Written by Amaury de Barros Conti, Partner | Vice President Investments
WHAT MOVED MARKET LAST WEEK
Markets generally demonstrated resilience, recovering from early volatility as investors balanced rising inflation pressures, evolving geopolitical developments in the Middle East, and continued strength in capital markets activity. Encouragingly, equity performance appeared to broadened beyond mega-cap leadership, while credit markets remained stable, implying underlying confidence despite a more complex macro backdrop. Against this environment, investors continue to weigh the durability of growth, the trajectory of inflation, and the potential implications for central bank policy. U.S. equities finished modestly higher, with the S&P 500, Dow Jones Industrial Average, and Nasdaq all advancing approximately 0.6%–0.7%, as per Bloomberg data.
Source: Bloomberg Finance as of June 18, 2026.
- The most significant macro catalyst was reported progress toward a peace agreement between the United States and Iran. The announcement of a memorandum of understanding between the countries, which includes the reopening of the Strait of Hormuz, triggered a sharp decline in oil prices and a corresponding rally in risk assets.
- The Federal Reserve held rates steady at 3.50%–3.75%, but the policy signal was more hawkish than markets had anticipated. The removal of an easing bias and updated projections indicating possible support for additional rate hikes pushed short-term Treasury yields higher, with the 2-year yield reaching its highest level in over a year.
- Federal Reserve Chair Kevin Warsh emphasized the Fed’s commitment to restoring price stability, while also introducing a shift in communication style that may place less emphasis on forward guidance. The dispersion among policymakers remains notable, with opinions split between possible additional tightening and holding policy steady.
- Recent economic data suggested continued resilience in the U.S. economy, led by consumer spending. Retail sales rose 0.9% in May, exceeding expectations, with core measures also showing solid momentum.
- Housing data reflects a more challenged segment of the economy. Housing starts declined sharply (-15.4%), and builder sentiment appears weakened amid persistent affordability constraints and elevated mortgage rates. While pending home sales showed improvement, the broader housing market continues to face structural headwinds tied to financing costs and supply constraints.
LOOKING AHEAD
- Investors will focus on inflation and the sustainability of the AI-driven growth narrative. The Fed’s preferred inflation gauge (core PCE) is expected to remain elevated at approximately 3.4%, reinforcing the central bank’s cautious stance.
- Earnings from Micron and updates from major semiconductor companies may provide important signals on the trajectory of AI-related capital spending, while the Federal Reserve’s bank stress test results may offer insight into financial system resilience.
Amaury de Barros Conti
Partner | Vice President Investments
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