Last week, America kept spending, put the brakes on building houses, and handed the Fed to a new chair who walked in convinced the Fed's problem is that it talks too much. Markets ran on two engines: a tech rally that carried stocks and a U.S.-Iran peace framework that sent oil prices lower, providing some relief to the spring’s inflation scare.
Stocks: U.S. equities finished the short week higher. The S&P 500 rose 0.9% while the Nasdaq climbed 2.4%. Technology and industrials led, while energy lagged as crude fell on peace prospects. Growth beat value and large caps beat small caps.
Rates: U.S. Treasuries split down the curve. The 10-year yield eased to about 4.46% as lower oil took heat out of the inflation worry, while short-term yields rose on the Fed’s hawkish hold.
Commodities and currencies: Crude oil fell more than 10% as the U.S. and Iran agreed to a framework to end the conflict, dropping prices to a 3-month low. Gold eased as the U.S. dollar rose to a new 2026 high.
The Fed: The FOMC held its benchmark rate at 3.50%–3.75% at its June meeting, the fourth straight pause. Nearly half of Fed officials now predict a rate hike in 2026 instead of a cut. New Fed Chair Kevin Warsh proved to be a man of few words: he refused to mark a dot on a chart he'd just called useless, trimmed the official meeting statement to 130 words (down from the usual 300-400 in the Powell era), then formed a task force to study why the Fed talks too much.
Retail sales: May sales rose 0.9% to $763.7 billion, roughly double April’s revised 0.4%, with the control group up 0.7% and online up 1.5%. Part of the gain is consumers paying more at the pump, not carrying more out of the store.
Housing: Starts fell 15.4% to a 1.177 million rate, the slowest since May 2020, and permits slipped 0.7% to 1.413 million. The 30-year mortgage rate approaching a one-year high has builders discounting what they’ve already got instead of breaking new ground.
Jobs: Initial jobless claims for the week ending June 13 fell 4,000 to 226,000. Continuing claims for the week ending June 6 increased 24,000 to 1,810,000, which means people are taking longer to land their next job.
Leading indicators: The Conference Board’s Leading Economic Index rose 0.1% to 99.3 in May, its second straight monthly gain, driven almost entirely by rising stock prices and the gap between short- and long-term interest rates. Consumer expectations stayed the heaviest drag.