week, slightly better than the 225,000 expected. Continuing claims, however, rose by 24,000 to 1,810,000, the highest level in nearly three months
• The Bank of Japan (BoJ) raised its key interest rate by 25 basis points (bp) to 1%, the highest in 31 years
• Core inflation in Japan rose 1.4% year-on-year (YoY) in May, in line with forecasts
• Chinese retail sales disappointed, falling 0.6% YoY in May against expectations for a flat 0% reading, though industrial production provided a bright spot by rising 4.5% YoY to beat the 4.3% consensus
• China (CN) new home prices across 70 cities fell 3.5% YoY in May, marking a 35th month of declines
• United Kingdom (UK) headline inflation held steady at 2.8% YoY in May, missing the 3.0% consensus forecast, while core consumer price index (CPI) came in slightly below expectations at 2.6% YoY
• The Bank of England (BoE) kept its official bank rate on hold at 3.75% as expected
• Euro area ZEW economic sentiment staged a massive rebound in June, surging to 9.5 from -9.1 prior and easily beating the -7.2 consensus forecast
• West Texas Intermediate (WTI) crude oil dived 10.64% this week to $75.85
• The US dollar index (DXY) surged 1.06% this week to 100.68
• Bitcoin lost 4.20% this week to $62,943
• Gold fell 1% to $4176
• Wall Street’s gauge of fear, the volatility index (VIX), fell to 16.41 from 17.67 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – CPI May: Wednesday, 24 June, at 9.30am SGT
• AU – RBA Hauser speech: Wednesday, 24 June, at 2.30pm SGT
• AU – labour force May: Thursday, 25 June, at 9.30am SGT

China & Japan

• CN – loan prime rate 1Y: Monday, 22 June, at 9.15am SGT
• CN – loan prime rate 5Y June: Monday, 22 June, at 9.15am SGT
• JP – S&P Global manufacturing purchasing managers' index (PMI) flash June: Tuesday, 23 June, at 8.30am SGT
• JP – S&P Global services PMI flash June: Tuesday, 23 June, at 8.30am SGT

United States

• US – S&P Global flash PMIs June: Tuesday, 23 June, at 9.45pm SGT
• US – core personal consumption expenditures (PCE)price index May: Thursday, 25 June, at 8.30pm SGT
• US – durable goods orders May: Thursday, 25 June, at 8.30pm SGT
• US – gross domestic product (GDP) growth rate QoQ final Q1: Thursday, 25 June, at 8.30pm SGT

Europe & United Kingdom

• EA – consumer confidence flash June: Monday, 22 June, at 10.00pm SGT
• EA – S&P Global flash PMIs June: Tuesday, 23 June, at 4.00pm SGT
• UK – S&P Global flash PMIs June: Tuesday, 23 June, at 4.30pm SGT

Key events for the week ahead

US: S&P Global flash PMIs

Date: Tuesday, 23 June at 9.45pm SGT

For May, the S&P Global US flash composite PMI held steady at 51.7, unchanged from April.

Drilling into the details, the manufacturing PMI climbed to 55.3 from 54.5, its strongest reading since May 2022, as new orders rose at the fastest pace in four years and output accelerated sharply on stockpiling efforts to mitigate the impact of the earlier energy shock. Meanwhile, the services PMI eased slightly to 50.9 from 51.0, as new business intake fell for the first time in two years on war-related uncertainty and tariff concerns. Input price pressures remained elevated across both sectors due to higher energy and staffing costs.

Tuesday’s June flash PMIs will be closely watched for signs of whether this resilience is holding or beginning to fade after the Fed’s hawkish pivot this week. With the rates market now pricing in a rate hike as soon as October, any softening in the composite or manufacturing readings could help ease rate hike fears, while another solid print would support the view that the US economy retains enough momentum to absorb tighter policy.

Consensus expects a modest easing, with the manufacturing PMI forecast to pull back slightly to 54.8 and the services PMI to remain near current levels.

The US rates market is currently pricing in a full 25 bp Fed rate hike by October 2026, with two hikes now priced in by March 2027.

US composite PMI chart

US: Core PCE price index

Date: Thursday, 25 June at 8.30pm SGT

Last month, headline PCE inflation rose 0.4% for the month, lifting the annual rate to 3.8% from 3.5%, the highest reading since May 2023. The Fed’s preferred inflation gauge, core PCE, rose 0.2% MoM in April, lifting the annual rate to 3.3% from 3.2%. This was the highest core reading since late 2023 and well above the Fed’s 2% target.

This week’s Federal Open Market Committee (FOMC) meeting delivered a sharp hawkish shift. While the Fed held rates steady at 3.50% - 3.75% as expected, the updated Summary of Economic Projections showed nine of the 19 officials now see at least one rate hike by the end of 2026, a major reversal from March when the median forecast still called for rate cuts.

The policy statement removed earlier language around potential easing, and in his debut press conference, new Chair Kevin Warsh emphasised the Fed’s commitment to price stability. He also refrained from submitting a dot in the projections.

Thursday’s May core PCE release will therefore carry extra weight. Consensus preliminary forecasts are looking for the rate to edge higher to 3.4%. While energy prices have fallen sharply in recent weeks, there is some offset from a firmer labour market and resilient activity data. A hotter-than-expected print would reinforce the hawkish pivot and add to expectations of tighter policy later this year, while a softer reading would help temper rate hike fears.

Core PCE price index annual change chart