Highlight

The Eurozone's Purchasing Managers' Index (PMI) for August has shown a stronger performance than anticipated. The Manufacturing PMI rose to 52.8, surpassing both the previous month's 51.9 and the forecast of 51.8, marking the highest level since May 2022. The Services PMI remained steady at 51.7, slightly above the forecast of 51.5. The Composite PMI, which combines both manufacturing and services, increased marginally to 52.1 from 52.0.

European Countries PMI Details

Germany's Manufacturing PMI saw a significant rise to 54.1 from 52.2, indicating robust growth in the sector. However, the Services PMI in Germany declined to 48.5 from 49.8, suggesting a contraction. In France, the Manufacturing PMI improved to 51.5 from 49.8, while the Services PMI decreased to 48.4 from 49.6, reflecting a downturn in the services sector.

Macroeconomics

US economic data presented a mixed picture, with initial jobless claims falling to 206,000, better than consensus, though continuing claims were slightly higher. The August Philadelphia Fed manufacturing index surprised with an increase to 47.4, its highest in over five years, with the employment index also improving, while prices paid and received indices declined. US Treasury Secretary Bessent indicated plans to further expand bond buybacks beyond $4 billion per operation and a new fiscal initiative for consolidation, alongside threatening "unprecedented economic isolation" against Iran. Federal Reserve officials offered varied perspectives, with San Francisco Fed President Daly stating policy is in a "good place" and no need for earlier hikes, while St. Louis Fed President Musalem noted that competition for capital from government financing and AI build-out is affecting the bond market. China's August LPR remained unchanged at 3.0% for the one-year and 3.5% for the five-year. Australian labor market data showed a downside surprise, with employment falling by 15.8k and participation easing by 0.1 percentage points to 66.9%.

Major Stock Markets

Major US equity indices closed lower, with the Dow Jones Industrial Average falling -1.3% to 52759, the S&P 500 declining -0.9% to 7641, and the Nasdaq Composite dropping -1.0% to 26067. The Russell 2000 also saw a significant decline of 1.34%. Walmart's shares plunged over 9% after disappointing earnings, dragging down consumer staples and discretionary sectors, while Moderna's stock retreated over 23% following a previous day's surge. Sector performance was mixed, with energy, agricultural chemicals, rails, exchanges, custody banks, utilities, and insurance outperforming. European markets were mostly down, with the Euro Stoxx 50 falling 0.35% and the German DAX30 down -0.4% to 25983, though the UK FTSE100 edged up 0.0% to 10748. Asian markets generally saw gains, with the Hang Seng Index rising 0.8% to 25699 and the Nikkei 225 up 1.4% to 66217, while mainland Chinese indices also closed higher.

Major Government Bonds

US Treasury yields rose across the curve, reversing much of the previous day's gains, as skepticism grew regarding the long-term impact of the Treasury's expanded buyback program. The 10-year US Treasury yield climbed 0.05 percentage points to 4.7%, while the 30-year US Treasury yield increased 5.7 basis points to 5.248%, nearing its recent 20-year high. The 2-year US Treasury yield also rose 2.8 basis points to 4.19%. The US Dollar Index firmed, gaining 0.0% to 98.8. German 5-year bond yields touched 3% for the first time since 2008, while Japanese government bonds rallied on strong demand.

Major Commodities

Crude oil prices surged significantly, driven by escalating geopolitical tensions following new economic threats from the US against Iran and ongoing concerns over the Strait of Hormuz. WTI crude futures rose 2.3% to $86.4 per barrel, and Brent crude futures climbed 2.4% to $93.78 per barrel, both reaching their highest levels since late July. Gold prices edged higher by 0.7%, settling at $4,576.9 per ounce, benefiting from safe-haven demand amidst global uncertainties and elevated inflation expectations, despite a firmer US dollar. Silver also saw a notable gain of 3.5%, reaching $68.11 per ounce. Bitcoin futures jumped 4.8%, surpassing $72,500.

Macroeconomics

The U.S. Treasury announced it would double its bond buyback operations for 10- to 30-year maturities to at least $4 billion per operation, effective September 9, aiming to support market liquidity. This came as U.S. federal government debt surpassed $40 trillion for the first time. The Federal Reserve's July FOMC minutes indicated that "many" participants viewed inflation as potentially more persistent, with "some" suggesting current financial conditions might not be restrictive enough and noting that AI investments could contribute to higher prices. In Europe, the Eurozone's June current account surplus expanded to 35.1 billion euros, while the UK's July CPI rose 0.3% month-over-month, bringing the annual rate to 2.9%.

Major Stock Markets

U.S. equities saw a modest rebound, with the S&P 500 gaining 0.2% to 7708, the Dow Jones Industrial Average gaining 0.2% to 53463, and the NASDAQ Composite Index gaining 0.2% to 26331, all driven by the U.S. Treasury's bond buyback announcement. The healthcare and biotech sectors significantly outperformed following news of a major breakthrough in an mRNA cancer vaccine trial. Conversely, the semiconductor sector broadly underperformed, down -2.1% to 11738, contributing to a mixed performance in European markets where the Euro Stoxx 50 fell 0.4% and the FTSE 100 gained 0.1% to 10743. Asian markets were mixed, with Japan's Nikkei 225 declining -3.2% to 65326 and Chinese A-shares experiencing a significant sell-off across major indices.

Major Government Bonds

U.S. Treasury yields tumbled, particularly at the longer end of the curve, in response to the U.S. Treasury's announcement of increased bond buyback operations. The benchmark US - 10-Year Treasury Note Yield fell -0.07 percentage points to 4.6%, while the 30-year yield dropped 9 basis points to 5.19%. In contrast, the German 10-year bund yield remained stable at 3.3%, a record high since May 2011, and the Japan 10-year Government Bond Yield decreased by -0.04 percentage points to 2.9%.

Major Commodities

Gold prices surged significantly, rising 3.6% to settle above $4579.8 per ounce, reaching its highest level since early June, primarily driven by a weaker U.S. dollar and declining Treasury yields. Crude oil prices continued their upward trend for a fourth consecutive session, with WTI Crude Oil settling around $84.5 per barrel, up 0.5%, and Brent Crude Oil around $91.62 per barrel, as tensions in the Middle East persisted. US - Crude Oil Inventories reportedly increased by 4.4 million barrels last week.

Macroeconomics

Macroeconomic data presented a mixed picture in the US, with July Housing Starts falling by 12.4% while Housing Permits rose by 5.0%. Import prices decreased by 0.4% and export prices by 1.3% in July, while industrial output saw a modest 0.2% increase. In Europe, Germany's ZEW Economic Confidence Index improved to 34.2 in August, surpassing expectations. However, the UK labor market showed signs of cooling, with private sector regular wages growing at 2.8% year-over-year, the slowest pace since October 2020. Geopolitical tensions in the Middle East remained elevated, with continued US-Iran stalemate, accusations of missile launches, and suspended trade relations, fueling broader inflation concerns.

Major Stock Markets

Major global stock markets largely closed lower for a third consecutive day, with the tech-heavy Nasdaq Composite declining by -1.3% to 26290, the S&P 500 down -0.7% to 7692, and the Dow Jones Industrial Average down -0.2% to 53343. The semiconductor sector was particularly hard hit, with the PHLX Semi Index falling down -5.0% to 11993, as concerns over AI investment debt and rising bond yields pressured rate-sensitive technology stocks. European equities also saw broad declines, with the Euro Stoxx 600 down 0.7%, though the UK FTSE 100 managed a slight gain of 0.1% to 10728. Asian markets were mixed, with Japan's Nikkei falling down -2.5% to 67461, while China's Shanghai Composite fell down -0.3% to 4726 and Hong Kong's Hang Seng posted marginal gains of 0.1% to 25471.

Major Government Bonds

Global government bond markets experienced a significant sell-off, pushing yields to multi-year highs. The US 30-year Treasury yield surged to 5.3371% intraday, its highest since 2007, before paring losses to close at 5.2868%, while the 10-year yield also saw an intraday peak of 4.7478% before settling down -0.02 percentage points to 4.7%. In Europe, Germany's 10-year bond yield rose 0.04 percentage points to 3.3%, reaching its highest level since 2011, and the UK 10-year Gilt yield increased by 2 basis points to 5.08%. Japanese 10-year government bond yields also climbed 0.03 percentage points to 3.0%, reaching a 30-year high, reflecting widespread concerns over inflation, fiscal deficits, and increased capital demand.

Major Commodities

Commodity markets saw crude oil prices extend their gains for a third straight session, driven by persistent Middle East geopolitical tensions and concerns over supply disruptions. WTI crude rose 0.9% to $84.5 per barrel, and Brent crude increased 0.17% to $91.02 per barrel, reaching a three-week high. Conversely, precious metals declined significantly, with spot gold falling down -1.8% to $4394.2 per ounce and spot silver dropping 3.72% to $63.34 per ounce, as surging bond yields and a firmer US dollar reduced their appeal.

Macroeconomics

Global economic data presented a mixed picture, with China's July industrial production slowing to 4.5% year-on-year and retail sales to 0.6% year-on-year, alongside a 19.2% decline in China Real Estate Investment. In contrast, the US saw its August Empire manufacturing index rise to 20.6, the highest since December 2021, and NAHB builder confidence increased to 35. Canada's July CPI also edged up to 3.0% year-on-year.

Major Stock Markets

Major global stock markets were largely subdued, with US equities closing lower as the S&P 500 fell -0.5% to 7745 and Dow Industrial Average fell -0.5% to 53460, and the Nasdaq Composite dipped -0.3% to 26645. European indices also saw declines, with the Euro Stoxx 600 down 0.2%. Sentiment was primarily weighed down by escalating geopolitical tensions in the Middle East and rising bond yields, though semiconductor and AI hardware-related stocks showed notable strength. Asian markets, however, generally outperformed, with the Hang Seng Index rising 1.3% to 25453 and Japan's Nikkei 225 gaining 0.7% to 69220.

Major Government Bonds

Government bond markets experienced a significant sell-off, particularly in the US, where the 10-year Treasury yield rose 0.02 percentage points to 4.7% and the 30-year Treasury yield surged to 5.31%, marking a 19-year high. This upward pressure on yields was attributed to heightened inflation expectations driven by rising oil prices, alongside ongoing concerns about increased government and corporate supply. Notably, China, Japan, and the UK all reduced their holdings of US Treasuries in June, with China's holdings reaching a 2008 low.

Major Commodities

Commodity markets were dominated by a sharp rise in oil prices, as geopolitical tensions in the Middle East intensified following the expiration of the US-Iran ceasefire memorandum and renewed threats. WTI crude settled up 3.5% at $84.3 per barrel, while Brent crude surged 2.65% to $90.87 per barrel, crossing the $90 mark for the first time in three weeks. Gold prices also advanced, gaining 0.8% to $4472.8 per ounce, as investors sought safe-haven assets amidst the heightened uncertainty.

Macroeconomics

US July retail sales unexpectedly fell 0.6%, the largest dip since May 2025, and preliminary August Michigan consumer sentiment also declined to 51.0 from July's 55.2. Despite this weaker data, July core CPI was inline and core PPI was cooler than expected, easing pressure on the Federal Reserve's rate hike outlook, with markets now pricing in a 28% chance of a September rate hike, down from 44% a week ago. The University of Michigan's 1-year inflation outlook rose slightly to 4.3% from 4.2%. In China, July social financing was 1.41 trillion yuan, RMB loans decreased by 340 billion yuan, and M2 grew 7.7%.

Major Stock Markets

US equities closed mostly lower on Friday, with the S&P 500 down -0.2% to 7786, the Nasdaq down -0.3% to 26729, and the Dow down -0.2% to 53732. Despite Friday's dip, the S&P 500 still managed a 0.4% gain for the week, marking its third consecutive weekly advance, and the Russell 2000 reached a new all-time high. The AI and memory chip sectors saw continued strong performance, with some individual names making significant moves, while broader tech was mixed. Chinese equities and Hong Kong markets experienced a mixed day, with some major tech companies seeing declines.

Major Government Bonds

US Treasury yields rose on Friday despite weaker economic data, with the 10-year Treasury yield up 0.05 percentage points to 4.7% and the 2-year yield up 3.1 basis points to 4.17%. The 30-year US Treasury yield ended the week above 5.25%, reaching its highest level since 2007, reflecting broader supply concerns and global yield increases. Longer-dated bond yields in the UK, Germany, and France also hit multi-year highs, with Germany's 10-year government bond yield rising 0.06 percentage points to 3.2%. In contrast, China's 10-year government bond yield fell down -0.01 percentage points to 1.7%, a record low since July 2025, amidst central bank liquidity operations.

Major Commodities

WTI crude oil prices up 1.4% to $82.4 per barrel on Friday, with Brent crude oil up 1.67% to $88.52 per barrel, driven by ongoing Middle East tensions. Gold prices saw a modest gain up 0.3% to $4432.0 per ounce, while silver also edged higher. The US Dollar Index fell down -0.3% to 99.7 following the disappointing retail sales data. Bitcoin continued its decline, down -1.0%.

Retail Sales Overview

The latest report on US retail sales for July indicates a decline, with the month-on-month (MoM) figure at -0.58%, down from the previous 0.25% and missing the forecast of 0.1%. This marks the lowest level since May 2025. Year-on-year (YoY), retail sales grew by 5.01%, compared to 6.75% previously.

Retail Sales Control Group

The retail sales control group, which excludes certain volatile items, also saw a decrease. The MoM figure is -0.49%, down from the previous 0.48% and below the forecast of 0.3%, marking the lowest level since January 2025. The YoY growth stands at 4.56%, down from 6.16%.

Components Details

Motor Vehicle sales showed a significant drop with a YoY growth of 1.86%, down from 6.27%. Sporting Goods saw a YoY growth of 10.14%, down from 12.59%. Electronics Appliance sales grew by 4.71%, down from 7.0%. Furniture sales declined with a YoY change of -1.22%, compared to -0.19% previously. Gasoline Stations experienced a YoY growth of 16.17%, down from 19.09%. Nonstore Retailers saw a notable decrease in growth, with a YoY figure of 7.7%, down from 12.42%.

Macroeconomics

US inflation data showed further signs of cooling, with July headline Producer Price Index (PPI) flat at 0.0% month-over-month, below the 0.2% consensus, and the core PPI rising 0.2%, also below expectations. The annualized core PPI decreased by 0.5 percentage points to 4.2%, its lowest level since March. Initial jobless claims rose to 209,000, exceeding consensus estimates, while continuing claims declined. Federal Reserve officials presented mixed views, with Cleveland Fed President Mester advocating for immediate rate hikes, while Richmond Fed President Barkin questioned the necessity of further increases. Market expectations for a September rate hike remained around 34%, but the total hikes priced through year-end fell to 24 basis points, the lowest since mid-June, indicating reduced conviction for further tightening.

Major Stock Markets

Major global stock markets generally advanced, with US equities closing mostly higher as a risk-on sentiment prevailed, fueled by cooling inflation data and falling oil prices. The S&P 500 index rose 0.6% to a new record close of 7799, while the Nasdaq Composite gained 0.8% to 26803 and the Dow Jones Industrial Average added 0.1% to 53840. Technology and AI-related sectors, particularly memory chip makers, showed strong performance, with SanDisk surging over 13% after its investor day projections, and Workday jumping on M&A talks. European markets were mixed, with the Euro Stoxx 50 seeing modest gains while the UK's FTSE 100 was down -0.6% to 10773. Asian markets varied, with Japan's Nikkei 225 up 1.2% to 68309 and South Korea's KOSPI surging 3.6% to 6813, while Chinese indices like the Shanghai Shenzhen CSI 300 were down -0.6% to 4664 and the Hong Kong Hang Seng Index was down -0.2% to 25397.

Major Government Bonds

Global government bond yields generally declined, with US Treasuries firming across the curve as softer inflation data reduced expectations for aggressive Federal Reserve rate hikes. The 10-year US Treasury yield was down -0.05 percentage points to 4.6%, and the 2-year yield dropped by around 5-6 basis points to 4.14%. However, a $25 billion auction of 30-year notes saw weak demand, with the yield reaching 5.216%, the highest at a long bond auction since 2001. European bond yields also saw modest declines, with Germany's 10-year government bond yield down -0.02 percentage points to 3.1%, while Japanese 10-year government bond yields edged up 0.02 percentage points to 2.9% following speculation of faster rate hikes by the Bank of Japan.

Major Commodities

Oil prices experienced a notable decline, with WTI crude was down -2.6% to settle at $81.1 per barrel and Brent crude also dropping over 2% to approximately $87.07 per barrel. This downturn was attributed to weaker global demand forecasts and a significant increase in US crude inventories, despite ongoing geopolitical tensions around the Strait of Hormuz. Gold prices were down -1.3% to settle at $4409.6 per ounce due to profit-taking, after reaching two-month highs. Silver also saw a similar percentage decline, while copper was down -0.1% to $6.6 and iron ore was up 0.7% to $710.5.

Macroeconomics

US July Consumer Price Index (CPI) data showed a modest increase, with the annual rate at 3.4% (matching expectations and down from 3.5% in June) and the monthly rate at 0.1%. Core CPI also moderated to 2.5% year-over-year (matching expectations and down from 2.6% in June) and 0.2% month-over-month, easing pressure on the Federal Reserve for a September rate hike, with market expectations for such a move falling to around 40-45%. Separately, the US July budget deficit widened significantly to $432 billion, exceeding estimates. In China, the central bank's Q2 monetary policy report emphasized timely, pragmatic incremental policies and increased counter-cyclical adjustment.

Major Stock Markets

Major global stock markets were mixed, with US indices generally higher as AI-related tech stocks drove gains following upbeat earnings and forecasts from semiconductor and AI cloud companies. The S&P 500 rose 0.3% to 7748 and the Nasdaq Composite gained 0.5% to 26588, while the Dow Jones Industrial Average saw a marginal decline to 53770. European equities closed lower across the board, with the Euro Stoxx 50 down 0.26% and the German DAX30 fell down -0.2% to 26331. In Asia, the KOSPI surged 3.7% to 6579 on AI optimism, the Nikkei 225 gained 0.8% to 67524, while Hong Kong's Hang Seng index fell down -0.8% to 25440 and mainland Chinese A-shares closed higher, with the CSI 300 Index gaining 0.5% to 4688, led by computing power hardware and optical fiber sectors.

Major Government Bonds

US Treasury yields saw initial declines following the benign CPI report, which tempered expectations for aggressive Fed tightening, before partially recovering. The 10-year US Treasury yield closed at 4.7%, while the 2-year yield settled near 4.21%. A 10-year Treasury auction drew a high yield of 4.683%, the highest since 2007. Futures markets adjusted, pricing in a reduced probability for a Fed rate hike in September. Chinese government bond yields saw a modest rally, with the 10-year yield closing at 1.7% and the 30-year at 2.158%.

Major Commodities

Oil prices traded in a narrow range before ending lower, influenced by ongoing uncertainty surrounding the Strait of Hormuz, a larger-than-expected build in US crude inventories, and OPEC's revised global demand outlook. WTI crude settled down -0.7% at $82.6 per barrel, and Brent crude fell 0.66% to $88.38 per barrel. Gold prices rose, gaining 0.5% to close at $4462.7 per ounce as the softer inflation data bolstered expectations for a stable interest rate environment. Silver also saw a notable increase of 1.00% to $65.33 per ounce, while copper fell down -0.1% to $6.6 on softer Chinese demand.

Highlight

The Consumer Price Index (CPI) for July in the United States showed a slower-than-expected increase. The CPI (NSA, YoY) recorded a 3.36% rise, down from the previous 3.53% and below the forecast of 3.4%. The CPI (SA, MoM) rose by 0.07%, compared to a previous decline of 0.42% and a forecast of 0.1%. Core CPI (NSA, YoY) was at 2.48%, slightly lower than the previous 2.59% and the expected 2.5%. Meanwhile, Core CPI (SA, MoM) increased by 0.22%, surpassing the forecast of 0.2% and the previous decrease of 0.02%.

Components

Energy prices saw a significant decline, with a YoY increase of 14.45%, down from 15.45%. Medical Care Commodities decreased by 2.71%, compared to a previous drop of 2.06%. Education & Communication rose by 0.55%, recovering from a previous decline of 0.06%. Transportation services saw a YoY increase of 2.9%, down from 3.24%. Shelter costs rose by 3.16%, slightly lower than the previous 3.26%. Housing increased by 3.25%, compared to 3.32% previously. Medical Care Services saw a YoY increase of 2.65%, down from 2.92%.

Macroeconomics

Anticipation for the upcoming US July Consumer Price Index (CPI) data dominated macroeconomic sentiment, with expectations for a 0.1% month-over-month increase and a 3.4% year-over-year rise in headline inflation, while core CPI is projected at 0.2% and 2.5% respectively. The NFIB Small Business Optimism Index rose 2.4 points to 99.8, reaching its highest level since August 2025. Meanwhile, US - ADP Nonfarm Employment weekly private payrolls showed a sixth consecutive deceleration, averaging 8,250 jobs over the prior four weeks, the lowest since January. US July Existing Home Sales fell 1.7% to an annualized rate of 4.06 million units, the slowest pace since April, with the median home price at $434,100, up 2.0% from July 2025. Federal Reserve officials continued to highlight inflation as a primary concern, while China's Consumer Price Index [CPI] and Producer Price Index [PPI] for Industrial Products slowed sharply in July.

Major Stock Markets

US equity markets largely closed lower, with the S&P 500 declining -0.3% to 7728, the Dow Jones Industrial Average falling -0.3% to 53792, and the NASDAQ Composite Index dropping -0.6% to 26445, as investors remained cautious ahead of inflation data and amid geopolitical uncertainties. Conversely, the iShares Russell 2000 ETF (IWM) bucked the trend, gaining 0.32%. European markets were mixed, with the Euro Stoxx 600 flat, Germany DAX Index up 0.3% to 26391, a record high since November 1990, and the FTSE 100 down -0.2% to 10844. Asian markets also saw mixed performance, notably with Japan Nikkei 225 Index rising 2.1%, while Hong Kong Hang Seng Index fell -1.2% to 25637. Semiconductor and data center-related stocks performed strongly, driven by positive AI infrastructure news, though several large technology companies experienced declines.

Major Government Bonds

Government bond markets saw yields edge lower, with the US - 10-Year Treasury Note Yield down -0.01 percentage points to 4.7% and the US 2-year Treasury Note Yield down 3 basis points to 4.21%. Demand for US government debt was evident as a $58 billion auction of three-year notes stopped through by 0.5 basis points. European bond yields also declined, with the Germany 10-year Bond Yield down -0.02 percentage points to 3.2% and the UK 10-Year Government Bond Yield falling 2 basis points to 4.96%.

Major Commodities

Oil prices extended gains, driven by persistent geopolitical tensions in the Middle East, particularly concerns over the IMF - Strait of Hormuz - Daily Transit Calls & Transit Trade Volume remaining closed until Iran's conditions are met. US WTI Crude Oil Futures rose 1.6% to settle at $83.4 per barrel, while Brent Crude Oil advanced 1.4% to $88.91 per barrel. US Gold Futures finished up 0.3% at $4433.0 per ounce after earlier touching a two-month high, while Silver also declined by 1.6%.

Macroeconomics

US-Iran tensions escalated as both sides demanded compensation, casting doubt on the reopening of the Strait of Hormuz and driving oil prices higher. This reignited inflation concerns, with Cleveland Fed President Hammack suggesting multiple rate hikes might be needed to bring inflation down. Meanwhile, the US Strategic Petroleum Reserve fell below 300 million barrels for the first time since 1983. In Asia, China's CPI inflation eased to a six-month low of 0.5% year-on-year in July, and PPI also moderated to 3.5% year-on-year.

Major Stock Markets

Major global stock markets showed mixed performance, with US indices closing slightly lower as technology shares underperformed. The Dow Jones Industrial Average fell -0.1% to 53976, the S&P 500 declined -0.1% to 7753, and the Nasdaq Composite dropped -0.3% to 26605, partly due to weakness in chipmakers following Intel's $15 billion stock offering and news of Nvidia's large AI infrastructure financing plans. European markets were also mixed, while most Asian markets, including Japan's Nikkei 225 rose 2.1% to 66970 and Hong Kong's Hang Seng Index rose 1.1% to 25938, saw gains.

Major Government Bonds

Government bond yields rebounded across major markets as rising oil prices renewed inflation fears. The benchmark 10-year US Treasury yield climbed 0.05 percentage points to 4.7%, with the 2-year yield also rising to 4.2430%, reversing some of the previous session's gains that followed weaker US jobs data. European bond yields also increased, with the UK 10-year Gilt yield jumping and the German 10-year Bund yield rising 0.05 percentage points to 3.2%, reflecting broader market concerns about persistent price pressures.

Major Commodities

Oil prices surged significantly, with WTI crude jumped 5.2% to $82.2 per barrel and Brent crude rising 6.71% to $86.96 per barrel, driven by heightened geopolitical tensions between the US and Iran and uncertainty surrounding the Strait of Hormuz. Gold extended its rally, touching a nine-week high with a 1.2% increase to $4451.2 per ounce, while silver also saw a substantial gain of 3.38%. European natural gas prices also saw a notable increase, rising over 10%.

Macroeconomics

The US labor market showed unexpected weakness as July non-farm payrolls contracted by 23,000, significantly missing the +80,000 expectation and marking the first decline since February. Revisions for May and June also reduced prior figures by a combined 103,000. Despite this, the unemployment rate dropped to 4.1%, partly due to a decreased labor force participation rate. Average hourly earnings rose by a modest 0.1% month-over-month and 3.2% year-over-year. Initial jobless claims remained low at 199,000. Meanwhile, July ISM manufacturing surpassed expectations, reaching its highest level since May 2022, while ISM services remained in expansion but slightly underperformed forecasts. China's July exports surged by 23.9% year-over-year, and imports increased by 27.5%.

Major Stock Markets

Global equity markets reacted positively to the weaker US jobs report, which eased fears of aggressive Fed rate hikes. Major US indices saw significant gains, with the S&P 500 closing at a record high of 7758, up 0.6%, while the Nasdaq climbed 1.3% to 26691 and the Dow Industrials rose 0.3% to 54037. Technology and software sectors were notable outperformers, buoyed by strong earnings reports. Conversely, energy and some defensive sectors lagged. European stock markets mostly closed higher, while Asian markets showed mixed performance, with some A-share sectors rising and Hong Kong stocks saw the Hang Seng Index rise 0.5% to 25668.

Major Government Bonds

US Treasury prices surged across the curve, leading to a notable decline in yields as the weak jobs data significantly reduced expectations for a September Federal Reserve rate hike. The benchmark 10-year Treasury yield fell by -0.02 percentage points to 4.6%, while the more policy-sensitive 2-year Treasury yield dropped by 8.7 basis points to 4.203%. The 30-year bond yield also retreated from its post-2007 highs. The Treasury's quarterly refunding announcement offered no surprises, maintaining stable issuance levels.

Major Commodities

Precious metals experienced a strong rally, with gold surging 2.4% to settle at $4401.3 per ounce, marking its best weekly performance since January. Silver also saw a substantial increase of 9.8% for the week, settling at $63.50 per ounce, its best since February. In contrast, crude oil prices declined significantly, with WTI crude settling down -0.3% at $77.1 per barrel, and Brent crude falling 4.9% to $83.55 per barrel, both recording their second consecutive weekly declines. Bitcoin also rose by 1.0% to $64899.1.

Highlight

The US July job report revealed a surprising decline in nonfarm payrolls, with a decrease of 23,000 jobs, falling short of the forecasted increase of 85,000. This marks a significant drop from the previous month's increase of 20,000 jobs. Meanwhile, the unemployment rate improved slightly to 4.1%, down from the previous 4.2% and below the forecasted 4.2%, reaching its lowest level since January 2025.

Components

• Construction saw a notable increase, adding 22,000 jobs compared to the previous 5,000.
• Retail Trade experienced a significant decline, losing 19,400 jobs, a sharp drop from the previous decrease of 3,700.
• Transportation rebounded with an increase of 9,700 jobs, compared to a loss of 11,400 in the previous month.
• Information sector showed a positive turnaround, adding 11,000 jobs after a previous decline of 13,000.
• Financial Activities reported a substantial decrease, losing 14,000 jobs compared to a previous loss of 2,000.
• Leisure & Hospitality continued to decline, losing 40,000 jobs, though slightly better than the previous month's loss of 43,000.
• Government sector faced a significant reduction, losing 53,000 jobs compared to a previous loss of 10,000.

Macroeconomics

Middle East geopolitical tensions escalated significantly, with Iran proposing to ban U.S. and Israeli vessels from the Strait of Hormuz and reports of Iranian strikes near the strait, fueling concerns over global energy supply and inflation. This comes as Federal Reserve officials, including Chairman Warsh, indicated readiness to raise interest rates in September if inflation data proves strong. Economic data showed U.S. initial jobless claims at 199,000, slightly below consensus, while Q2 non-farm productivity rose 1.4% and unit labor costs increased 1.3%. Separately, China initiated a national security investigation into imported printing and copying equipment, and imposed sanctions on several U.S. entities.

Major Stock Markets

Major U.S. stock indices closed lower, with the Dow Jones Industrial Average falling -0.8% to 53885, ending a five-day winning streak, the S&P 500 declining -0.2% to 7710, and the Nasdaq Composite down -0.1% to 26348, marking a second consecutive day of losses for the latter two. The Russell 2000 also fell 0.58%. The technology sector saw mixed performance, with some memory chip stocks experiencing significant declines following earnings reports, while the broader chip index showed slight gains, up 0.3% to 12049. European equities were mostly positive, with the Euro Stoxx 600 gaining 0.2% to a new historical high, though the UK FTSE 100 dipped -0.2% to 10868. Asian markets were broadly lower, with South Korea's Kospi plunging -4.6% to 6296 and Hong Kong's Hang Seng Index dropping -1.5% to 25530.

Major Government Bonds

Government bond yields rose across the board, reflecting increased inflation concerns stemming from higher oil prices and renewed expectations for a Federal Reserve rate hike. The U.S. 10-year Treasury yield climbed by 0.06 percentage points to settle at 4.7%, and the 2-year Treasury yield also increased by about 7 basis points to 4.25%. European government bonds followed suit, with the German 10-year Bund yield rising 0.02 percentage points to 3.1% and the UK 10-year Gilt yield up 5 basis points to 4.94%. The U.S. Dollar Index strengthened by 0.3% to 100.0.

Major Commodities

Oil prices surged significantly due to heightened Middle East tensions, with Brent crude jumping approximately 4.9% to $82.77 per barrel and WTI crude rising about 3.8% to $78.1 per barrel. This rally was driven by reports of Iran's proposed restrictions on shipping in the Strait of Hormuz for U.S. and Israeli vessels, alongside reports of Iranian military action in the area. In other commodities, gold prices edged lower by -0.2% to $4295.6 per ounce, snapping a three-day advance, while silver also fell by 1.1%.

Macroeconomics

US economic data presented a mixed picture, with the 7月 ISM services PMI slightly up to 54.1 but its employment component contracting to 47.4 and prices paid remaining high at 70.3. The 7月 ADP private payrolls significantly missed expectations, adding only 4.4万人, the weakest gain since January. Federal Reserve officials continued to signal a readiness to raise rates if inflation does not recede. In Europe, the Euro Area PPI declined 0.3% in June, slowing the annual rate to 4.6%, while France's central government fiscal deficit reached approximately 107 billion Euros by June end, raising concerns about its full-year deficit potentially reaching 8% of GDP. Japan's scheduled cash earnings rose 3.4% year-over-year in June, marking the sixth consecutive month of over 3% growth.

Major Stock Markets

Major global stock markets showed mixed performance, with the Dow Jones Industrial Average up 0.5% to a new record high of 54349, while the S&P 500 down -0.2% to 7724 and Nasdaq Composite down -0.8% to 26363 respectively, ending their four-day rallies. This divergence was largely driven by sector-specific dynamics, as strong earnings from healthcare and traditional industries supported the Dow, while significant declines in several prominent technology and AI-related stocks, including Alphabet and AMD, weighed heavily on the Nasdaq. European indices were mostly flat to slightly lower, with the Stoxx 600 Index closing unchanged at a new historical high, while Asian markets generally saw gains, notably in Japan, where the Nikkei 225 rose 3.7% to 66300, and South Korea, with the KOSPI Index up 3.8% to 6598.

Major Government Bonds

US Treasury yields edged lower, with the benchmark 10-year yield down -0.01 percentage points to 4.6% and the 2-year yield slightly lower at 4.192%. In Europe, the German 10-year Bund yield edged down -0.01 percentage points to 3.1%, while the UK 10-year Gilt yield saw a minor decline. Japanese government bond yields also edged lower, with the 10-year JGB yield down -0.04 percentage points to 2.8%. The stability in bond markets came as investors processed mixed economic data and awaited further developments on geopolitical tensions.

Major Commodities

International oil prices traded in a narrow range, with WTI crude settling down -0.9% at $75.1 per barrel and Brent crude near $79.45 per barrel, as conflicting reports regarding the Strait of Hormuz and ongoing geopolitical tensions created volatility. Gold experienced a significant surge, climbing up 3.7% to settle around $4306.9 per ounce, marking its largest daily gain since February, supported by a weaker US Dollar and an easing of some geopolitical risk premiums. Silver also saw a strong increase, while copper prices advanced, up 2.0% to $6.8 per pound, reaching a record high since July 1959.

Highlight

The ISM Services PMI for July was reported at 54.1, slightly below the forecast of 54.5 but marginally higher than the previous month's 54.0. Despite falling short of expectations, the index remains above the 50 mark, indicating continued expansion in the services sector since May 2025.

Components

Business Activity saw a significant increase, rising to 59.1 from 55.4. New Orders also experienced growth, reaching 57.2 compared to the previous 55.1. Employment, however, declined to 47.4 from 51.2, indicating contraction in hiring. Supplier Deliveries improved slightly to 52.8 from 54.4. Prices rose to 70.3 from 67.7, suggesting increased cost pressures. The Backlog of Orders decreased to 50.9 from 54.9, while New Export Orders increased to 52.0 from 50.4. Imports rose to 51.8 from 49.4, indicating higher demand for foreign goods. Inventory Sentiment remained relatively stable at 52.5, compared to the previous 52.6.

Employment Growth Falls Short

The latest ADP Nonfarm Employment report for July showed a monthly change of 44,000, significantly lower than the forecasted 68,000 and the previous month's 95,000. This indicates a slower pace of job growth than anticipated.

Salary Growth

The median salary for job stayers saw a YoY increase of 4.4%, consistent with the previous month. Meanwhile, job changers experienced a YoY median salary growth of 7.0%, slightly up from 6.8% in the prior period.

Components Details

• Leisure and Hospitality experienced a decline, with a change of -11,000 compared to the previous 2,000.
• Natural Resources and Mining also saw a decrease, reporting -6,000, down from -5,000.
• Trade, Transportation, and Utilities reported a decline of -8,000, contrasting with the previous month's 15,000.
• Education and Health Services added 36,000 jobs, down from 48,000 previously.
• Professional and Business Services saw an increase, reporting 9,000 compared to the previous 3,000.

Macroeconomics

Reports of significant progress in US-Iran talks regarding a potential agreement to reopen the Strait of Hormuz eased geopolitical risks and inflation concerns, with US Treasury Secretary Bessent indicating a deal could be imminent. Economic data showed the US labor market cooling, as June JOLTS job openings decreased by 178,000 to 7.359 million, falling below expectations. The US trade deficit narrowed to $73.3 billion in June, while factory orders unexpectedly declined by 0.3%. Philadelphia Fed President Paulson stated an open mind on future rate paths, considering current policy "mildly restrictive."

Major Stock Markets

Global stock markets experienced a broad rally, with US indices reaching new record highs as the S&P 500 surged 1.8% to a record high of 7736, the Dow Jones Industrial Average gained 1.7% to a record high of 54086, and the Nasdaq Composite climbed 2.6% to 26585. This robust performance was driven by optimism over easing Middle East tensions, strong corporate earnings, particularly in the technology and AI sectors, and falling oil prices. European markets also closed higher, with the Dow Jones Euro Stoxx 600 index rising 0.7% to a new historical peak, and Asian markets generally posted gains, though Hong Kong's Hang Seng index fell down -0.6% to 25853.

Major Government Bonds

Major government bond yields declined across the board as improved risk sentiment and reduced inflation fears, stemming from lower oil prices and easing geopolitical tensions, tempered expectations for future interest rate hikes. The US 10-year Treasury yield fell down -0.07 percentage points to 4.6%, while the 2-year yield dropped 5 basis points to 4.19%. Similarly, the German 10-year Bund yield fell down -0.04 percentage points to 3.1%, and the UK 10-year Gilt yield fell 6 basis points, reflecting a global trend of lower borrowing costs.

Major Commodities

International crude oil prices experienced a sharp decline, with WTI crude falling down -6.4% to $75.2 per barrel and Brent crude dropping 5.55% to $78.42 per barrel, as hopes for a diplomatic resolution to the Strait of Hormuz standoff alleviated supply disruption concerns. Gold prices rose 1.1% to $4134.0 per ounce, supported by lower bond yields and a softer US dollar, while silver also saw a significant gain of 2.29%. In industrial metals, LME three-month copper advanced 1.4%, surpassing the $14,000 mark.

Job Openings Decline

The latest JOLTS report reveals that job openings in the United States decreased to 7,359,000 in June, falling short of the forecasted 7,440,000 and down from the previous month's 7,537,000. This marks a notable decline in job openings, suggesting a potential cooling in the labor market.

Job Openings Rate

The job openings rate also saw a slight decrease, moving from 4.5% in the previous month to 4.4% in June.

Components Details

• Quits Rate: Remained steady at 2.0%.
• Hires Rate: Increased slightly to 3.4% from 3.3%.
• Layoffs Rate: Unchanged at 1.1%.

Macroeconomics

US ISM Manufacturing PMI rose to 55.6 in July, exceeding expectations of 54.0 and reaching its highest level in over two years, with the employment index expanding for the first time in nearly 33 months. New York Fed President Williams expressed optimism that inflation would ease in the second half of 2026, stating that current monetary policy is well-positioned. The US Treasury upwardly revised its third-quarter borrowing estimate to $739 billion, an increase of $68 billion from its May projection. Meanwhile, Germany's June real retail sales unexpectedly fell by 1.1%, and China's RatingDog Manufacturing PMI for July registered 50.9, continuing its expansion.

Major Stock Markets

Major US equity indices surged, with the Dow Jones Industrial Average closing at a new record high of 53178, up 1.3%. The S&P 500 gained 1.5% to 7601, nearing its all-time closing high, while the Nasdaq Composite advanced 2.1% to 25914. This broad rally was largely driven by easing geopolitical tensions and strong performance in technology and communication services sectors. European markets were mostly positive, with Germany's DAX rising 1.5% to 26001, a record high, and France's CAC 40 up 1.2% to 8614, reaching its highest level since February 2026, though the UK's FTSE 100 edged down -0.1% to 10858. In Asia, South Korea's KOSPI experienced a significant decline of down -5.1% to 6258, while Hong Kong's Hang Seng Index saw a modest gain of 0.5% to 26009.

Major Government Bonds

Government bond yields broadly declined across major economies as market concerns over inflation eased. The benchmark US 10-year Treasury yield fell down -0.06 percentage points to 4.7%, with the 2-year and 30-year yields also decreasing by 5 basis points and 4 basis points, respectively. Similarly, German 10-year Bund yields dropped down -0.05 percentage points to 3.2%, and UK 10-year gilt yields saw a more substantial fall of 10 basis points to 4.95%. In contrast, Japanese 10-year government bond yields edged up 0.03 percentage points to 2.8%. The US Dollar Index rose 0.1% to 100.0, after some earlier volatility.

Major Commodities

International oil prices plummeted significantly as geopolitical tensions in the Middle East eased following reports of de-escalation efforts. WTI crude futures closed down -5.5% at $80.0 per barrel, and Brent crude futures fell 4.73% to $83.77 per barrel. Gold prices were largely unchanged, settling at $4,106.0 per ounce, while silver saw a modest gain. Copper also advanced 1.7% to $6.5, reflecting a general improvement in risk sentiment across commodity markets.

ISM Manufacturing PMI Overview

The Institute for Supply Management (ISM) reported that the Manufacturing Purchasing Managers' Index (PMI) for July rose to 55.6, surpassing both the previous month's reading of 53.3 and the forecast of 54.0. This marks the highest level since May 2022, indicating a robust expansion in the manufacturing sector.

Components Details

• Production: The production index jumped to 58.5, up from 52.2, reaching its highest level since December 2021.
• Employment: The employment index increased to 52.8 from 49.7, marking its highest point since August 2022.
• Customers' Inventories: This index decreased to 40.7 from 42.3, suggesting that customers' inventories are considered too low.
• Price: The price index fell to 71.1 from 73.0, indicating a slower rate of price increases.
• Backlog of Orders: The backlog of orders index rose significantly to 55.0 from 50.5.
• Exports: The exports index improved to 53.0 from 48.5, indicating a return to growth.
• Imports: The imports index climbed to 55.7 from 52.9, showing increased demand for imported goods.

Eurozone PMI Overview

The Eurozone's Purchasing Managers' Index (PMI) for July has shown stronger-than-expected performance across both manufacturing and services sectors. The Manufacturing PMI recorded a slight decrease to 51.9 from the previous 52.0, but still surpassed the forecast of 51.5. The Services PMI rose to 51.6, significantly higher than both the previous 49.4 and the forecast of 49.8. The Composite PMI, which combines both sectors, increased to 51.9 from 50.0.

European Countries PMI Details

In Germany, the Manufacturing PMI remained steady at 52.2, while the Services PMI improved to 49.6 from 48.6. In France, the Manufacturing PMI slightly decreased to 49.8 from 50.0, whereas the Services PMI saw a notable rise to 49.8 from 46.8. These figures indicate a mixed performance across the major economies in the Eurozone, with services showing more significant improvements compared to manufacturing.

Macroeconomics

Global macroeconomic focus was on currency markets, with reports of Japan intervening to curb yen depreciation, possibly with US support, leading to a significant strengthening of the yen against the dollar, with the USD/JPY pair falling -1.7% to 157.4; US Treasury Secretary Yellen commented that the yen appears "seriously undervalued." The Bank of Japan maintained its 1% interest rate, but a dissenting vote for a hike emerged, and Governor Ueda signaled potential for faster future rate increases. In the US, June PCE inflation turned negative month-over-month, with core PCE at 0.1%, while Q2 GDP growth was 1.5%. The Chicago PMI rose to 57.6 in July, and consumer sentiment improved. The Eurozone saw its July CPI rise to 2.9% and core CPI rebound to 2.5%, while China's July manufacturing PMI fell to 49.2.

Major Stock Markets

US equity markets closed higher, with the S&P 500 gaining 0.7% to 7490, the Nasdaq Composite rising 1.0% to 25374, and the Dow Jones Industrial Average advancing 0.5% to 52485. This was largely driven by strong earnings from major technology companies, notably Amazon, which surged over 15% on robust cloud services performance. Conversely, Apple shares fell more than 7% due to weaker-than-expected services and Greater China revenue, while US memory chip stocks also declined. European markets were mostly positive, with the Euro Stoxx 50 up 1.53%. In Asia, South Korea's KOSPI index saw a substantial rally of 17.9% to 6596, while Hong Kong's Hang Seng Index posted a modest gain of 0.1% to 25884, though Chinese A-shares experienced broad declines.

Major Government Bonds

Government bond yields saw a notable increase, reflecting persistent inflation concerns and central bank rhetoric. The benchmark US 10-year Treasury yield rose by 0.08 percentage points to 4.7%, marking its highest level since January 2025 and a significant monthly increase of over 30 basis points for July. The 30-year Treasury yield also climbed by about 5.6 basis points, reaching 5.27%, a level not seen since July 2007, while the 2-year Treasury yield similarly advanced to 4.29%.

Major Commodities

Commodity markets presented a mixed picture. Oil prices rose, with WTI crude increasing by 3.2% to $83.4 per barrel and Brent crude gaining 1.22% to $90.12 per barrel, fueled by ongoing geopolitical tensions in the Middle East and concerns over the Strait of Hormuz. For the month of July, both WTI and Brent crude posted substantial gains exceeding 22%. Conversely, precious metals declined, with spot gold falling -1.5% to $4098.6 per ounce and spot silver also dropping 1.89% to $57.87 per ounce.

Highlight

The July MM Fundamental Index reports reveal significant movements across major global markets. US stocks have shown a notable increase, with the latest stats at 4.44 compared to the previous 2.99. In contrast, Taiwan stocks have dropped to 1.56, marking the lowest level since June 2025. Japan stocks have reached their highest level since February 1995, with a current stat of 2.15. Emerging Market stocks have decreased to 1.29, the lowest since April 2025.

Components

US Bonds have increased to 0.48 from 0.23. Investment Grade Corporate Bonds have dropped to 3.57, the lowest since July 2023, while High Yield Bonds have decreased to -0.14, the lowest since November 2023. The US Dollar has improved slightly to -0.7 from -2.12. The Japanese Yen has fallen to -1.76, the lowest since February 2025. Oil prices have decreased further to -4.86 from -4.54. Copper has surged to 5.61, reaching its highest level since April 2005.

Macroeconomics

US economic data showed mixed signals, with second-quarter US - Real GDP growing at an annualized rate of 1.5%, below the 2.1% consensus. However, inflation cooled significantly as the June US - Personal Consumption Expenditure Price Index [PCE] declined 0.1% month-over-month, the first negative reading in six years, and the core PCE year-over-year rate fell to 3.3%. US - Initial & Continuing Jobless Claims also came in better than expected at 197,000. In Europe, second-quarter Eurozone - Real GDP rose 0.4% quarter-over-quarter, while German July Germany - HICP increased to 2.8% annually. The Bank of England maintained its UK - Benchmark Interest Rate at 3.75% by a 6-3 vote, acknowledging softer price pressures but warning of readiness to act if high WTI Crude Oil prices trigger secondary inflation.

Major Stock Markets

Major US stock markets staged a strong rebound, with the S&P 500 climbing 1.7% to 7438, the Dow Jones Industrial Average gaining 1.2% to 52208, and the NASDAQ Composite Index surging 2.8% to 25122, ending a six-day losing streak. The rally was primarily driven by strong tech earnings, particularly Microsoft's record single-day market capitalization increase, and a broad surge in US - PHLX Semiconductor Sector Index, which rose 8.2% to 11303, and AI-related stocks. European markets were mostly higher, with the Euro Stoxx 50 up 1.5%, while Asian indices saw mixed to negative performance, with Korea's South Korea - KOSPI Index down -1.2% to 5594, a record low since April 8, 2026, and China's China CSI 300 Index down -1.1% to 4550.

Major Government Bonds

Government bond markets saw mixed movements, with the US - 10-Year Treasury Note Yield rising 0.05 percentage points to 4.7%, while the US 2-year Treasury Note Yield fell 3 basis points to 4.25%. The 30-year Treasury yield initially touched a 19-year high of approximately 5.23% before settling near 5.21%, leading to a further steepening of the US - Treasury Yield Spread. European bond yields saw slight increases, with the Germany 10-year Bond Yield rising 0.01 percentage points to 3.2% and the UK 10-Year Government Bond Yield dropping 5 basis points to 4.98%.

Major Commodities

Commodity markets experienced some volatility, with international WTI Crude Oil prices resuming their upward trend after recent surges. WTI Crude Oil settled up 2.3% at $84.0 per barrel, and Brent Crude Oil fell 1.5% to $89.4 per barrel, as signs emerged of increased shipping through the IMF - Strait of Hormuz - Daily Transit Calls & Transit Trade Volume despite ongoing Middle East tensions. Gold rose 0.2% to $4103.2 per ounce, and Silver gained 1.6% to $59.02 per ounce, benefiting from a US Dollar Index that was down -0.9% to 100.0.

US GDP Growth Slows

The US economy grew at an annualized rate of 1.5% in the second quarter, according to preliminary data, falling short of the 2.1% forecast and previous quarter's growth rate. On a year-over-year basis, GDP growth was recorded at 2.1%, down from 2.7% in the previous quarter.

Components

• Consumption surged to 3.2%, a significant increase from the previous 0.5%.
• Investment dropped to 3.0% from a previous 7.9%.
• Government Expenditures decreased to -0.8%, down from 4.4%.
• Exports fell to 4.5% from 10.9%.
• Imports remained relatively stable at 11.5%, slightly down from 11.8%.

Eurozone Economic Sentiment Indicator Surpasses Forecast

The Eurozone Economic Sentiment Indicator for July reported a figure of 96.9, surpassing both the previous month's 95.4 and the forecasted 96.0. This indicates a more optimistic economic outlook within the Eurozone than analysts had anticipated.

Main Countries and Sectors Details

Germany showed an improvement with a rise to 92.7 from 91.6. France also saw an increase, reaching 95.9 from 93.5. Conversely, Greece experienced a slight decline to 107.6 from 108.2. Italy's sentiment rose marginally to 99.6 from 99.2, while Spain's indicator increased to 104.3 from 103.5.

In sector-specific details, the Industrial Confidence Indicator improved to -6.1 from -7.5, marking the highest level since May 2023. The Services Confidence Indicator rose to 4.7 from 4.2. The Consumer Confidence Indicator also showed improvement, climbing to -15.9 from -17.6. Retail Confidence saw a notable rise to -6.6 from -9.3. However, the Construction Confidence Indicator fell to -5.3 from -4.8, marking its lowest level since June 2024.

Macroeconomics

The Federal Reserve maintained its benchmark interest rate at 3.50-3.75%, though three FOMC members dissented in favor of a 25 basis point hike, signaling increased internal hawkishness. Chair Warsh reiterated the commitment to a 2% inflation target while offering little forward guidance, contributing to market uncertainty. Geopolitical tensions in the Middle East escalated significantly following reported US-Iran clashes and threats from the US President. Separately, Australia's Q2 CPI came in below expectations at 0.6% quarter-on-quarter and 3.9% year-on-year for headline, and 0.8% quarter-on-quarter and 3.6% year-on-year for trimmed mean, leading to a reassessment of future RBA rate hikes.

Major Stock Markets

US equities experienced a broad sell-off, with the Dow Jones Industrial Average plummeting down -2.2% to 51594, the S&P 500 falling down -1.5% to 7316, and the Nasdaq Composite declining down -1.7% to 24443, reaching its lowest level since April 24, 2026. The Russell 2000 also dropped 1.61%. The technology and semiconductor sectors were particularly hard hit, with the PHLX Semi Index (SOX) down -5.3% to 10448, its lowest level since April 30, 2026, as investors reassessed AI-related growth and capital expenditure. European markets were mixed, while Asian performance varied, with Hong Kong and mainland China indices posting gains, but South Korea's KOSPI plunged down -6.0% to 5663, its lowest level since April 8, 2026, and Taiwan's TWSE declined down -3.8% to 40039 amid a sharp sell-off in AI-dominated stocks.

Major Government Bonds

US Treasury yields saw a significant "twist steepening," reflecting market anxiety over inflation and policy uncertainty following the Fed meeting. The 30-year Treasury yield surged 11-13 basis points to 5.20%, reaching its highest level since July 2007, while the 10-year Treasury yield rose 0.08 percentage points to 4.7%. Conversely, the more policy-sensitive 2-year Treasury yield declined 5-6 basis points to 4.23-4.27%. Australian government bond yields also fell, with the 3-year and 10-year yields down 7 basis points and 4 basis points respectively, after softer-than-expected domestic inflation data.

Major Commodities

International oil prices surged dramatically due to escalating geopolitical tensions in the Middle East. WTI crude oil jumped 9.5% to settle at $84.5 per barrel, while Brent crude oil soared 7.27-7.91% to settle between $87.91 and $90.74 per barrel. Gold prices, initially down slightly, rallied after settlement to close up 0.7% at $4066.5 per ounce, reflecting renewed uncertainty, and silver also saw gains of approximately 1%.

Macroeconomics

US consumer confidence declined in July to 90.8, below the consensus of 92.3, while the Richmond Fed manufacturing index edged up to +5. The US goods trade deficit narrowed slightly to $101.5 billion in June, and house prices rose 0.3% month-on-month in May. Market participants anticipate the Federal Reserve will keep its policy rate unchanged between 3.50%-3.75% following its upcoming meeting, though geopolitical developments and inflation data remain key. OPEC+ indicated plans to maintain stable production levels after September, following a planned increase in August.

Major Stock Markets

Global equities showed mixed performance, with a significant rotation out of technology. The Dow Jones Industrial Average gained 1.0% to 52747, and the S&P 500 rose 0.2% to 7429, largely supported by strength in defensive sectors like healthcare and consumer staples, as well as financials. However, the Nasdaq Composite fell -0.2% to 24877, reaching a record low since 2026-04-30, with the Nasdaq 100 entering correction territory. Semiconductor stocks experienced a sharp selloff, with the Philadelphia Semiconductor Index (SOX) down -4.5% to 11035.7 and memory chipmakers like SK Hynix and Micron Technology seeing substantial declines, reflecting concerns over AI capital expenditure sustainability and increased competition. In Asia, Japan's Nikkei 225 tumbled -4.0% to 62365 amidst an earthquake and tech selloff, while South Korea's KOSPI index plunged -10.8% to 6024, triggering a circuit breaker and marking a record low since 2026-04-15. Chinese A-shares also saw broad losses, with the ChiNext Index down 7.35%.

Major Government Bonds

Major government bond yields declined as oil prices eased and inflation concerns temporarily subsided. The US 10-year Treasury yield fell down -0.04 percentage points to 4.6%, with the 2-year yield also dropping to 4.293%. This widespread decline across the curve pulled yields back from their recent 18-month highs. European government bonds followed a similar trend, with the 10-year Gilt yield down 5 basis points and the equivalent German Bund yield falling down -0.02 percentage points to 3.1%.

Major Commodities

International oil prices showed mixed performance. WTI crude futures settled up 0.7% at $80.8 per barrel, driven by hopes of de-escalation in Middle East tensions and potential talks regarding the Strait of Hormuz, and Brent crude futures fell 3.93% to $81.95 per barrel. Gold prices also declined, dropping down -1.2% to $4025.8 per ounce, reaching a one-week low, while silver fell 2.2% to $57.13 per ounce.

Macroeconomics

US economic data showed resilience, with June core capital goods orders rising 0.9%, indicating sustained business investment, particularly in AI-related expenditures. The Dallas Fed manufacturing index also improved to 1.3 from 0.0 in July. In China, industrial profits for June increased by 15.1%, contributing to an 18.7% growth for the first half of the year, while Germany's Ifo Business Climate Index edged up to 86.6. Investors are now keenly awaiting the Federal Reserve's upcoming policy meeting, with expectations leaning towards a hawkish hold.

Major Stock Markets

Global equities presented a mixed picture, with US markets seeing the Dow Jones Industrial Average rose 0.5% to 52210 and the S&P 500 closed marginally higher at 7413. However, the Nasdaq Composite was down -0.2% to 24932, largely dragged down by significant weakness in semiconductor stocks, with the Philadelphia Semiconductor Index down -2.2% to 11555. Concerns over 'circular financing' in AI infrastructure and reports of China's advancements in DUV chip-making tools weighed heavily on the sector. European markets generally advanced, with Germany's DAX Index up 1.0% to 25361 and the UK's FTSE 100 gaining 0.4% to 10782, its highest level since March 2, 2026, while Asian markets also strengthened, notably Hong Kong's Hang Seng Index rising 1.0% to 25207 and Chinese indices posting gains following a strong debut by a domestic memory chip maker.

Major Government Bonds

Major government bond yields declined across the board, reflecting easing inflation concerns following the sharp drop in oil prices. The US - 10-Year Treasury Note Yield was down -0.04 percentage points to 4.6%, while the US 2-year Treasury Note Yield also decreased by 1-2 basis points to 4.32-4.33%. Similarly, European yields saw a downward trend, with the Germany 10-year Bond Yield down -0.05 percentage points to 3.1% and the UK 10-Year Government Bond Yield dropping 4 basis points to 5.0%.

Major Commodities

Commodity markets were dominated by a significant plunge in oil prices, as hopes for a diplomatic resolution in the Middle East eased fears of supply disruptions. WTI Crude Oil was down -3.7% to settle at $82.0 per barrel, while Brent Crude Oil also saw a substantial drop of 8.7% to $88.36 per barrel. Gold, often seen as a safe-haven asset, saw a modest gain of 0.3%, while Silver experienced a slight decline of 0.3-0.4%.

Highlight

The global Economic Expectation Index for July recorded a slight increase, reaching 2.54%, up from the previous 2.52%.

Components

• US: The index rose to 2.12% from 2.1%.
• Eurozone: The index increased to 0.95% from 0.9%.
• UK: The index climbed to 1.1% from 1.05%.
• Germany: The index moved up to 0.89% from 0.85%.
• Japan: The index edged up to 0.72% from 0.7%.
• China: The index slightly decreased to 4.48% from 4.5%.
• Taiwan: The index significantly dropped to 6.34% from 6.75%.
• India: The index slightly decreased to 6.98% from 7.05%.
• Canada: The index increased to 1.35% from 1.27%.
• South Korea: The index rose to 2.51% from 2.38%.
• Singapore: The index increased to 3.08% from 3.0%.
• Malaysia: The index slightly increased to 4.54% from 4.5%.

Macroeconomics

Macroeconomic data showed a mixed picture with US initial jobless claims dropping to 187,000, the lowest since 1969, indicating limited layoffs. July flash PMIs revealed a composite reading of 53.6, with services at 53.6 and manufacturing at 53.8, while employment rebounded and input/selling price inflation accelerated. June new home sales also beat expectations at an annual rate of 628,000. Geopolitical tensions contributed to shifting Federal Reserve expectations, with markets now pricing a 36% chance of a July rate cut. Additionally, new tariffs of 10% to 12.5% were imposed on 60 trading partners.

Major Stock Markets

Major US equity indices experienced a weekly decline, with the S&P 500 falling 0.6%, the Dow 0.4%, and the Nasdaq 2.1%. On the day, performance was mixed as the S&P 500 edged up 0.1% to 7412 and the Dow gained 0.5% to 51947, while the tech-heavy Nasdaq fell -0.6% to 24976. The semiconductor sector notably lagged, declining -4.3% to 11819, as mixed mega-cap tech earnings and higher capital expenditure guidance weighed on sentiment. Outperforming sectors included energy, industrial and precious metals, utilities, and healthcare. European markets generally closed higher, with Germany's DAX index gaining 0.9% to 24984, the UK's FTSE 100 gaining 0.9% to a record high of 10736, and France's CAC 40 rising 0.9% to 8372. Meanwhile, Hong Kong's Hang Seng Index was down -1.0% to 24963 and mainland China's CSI 300 Index was down -1.7% to 4649.

Major Government Bonds

US Treasury yields were mostly weaker for the week, driven by elevated oil prices, fiscal concerns, and evolving Federal Reserve expectations. The benchmark 10-year Treasury yield crossed above 4.7% for the first time since early 2025, reaching 18-month highs before settling down -0.03 percentage points to 4.7% for the day. The 2-year Treasury yield also surged for the week, reflecting increased sensitivity to potential Fed policy shifts.

Major Commodities

Crude oil prices saw a significant weekly surge, with WTI crude up 12.7% and Brent crude up nearly 10%, driven by escalating US-Iran conflict and attacks on tankers in the Red Sea. On the day, WTI crude futures were down -1.3% to $85.9 a barrel amid mediation headlines. Brent crude futures briefly topped $100 per barrel during the week. Gold and silver also posted weekly gains, rising 1.3% and 4.67% respectively, as investors sought safe-haven assets. On the day, gold futures saw a modest gain of 0.1% to $4055.7.

Macroeconomics

US initial jobless claims fell to a 55-year low of 187,000, signaling continued labor market tightness, while new US tariffs ranging from 10% to 12.5% on imports from 60 economies officially took effect. The European Central Bank maintained its benchmark interest rates but warned that energy shocks would keep Eurozone inflation above target until the first half of 2027, leaving the door open for a potential rate hike in September. South Korea's second-quarter GDP grew by 3.7% year-on-year, surpassing expectations, largely propelled by robust demand in the AI sector.

Major Stock Markets

Major US stock indices closed significantly lower, with the S&P 500 down -1.2% to 7408, the Dow Jones Industrial Average down -1.0% to 51712, and the Nasdaq Composite down -2.1% to 25138, as surging oil prices and concerns over the return on AI investments weighed heavily on technology shares following key earnings reports. European markets also saw broad declines, with the Euro Stoxx 600 down 1.2%. In contrast, several Asian markets, including South Korea's KOSPI which jumped 4.4% to 7097, outperformed on expectations of increased capital expenditure in the technology sector supporting regional supply chains.

Major Government Bonds

Global government bond yields rose sharply as escalating Middle East tensions and surging oil prices fueled inflation concerns and bolstered expectations for tighter monetary policy. The US 10-year Treasury yield increased by 0.04 percentage points to 4.7%, reaching its highest level since January 2025, while the 2-year yield rose 5 basis points to 4.35%. German and UK 10-year bond yields also climbed, with Germany's 10-year yield rising 0.03 percentage points to 3.2%, a record high since May 2011. The Japanese Yen weakened past 163 against the US Dollar to 163.8, marking its weakest level since 1986.

Major Commodities

Crude oil prices surged dramatically, with WTI crude jumping 10.6% to $92.5 per barrel and Brent crude soaring 7.0% to $100.69 per barrel, breaking above $100 for the first time since May, driven by escalating Middle East tensions, including Houthi attacks on Red Sea shipping and renewed threats from the US. This surge in energy prices, coupled with rising bond yields and a stronger dollar, with the US Dollar Index rising 0.3% to 101.4, led to significant declines in precious metals, with spot gold down -2.4% to $4050.8 and silver dropping 3.7%.

Macroeconomics

Geopolitical tensions in the Middle East escalated, with threats exchanged between the US and Iran, and Houthi militants attacking Saudi oil tankers in the Red Sea. Domestically, US President Trump anticipated a federal government shutdown in September. Economic data showed China's上半年securities transaction stamp duty surged 97.3% year-on-year, while the UK's June headline CPI softened to 2.6% year-on-year, below the 2.7% estimate, with core CPI unchanged at 2.6%. South Korea's Q2 GDP grew 3.7% year-on-year, exceeding expectations, and Japanese central bank officials indicated openness to faster rate hikes.

Major Stock Markets

US equity markets closed slightly lower, with the Dow down -0.01% to 52219, the S&P 500 down -0.1% to 7499, and the Nasdaq down -0.6% to 25691, primarily due to weakness in technology ahead of major earnings reports, though Super Micro Computer surged nearly 20% on new orders. European bourses, however, saw gains, with the Germany DAX Index up 0.6% to 25155 and the UK FTSE100 rising 1.2% to 10717, a record high. Asian markets were mixed, as Hong Kong's Hong Kong Hang Seng Index fell -1.1% to 24856 and the Hong Kong - Hang Seng TECH Index dropped 3.04%, while mainland China's Shanghai Stock Exchange Composite Index edged up 0.07% but the Shenzhen Stock Exchange Component Index and ChiNext fell 1.42% and 3.23% respectively.

Major Government Bonds

Government bond yields climbed across major markets, with the benchmark US - 10-Year Treasury Note Yield rising 0.04 percentage points to 4.7% and the US 2-year Treasury Note Yield reaching 4.302%, its highest since February 2025, driven by persistent inflation concerns and geopolitical risk. The 30-year US Treasury yield traded above 5% for a record twelfth consecutive day. Bunds also saw yields rise, while UK Gilt yields remained largely flat following softer-than-expected inflation data.

Major Commodities

Crude Oil prices surged significantly amid escalating Middle East tensions and threats to shipping lanes, with WTI Crude Oil rising 4.2% to $87.9 per barrel and Brent Crude Oil gaining 1.47% to $90.67 per barrel, briefly topping $95. Despite a reported 2.0 million barrel increase in US - Crude Oil Inventories, geopolitical risks overshadowed the bearish data. Gold prices also advanced, with spot gold climbing 1.2% to $4124.2 per ounce, benefiting from safe-haven demand and a softer US Dollar Index down -0.03% to 101.1.

Macroeconomics

The US-Iran conflict escalated for the tenth consecutive day, with threats exchanged regarding nuclear facilities and regional interests, while President Trump downplayed immediate talks and warned of new tariffs on dozens of economies, including a 100% tariff on generic drugs by August 2028. Inflation concerns were also stoked by rising oil prices and hawkish Fed expectations, with the Philadelphia Fed's non-manufacturing activity index unexpectedly rising to 7.4 in July from -25.8, while UK private average weekly earnings excluding bonuses eased to 2.9% year-on-year in the three months to May. South Korea's exports surged 52% year-on-year in the first 20 days of July, driven by a 180.6% rise in semiconductor exports.

Major Stock Markets

Global equity markets saw a broad rebound, led by a strong rally in the technology and semiconductor sectors, which had been under pressure recently. The S&P 500 gained 0.9% to 7509, the NASDAQ Composite Index climbed 1.3% to 25837, and the Dow Jones Industrial Average rose 0.7% to 52225, as investors focused on early strong corporate earnings reports. European markets also closed higher, with the Euro Stoxx 50 up 0.94%, while Asian equities, particularly in Japan, South Korea, Taiwan, and mainland China, surged significantly, with China's STAR50 index jumping 10.73% and the US - PHLX Semiconductor Sector Index advancing 5.2% to 12356.

Major Government Bonds

US Treasury yields rose across the curve, reflecting renewed inflation concerns and hawkish Federal Reserve expectations amid rising oil prices, with the US - 10-Year Treasury Note Yield climbing 0.04 percentage points to 4.6% and the US 2-year Treasury Note Yield increasing 5.7 basis points to 4.278%. In contrast, the UK Gilt market stabilized after recent volatility, with the 10-year yield holding steady at 5.03%, while German and Japanese 10-year bond yields saw minor increases.

Major Commodities

International oil prices surged to near five-week highs, with WTI Crude Oil Futures rising 2.6% to $84.6 per barrel and Brent Crude Oil increasing 2.12% to $89.35 per barrel, driven by escalating geopolitical tensions in the Middle East, including continued US-Iran hostilities and threats to Red Sea shipping. Precious metals also saw a strong rebound, with Gold gaining 1.8% to $4089.1 per ounce and Silver surging 4.18% to $58.76 per ounce, as investors sought safe-haven assets.

Macroeconomics

Middle East tensions escalated with continued US strikes on Iran and Houthi rebels announcing a maritime blockade on Saudi Arabia, though mediators proposed a 10-day ceasefire. In other geopolitical news, the US announced 50% tariffs on various Canadian goods, effective August 19, excluding energy and critical minerals. Economic data showed the US Leading Index eased to -0.2% month-over-month in June, while Canada's CPI slowed more than expected to -0.4% month-over-month and 2.8% year-over-year. New Zealand's Q2 CPI came in slightly hotter than anticipated at 1.5% quarter-over-quarter and 4.15% year-over-year.

Major Stock Markets

Major global stock markets largely closed lower as investors reacted to escalating Middle East tensions and awaited key corporate earnings. In the US, the Dow Jones Industrial Average fell -0.6% to 51839, the S&P 500 declined -0.2% to 7443, and the Nasdaq Composite was down -0.1% to 25508. European indices were also mostly negative, with the Euro Stoxx 600 losing 0.3% and the FTSE 100 dropping -0.7% to 10525, though Germany's DAX gained 0.1% to 24847. Asian markets were mixed, with Hong Kong's Hang Seng Index rising 2.2% to 25110 while South Korea's KOSPI plunged -4.5% to 6516.

Major Government Bonds

Government bond yields generally rose across major markets amid inflation concerns driven by higher energy prices and geopolitical uncertainty. The US 10-year Treasury yield increased by 0.05 percentage points to 4.6%, and the 2-year Treasury yield climbed 3 basis points to 4.21%. In Europe, the German 10-year bond yield rose 0.02 percentage points to 3.1%, while UK Gilt yields saw a more pronounced jump, with the 10-year yield increasing by 8 basis points to 5.03%.

Major Commodities

Crude oil prices advanced significantly due to heightened geopolitical risks in the Middle East. WTI crude futures settled up 1.1% at $82.7 per barrel, and Brent crude futures rose 1.27% to $89.22 per barrel, initially surging on conflict news before paring some gains on ceasefire hopes, then rallying again. Precious metals saw mixed performance, with gold closing down -0.2% at $4010.3 per ounce, while silver gained 1.36% to settle at $56.802 per ounce. Copper also rose 1.9% to $6.3 per pound.

Macroeconomics

U.S. economic data presented a mixed picture, with June retail sales rising a softer-than-expected 0.2% month-over-month and industrial output up a modest 0.1%. However, US - Initial & Continuing Jobless Claims fell to a new low of 208,000, and US - Housing Starts vs. Building Permits surged 19.0% to an annual rate of 1.427 million in June. Preliminary July US - Consumer Confidence also improved to 54.4, with a slight dip in the 1-year inflation outlook to 4.2%. Geopolitical tensions in the Middle East escalated significantly, with reported U.S. strikes on Iran and Iranian responses, alongside threats to key shipping lanes, fueling market uncertainty.

Major Stock Markets

Major global stock markets experienced a generally negative session, with U.S. indices closing lower as the NASDAQ Composite Index declined -1.4% to 25520, the S&P 500 fell -1.0% to 7458, and the Dow Jones Industrial Average dropped -0.8% to 52146. The technology and semiconductor sectors were particularly hard hit, with the US - PHLX Semiconductor Sector Index fell -1.6% to 11674, entering bear market territory, driven by concerns over AI valuations and increased competition following the launch of a new Chinese AI model. European markets showed mixed results, while mainland China's A-shares saw significant declines across all major indices, though Hong Kong's Hong Kong Hang Seng Index posted gains.

Major Government Bonds

U.S. government bond yields displayed a mixed performance, as the benchmark US - 10-Year Treasury Note Yield slightly decreased by 0.59 percentage points to 4.6%. Conversely, the US 2-year Treasury Note Yield, which is more sensitive to immediate interest rate expectations, rose by 3.58 basis points to 4.1767%. Markets continued to largely price out the possibility of a rate hike at the Federal Reserve's upcoming policy meeting.

Major Commodities

Crude oil prices surged significantly due to escalating geopolitical tensions in the Middle East and threats to vital shipping routes. US WTI Crude Oil Futures fell to $79.1 per barrel, and Brent Crude Oil jumped 4.59% to $88.10 per barrel, with both benchmarks recording weekly gains exceeding 15%. Spot Gold, after an initial decline below $4000, closed at $3983.8 per ounce, a record low since November 5, 2025, though it still registered a weekly loss, while spot Silver also saw a modest daily gain.

Macroeconomics

Macroeconomic data revealed a resilient U.S. economy, with June US - Retail Sales by Component (MoM) rising 0.2% month-over-month, and US - Initial & Continuing Jobless Claims falling to 208,000, the lowest since May 2, 2026. The US - Regional Fed Current Manufacturing Index surged to 41.4 in July, significantly exceeding expectations. However, housing data showed weakness, with June US - Pending Home Sales Index down 5.6% and July US - NAHB/Wells Fargo Housing Market Index [HMI] falling to 34. Federal Reserve officials maintained a hawkish stance, emphasizing that US - Consumer Price Index (CPI) remains too high and more evidence is needed for a sustained return to target. World - Geopolitical Risk Index in the Middle East escalated, with reports of U.S. airstrikes on Iran and threats to shipping routes, while South Korea Interest Rate by 25 basis points to 2.75% amid persistent inflation.

Major Stock Markets

Global stock markets largely retreated, primarily driven by a significant sell-off in the semiconductor sector and other AI-related stocks. The NASDAQ Composite Index fell -1.5% to 25882, the S&P 500 declined -0.5% to 7534, and the Dow Jones Industrial Average was down -0.2% to 52553. Major tech companies like Alphabet saw a 4.4% drop due to reported delays in its flagship AI model, while semiconductor firms experienced sharp declines, with the US - PHLX Semiconductor Sector Index falling down -4.3% to 11868 and major memory chip players seeing substantial losses. In Asia, South Korea - Korea Stock Exchange KOSPI Index plunged down -6.4% to 6821 after regulators imposed new restrictions on single-stock leveraged ETFs, and Japan Nikkei 225 Index fell down -2.8% to 66836, though Hong Kong Hang Seng Index managed a 1.3% gain to 25012. European equities were mixed, with the Stoxx 600 Index up 0.2% and the UK FTSE 100 gaining 0.5% to 10572.

Major Government Bonds

Major government bond yields saw modest increases, reflecting strong U.S. economic data and hawkish comments from Federal Reserve officials. The US - 10-Year Treasury Note Yield rose 0.02 percentage points to 4.6%, and the US 2-year Treasury Note Yield also edged higher to 4.158%. Germany 10-year Bond Yield similarly increased by 0.04 percentage points to 3.1%. The slight upward movement in yields indicated investor expectations for sustained higher interest rates.

Major Commodities

Commodity markets were marked by a significant drop in precious metals and mixed movements in energy. Gold fell down -1.7%, closing below the $4,000 per ounce mark at $3983.8, marking its lowest level since November 5, 2025, pressured by rising U.S. Treasury yields and a stronger dollar amid inflation concerns. Silver also declined sharply by 3.9%. WTI Crude Oil prices initially surged on escalating Middle East tensions but later pared gains, with WTI crude settling down -0.6% at $79.1 per barrel and Brent Crude Oil falling approximately 0.78% to $84.02 per barrel. The US Dollar Index strengthened, rising 0.3% to 100.8.

Retail Sales Overview

In June, US retail sales rose by 0.22% , surpassing the forecast of 0.2% but lower than the previous month's 1.02%. On a basis, retail sales increased by 6.72%, compared to 7.33% in the previous period.

Retail Sales Control Group

The retail sales control group, which excludes certain volatile items, grew by 0.39% , slightly below the expected 0.5% and down from the previous month's 0.82%. On a basis, the control group saw a 6.36% increase, slightly down from 6.57% previously.

Components Details

Motor Vehicle sales showed a significant rise, increasing by 5.73% from 4.77%. Sporting Goods also saw a notable increase, with sales up 15.19% from 12.63%. Electronics Appliance sales grew by 8.61%, up from 7.26%. Conversely, Gasoline Stations experienced a sharp decline, with sales dropping to 19.85% from 27.24%. Health & Personal Care sales saw a significant decrease, growing only 0.19% compared to 2.81% previously. Nonstore Retailers experienced a substantial increase, with sales rising to 14.23% from 12.16%.

Macroeconomics

US June US - Producer Price Index (PPI) data showed further signs of cooling inflation, with the headline PPI contracting by 0.3% month-over-month, its largest decline in six years, and core PPI rising a modest 0.2% month-over-month, both below expectations. Annually, headline PPI eased to 5.5% and core PPI to 4.7%. Federal Reserve officials acknowledged encouraging signs that inflation may have peaked, though some remained ready to act if disinflation doesn't materialize soon. The Fed's Beige Book indicated slight to moderate economic growth across most districts, noting higher fuel prices dampened discretionary spending. Separately, China - Real GDP grew by 4.3% year-on-year, bringing the first-half growth to 4.7%, while Europe - Industrial Production Index by Country for May contracted more than anticipated. The Canada - Target for the Overnight Rate maintained its policy rate at 2.25%.

Major Stock Markets

Major US stock indices posted gains for a second consecutive day, buoyed by the softer inflation data and strong earnings from some financial firms. The S&P 500 rose 0.4% to 7572, the Dow Jones Industrial Average gained 0.3% to 52659, and the NASDAQ Composite Index advanced 0.6% to 26269. However, the semiconductor sector experienced significant selling pressure, with the US - PHLX Semiconductor Sector Index down -2.1% to 12399, as memory chip names like SK Hynix and MU saw sharp drops amid concerns over increased supply. In contrast, several "Magnificent Seven" tech giants performed well, with AAPL notably up 4%. European markets were mixed, while Asian equities saw broad rallies, particularly South Korea - Korea Stock Exchange KOSPI Index surging 6.2% to 7284 and Hong Kong Hang Seng Index up 1.4% to 24681, though mainland Chinese indices slipped.

Major Government Bonds

Government bond markets saw yields ease across the board, reflecting reduced expectations for further Federal Reserve rate hikes following the cooler-than-expected inflation data. The yield on the benchmark US - 10-Year Treasury Note Yield fell -0.03 percentage points to 4.6%, and the US 2-year Treasury Note Yield declined 6 basis points to 4.14%. In Europe, the Germany 10-year Bond Yield edged up 0.02 percentage points to 3.1%, while the UK 10-Year Government Bond Yield decreased by 4 basis points to 4.94%.

Major Commodities

Oil prices extended their gains for a third day, reaching a one-month high, as escalating geopolitical tensions in the Middle East persisted. US WTI Crude Oil Futures settled up 1.1% at $80.2 per barrel, and Brent Crude Oil gained 0.26% to $84.95 per barrel, following reports of new US military strikes against Iran and the reinstatement of maritime blockades. Gold trimmed earlier losses but ultimately closed down -0.1% at $4067.1 per ounce, while Silver saw a more significant decline of 2.8% to $57.43 per ounce. Bitcoin/USD closed down -0.3% to $64756.4.

Macroeconomics

US June CPI data showed a significant cooling of inflationary pressures, with the headline CPI falling 0.4% month-over-month, the first decline in six years, bringing the annual rate to 3.5%. The core CPI was flat month-over-month, resulting in a 2.6% annual increase, both figures coming in below market expectations. Despite this, Federal Reserve Chair Warsh maintained a hawkish stance in his testimony, reiterating the Fed's "no tolerance for persistently elevated inflation" and downplaying the significance of a single month's data. Geopolitical tensions escalated in the Middle East, with the US resuming a naval blockade of Iranian ports and conducting strikes, while Iran declared a "formal state of war" with the US.

Major Stock Markets

Major US stock indices closed mostly higher, with the S&P 500 gaining 0.4% to 7544, the Nasdaq Composite rising 0.9% to 26107, and the Dow Jones Industrial Average inching up 0.0% to 52508. The Russell 2000 also saw a 0.39% increase. Technology and semiconductor sectors rebounded strongly, but market sentiment was notably impacted by IBM, which plunged 25.2% following a negative preliminary Q2 earnings announcement, citing a significant shift in corporate capital expenditure towards hardware for AI. Major bank earnings were mixed despite widespread beats, with GS up 9% and JPM up 2.5%, while C fell 5.3% and WFC declined 2.7%.

Major Government Bonds

US Treasury yields declined across the curve as softer-than-expected inflation data tempered expectations for aggressive near-term rate hikes from the Federal Reserve. The 2-year Treasury yield fell approximately 9 basis points to 4.19%, and the 10-year Treasury yield dropped 0.03 percentage points to 4.6%. This dovish repricing of rate hike probabilities was somewhat contained by Fed Chair Warsh's continued hawkish rhetoric, emphasizing the central bank's commitment to achieving its inflation target.

Major Commodities

Crude oil prices rose, with WTI crude futures settling up 2.2% at $79.8 per barrel and Brent crude up 1.72% at $84.73 per barrel, driven by escalating US-Iran tensions and the resumption of the US naval blockade, although President Trump's withdrawal of a proposed 20% toll on Strait of Hormuz shipping tempered earlier highs. Gold futures climbed 1.3% to $4,057.0 per ounce, benefiting from both the softer inflation data, which eased rate hike fears, and increased safe-haven demand amid geopolitical uncertainty. Silver also saw gains, rising 1.97%.

Job Openings

The US JOLTS Job Openings for May reported a slight increase, reaching 7,594,000, up from the previous month's 7,585,000. This marks the highest level since May 2024. The Job Openings Rate remained steady at 4.6%.

Components

The JOLTS Quits Rate held steady at 1.9%, indicating no change from the previous month. The Hires Rate also remained unchanged at 3.3%. However, the Layoffs Rate saw a slight increase, rising to 1.1% from the previous 1.0%.

Highlight

The US Consumer Price Index (CPI) for June showed a notable decline, with the non-seasonally adjusted year-over-year (YoY) CPI registering at 3.53%, down from the previous 4.25% and below the forecasted 3.8%. The seasonally adjusted month-over-month (MoM) CPI fell by 0.42%, a significant drop from the previous 0.47% and lower than the expected -0.1%. Core CPI, excluding food and energy, also decreased, with the non-seasonally adjusted YoY figure at 2.59%, compared to the previous 2.85% and forecasted 2.8%. The seasonally adjusted MoM Core CPI was slightly negative at -0.02%, down from the previous 0.21% and below the expected 0.2%.

Components

Energy prices saw a substantial decline, with a YoY change of 15.45%, down from 22.97%. Medical Care Commodities experienced a decrease of -2.06%, compared to the previous -1.8%. Education & Communication showed a slight negative change of -0.06%, a decrease from the previous 0.84%. Transportation costs decreased significantly, with a YoY change of 6.23%, down from 8.95%. Shelter and Housing costs also saw reductions, with Shelter at 3.26% from 3.35% and Housing at 3.32% from 3.59%.

Macroeconomics

Geopolitical tensions escalated significantly as the US announced a renewed naval blockade on Iranian ports starting July 15 and a 20% toll on cargo transiting the Strait of Hormuz, with threats of further strikes. Concurrently, Federal Reserve Governor Waller indicated that if core inflation data this week proves elevated, the FOMC would need to consider tightening monetary policy in the near term, leading markets to fully price in a September rate hike. India's June India - Consumer Price Index [CPI] also rose to 4.38% year-over-year, surpassing the central bank's 4% target for the first time in 17 months.

Major Stock Markets

Major global stock markets were mostly lower, with US indices declining as technology and semiconductor stocks faced significant selling pressure. The NASDAQ Composite Index fell -1.5% to 25873, the S&P 500 dropped -0.8% to 7515, and the Dow Jones Industrial Average lost -0.3% to 52499. This was largely driven by a sharp sell-off in AI-related shares and memory names, exemplified by South Korea's South Korea - Korea Stock Exchange KOSPI Index plunging -9.0% amid valuation concerns. European markets, however, largely held steady, with the Stoxx 600 Index closing flat, as energy shares gained on rising oil prices.

Major Government Bonds

Government bond yields rose across major markets, driven by renewed inflation concerns stemming from soaring oil prices and hawkish signals from the Federal Reserve. The US - 10-Year Treasury Note Yield climbed 0.1 percentage points to 4.6%, while the US 2-year Treasury Note Yield also increased by 6 basis points to 4.28%. Similarly, the Germany 10-year Bond Yield rose to 3.1%, reflecting a broader market reaction to geopolitical risks and potential monetary policy tightening.

Major Commodities

Crude oil prices surged dramatically following the escalation of US-Iran tensions, with US WTI Crude Oil Futures jumping 9.5% to $78.2 per barrel and Brent Crude Oil soaring 9.6% to $83.30 per barrel, as threats of a naval blockade in the Strait of Hormuz fueled supply disruption fears. Conversely, safe-haven assets like Gold and Silver declined, with gold falling -2.5% to $4,011.4 per ounce and silver dropping 3.6% to $57.97 per ounce, pressured by a stronger US dollar and expectations of higher interest rates.

Macroeconomics

US inflation concerns persisted as the Federal Reserve's semi-annual report indicated inflation "stepped up further this spring," with the PCE Price Index running about double the 2% target as of May, partly driven by AI infrastructure buildout. China reported June 2026 CPI increased by 1.0% year-on-year, while PPI rose by 4.1% year-on-year. Geopolitical tensions eased as reports suggested Iran had no intention of escalating conflict with Israel, and technical talks with the US were ongoing.

Major Stock Markets

US major stock indices ended the day positively, with the S&P 500 up 0.4% to 7575 and the Nasdaq Composite up 0.3% to 26282, both extending their weekly gains. The tech sector continued to lead, notably with SK Hynix's significant US market debut, closing up 13%, and Meta Platforms seeing strong gains. European markets were mixed, with Germany's DAX30 down -0.2% to 25067 while the UK FTSE 100 edged up 0.2% to 10497. Asian markets saw varied performance, with Hong Kong's Hang Seng Index up 0.6% to 24175, but mainland China's A-shares staged a strong afternoon rally, with the Shanghai Composite up 1.65% and the ChiNext index surging 4.49%, driven by a broad rally in the semiconductor sector.

Major Government Bonds

US Treasury yields edged higher, with the 10-year Treasury yield up 0.01 percentage points to 4.6% and the 2-year yield increasing about 3 basis points to 4.208%, reflecting persistent inflation concerns. In contrast, Japanese 10-year government bond yields down -0.17 percentage points to 2.7% following comments from the Finance Minister encouraging domestic asset investment by pension funds.

Major Commodities

Gold and silver futures declined, with August gold down -0.6% to $4,113.7/oz and September silver down 0.96% to $60.17/oz. Oil prices eased on the day, with WTI crude settling down -0.9% at $71.4/bbl and Brent crude down 0.38% at $76.01/bbl, as concerns over Middle East conflict escalation temporarily subsided. Despite the daily decline, both WTI and Brent crude posted weekly gains of 3.96% and 5.39% respectively, driven by earlier supply concerns. Copper futures rose 1.1% to $6.3/lb, marking a weekly gain.

Macroeconomics

Macroeconomic data showed the U.S. labor market remained stable, with initial jobless claims at 215,000, below the 218,000 consensus, while continuing claims printed at 1.814 million. June existing home sales declined by 2.4% month-over-month to a seasonally adjusted annual rate of 4.09 million, missing expectations, though the median home price reached a record high of $440,600. In China, June Consumer Price Index (CPI) rose 1.0% year-over-year, and the Producer Price Index (PPI) increased 4.1% year-over-year. Geopolitical concerns surrounding the Middle East persisted with mutual strikes between the U.S. and Iran, but market sentiment leaned towards a managed de-escalation, supported by ongoing mediation efforts.

Major Stock Markets

Major stock markets saw a broad uplift in the U.S., with the S&P 500 rising 0.8% to 7544, the Nasdaq Composite gaining 1.3% to 26207, and the Dow Jones Industrial Average adding 0.3% to 52487. This surge was largely propelled by a significant rally in semiconductor and AI-related stocks, exemplified by Micron Technology's over 4% increase following substantial U.S. investment commitments. European indices were mostly positive, with the Euro Stoxx 50 up 1.3%, while Asian markets presented a mixed picture, as Chinese equities rallied strongly, especially in the chip sector, contrasting with Hong Kong's Hang Seng Index down -0.7% to 24030.

Major Government Bonds

Major government bonds saw U.S. Treasuries firm, leading to a decline in yields across the curve. The 10-year U.S. Treasury yield dropped by -0.03 percentage points to 4.5%, while the 2-year yield fell by about 4 basis points to 4.18%. A $22 billion auction of 30-year bonds was well-received, stopping through by 0.3 basis points despite clearing at 5.058%, the highest yield for such an auction since 2007.

Major Commodities

Major commodities experienced a notable divergence, with oil prices retreating sharply as WTI crude fell down -2.5% to $71.7 per barrel and Brent crude declined by about 2.2% to $76.30 per barrel, reflecting diminished concerns over the U.S.-Iran conflict's impact on supply. Conversely, precious metals rallied, with gold gaining 1.2% to $4,132.1 per ounce and silver surging 3.8% to $60.75 per ounce, while copper also advanced by 3.2% to $6.3.

Macroeconomics

Macroeconomic sentiment was dominated by escalating US-Iran geopolitical tensions and the release of the FOMC minutes. The minutes revealed heightened inflation concerns among Federal Reserve officials, with a minority even considering a June rate hike, and notably identified the "AI investment hot streak" as a new inflation risk alongside the Middle East conflict and potential tariff policies. Meanwhile, the IMF maintained its 2026 global economic growth forecast at 3%, noting that the AI boom partially offset the impact of the Middle East war, but highlighted a stagnation in inflation cooling. US May wholesale inventories were revised softer to a 0.1% increase.

Major Stock Markets

Global equity markets reacted to the geopolitical uncertainty with a mixed performance. In the US, the S&P 500 was down -0.3% to 7483 and the Dow Jones Industrial Average fell -1.1% to 52348, while the Nasdaq Composite managed a 0.2% gain to 25871, demonstrating resilience in technology and AI-related stocks. European markets experienced broader declines, with the Euro Stoxx 600 index dropping 1.6%. Asian markets were also divergent, as the Hang Seng Index surged 3.0% to 24200 driven by Chinese internet and tech shares, but South Korea's KOSPI plunged -5.4% to 7247, entering a technical bear market, and Japan's Nikkei fell -2.1% to 66819.

Major Government Bonds

Government bond yields rose across major economies as the escalating geopolitical tensions and hawkish signals from the FOMC minutes intensified inflation concerns. The US 10-year Treasury yield increased by 0.02 percentage points to 4.6%, while the 2-year yield also climbed 3 basis points to 4.22%. European bond markets saw significant upward pressure, with the German 10-year Bund yield rising 0.10 percentage points to 3.1% and the UK 10-year Gilt yield advancing 13 basis points to 4.97%.

Major Commodities

Crude oil prices surged dramatically in response to renewed US strikes on Iran and President Trump's declaration that a temporary ceasefire was over, sparking fears of Middle East supply disruptions. West Texas Intermediate (WTI) crude settled up 6.0% at $74.7 per barrel, and Brent crude jumped 7.0% to $79.35 per barrel, briefly surpassing $80 intraday. Conversely, safe-haven assets like gold were down -1.7% to $4087.9 per ounce, and silver fell 4.6%, as a stronger dollar and rising bond yields weighed on precious metals. Copper also was down -0.9% amid the broader risk-off sentiment.

Macroeconomics

US economic data showed a widening May trade deficit to $77.6 billion, the largest in over a year, while consumer inflation expectations rose, with the 1-year outlook reaching 3.7% and the 3-year outlook hitting 3.3%. The ADP weekly employment estimate indicated 21,000 jobs per week. China's central bank continued its Gold accumulation for the 20th consecutive month, though overall foreign exchange reserves saw a slight decline.

Major Stock Markets

Global equity markets experienced a broad decline, led by a significant sell-off in technology, semiconductor, and AI-related stocks. The Nasdaq fell -1.2% to 25819, with the S&P 500 down -0.4% to 7504 and the Dow losing -0.2% to 52925. European indices mostly closed lower, while Asian markets saw sharper declines, notably South Korea's Kospi plunging -4.9% to 7656 following Samsung's preliminary earnings which, despite a substantial profit surge, fueled concerns about AI investment returns. This prompted a rotation of funds towards more defensive sectors and value stocks.

Major Government Bonds

Government bond yields rose significantly across the board, driven by renewed inflation concerns stemming from escalating geopolitical tensions and higher oil prices. The 10-year US Treasury yield advanced 0.1 percentage points to settle at 4.6%, while the 2-year yield increased 6-7 basis points to 4.19%. The 30-year US Treasury yield also saw a notable rise, pushing above the 5% mark.

Major Commodities

Oil prices surged sharply, with WTI crude gaining 5.5% to $72.3 per barrel and Brent crude rising 3.01-5.4% to above $74 per barrel. This rally was primarily driven by escalating geopolitical tensions in the Middle East, including reports of attacks on vessels near the Strait of Hormuz, US retaliatory airstrikes on Iran, and the US revoking a general license for Iranian oil sales. Conversely, safe-haven assets like Gold and Silver declined, with Gold falling down -1.3% to $4113.8 and Silver dropping 1.6-3.3%, as higher bond yields and a stronger dollar weighed on precious metals.

Macroeconomics

US economic data showed the June ISM Services PMI slowing to 54.0 from 54.5, though the employment index improved to 51.2 from 47.9 and prices paid cooled to 67.7 from 71.3. Fed Governor Waller maintained a hawkish stance, emphasizing inflation risks and advocating for flexible forward guidance. In Europe, May retail sales increased by 1.6% year-over-year, and German industrial orders rose by 1.9% month-over-month. Geopolitical tensions in the Middle East saw some normalization with improved shipping traffic in the Strait of Hormuz, and new US-Iran talks are anticipated.

Major Stock Markets

US equity markets closed higher, with the S&P 500 gaining 0.7% to 7537, the Dow Jones Industrial Average rising 0.3% to a record high of 53056, and the Nasdaq Composite advancing 1.1% to 26121. Technology and semiconductor sectors led the rally, driven by renewed optimism in AI-related stocks. European markets were mixed, with the Euro Stoxx 600 declining 0.4%, while the German DAX edged up 0.2% to a record high. Asian markets saw Hong Kong's Hang Seng index rise 1.1%, but mainland Chinese equities were mostly lower.

Major Government Bonds

US Treasury yields were largely stable to slightly lower, with the benchmark 10-year Treasury yield decreasing by -0.02 percentage points to 4.5%. The yield curve steepened as front-end rates saw more significant declines, reflecting a slight shift in near-term rate hike expectations. In contrast, the German 10-year bond yield edged up 0.01 percentage points to 2.9%.

Major Commodities

Oil prices declined, with WTI crude settling around $68.6 per barrel, down -0.3%, and Brent crude at $71.99 per barrel, following Saudi Arabia's decision to cut its August official selling price for Arab Light crude to Asia by $11 per barrel, marking the largest reduction in at least 26 years. This move, coupled with increased OPEC+ output targets and normalizing traffic through the Strait of Hormuz, intensified oversupply concerns. Gold futures closed lower, down -0.2% to $4177.4 per ounce, while silver also saw a significant rise of 2.1%.

Highlight

The Institute for Supply Management (ISM) reported that the Services Purchasing Managers' Index (PMI) for June stood at 54.0, slightly below the forecast of 54.2 and down from May's 54.5. Despite the decline, the index remains above the 50 mark, indicating expansion in the services sector, a trend that has continued since May 2025.

Components

• Business Activity: The index decreased to 55.4 from 57.7.
• New Orders: The index fell to 55.1 from 57.3.
• Employment: The index rose to 51.2 from 47.9, indicating growth in employment.
• Inventory: The index saw a significant drop to 51.2 from 62.5.
• Prices: The index decreased to 67.7 from 71.3, suggesting a reduction in price pressures.
• Backlog of Orders: The index increased to 54.9 from 51.3, showing a rise in backlogged orders.
• Imports: The index declined to 49.4 from 51.1, indicating a contraction in imports.

Macroeconomics

US June nonfarm payrolls significantly missed expectations, increasing by only 57,000, while the unemployment rate unexpectedly fell to 4.2%. This data eased market concerns about immediate Federal Reserve rate hikes. In Europe, the May unemployment rate edged down to 6.2%, and the ECB affirmed its recent rate hike. Japan is showing signs of transitioning from deflation to inflation, with corporate earnings expanding, though foreign investors were net sellers of Japanese bonds in June, offloading JPY 3.12 trillion. South Korea's June CPI rose 3.2% year-over-year, marking a 30-month high.

Major Stock Markets

The Dow Jones Industrial Average reached a new record high, gaining 1.1% to 52900, while the S&P 500 closed flat at 7483. However, the Nasdaq Composite fell -0.8% to 25833 as technology and semiconductor stocks experienced a significant sell-off, with the PHLX Semiconductor Sector Index falling -5.4% to 12626, fueled by concerns over AI investment returns and reports of a major tech company's AI agent development not meeting expectations. European markets posted solid gains, with Germany's DAX Index rising 2.2% to a record high of 25581. Asian markets were mixed, with Hong Kong's Hang Seng Index rising 0.8% to 23055, but mainland Chinese equities saw substantial declines, with the CSI 300 Index falling -3.0% to 4812, and South Korea's KOSPI plunged -7.9% to 7648 amidst the global semiconductor rout. Japan's Nikkei also fell -2.5% to 68733.

Major Government Bonds

US Treasury yields saw a divergence, with the 2-year yield falling approximately 4 basis points to 4.181% as expectations for near-term Federal Reserve rate hikes diminished following the weak jobs report. The 10-year US Treasury yield remained stable at 4.5%. In contrast, Japanese long-term government bond yields rose 0.08 percentage points to 2.8%, partly due to foreign investors offloading a record JPY 3.12 trillion in Japanese bonds in June. European bond yields also saw slight increases.

Major Commodities

Spot Gold rose 1.4% to $4139.2 per ounce, supported by a weaker US dollar, which fell -0.5% to 100.9, and reduced expectations for Federal Reserve interest rate increases. Oil prices stabilized and edged higher, with WTI Crude Oil fell -0.2% to a record low of $68.5 per barrel and Brent Crude Oil up 0.57% to $71.84 per barrel, driven by short covering ahead of the US holiday weekend and signs of easing tensions in the Middle East. Silver also saw a notable gain of 3.14%.

Highlight

The latest US Nonfarm Payrolls report for June showed a monthly change of 57.0k, falling short of the forecasted 114.0k and significantly lower than the previous month's 129.0k. The unemployment rate decreased slightly to 4.2%, compared to the previous and forecasted rate of 4.3%.

Components

• Mining & Logging saw a decrease of 4.0k, compared to a previous increase of 3.0k.
• Construction jobs increased by 11.0k, up from 6.0k in the previous month.
• Retail Trade experienced a significant decline of 7.5k, contrasting with the previous month's increase of 8.2k.
• Information sector jobs decreased by 9.0k, following a previous decrease of 4.0k.
• Leisure & Hospitality saw a sharp decline of 61.0k, compared to a previous increase of 40.0k.
• Professional & Business Services reported a substantial increase of 36.0k, up from 11.0k previously.
• Education & Health Services saw a notable rise of 69.0k, compared to 45.0k in the previous month.
• Financial Activities remained stable with no change, following a previous decrease of 22.0k.

Macroeconomics

The macroeconomic landscape saw mixed signals from the United States, where the June ISM Manufacturing Index expanded to 53.3 but with a significant drop in the prices paid component, and ADP private payrolls added a lower-than-expected 98,000 jobs. Federal Reserve Chair Warsh indicated that inflation expectations and risks have diminished, reiterating a commitment to price stability. In the Eurozone, June HICP inflation eased to 2.8% year-on-year, with core HICP at 2.4%, both below estimates, leading ECB President Lagarde to note that inflation and economic growth risks are now more balanced. Japan's Tankan Large Manufacturer's Index improved to +22, an 8-year high, alongside rising inflation expectations.

Major Stock Markets

Global equity markets experienced a notable rotation, with US major indices closing lower as the S&P 500 fell -0.2% to 7483, the NASDAQ Composite Index declined -0.7% to 26040, and the Dow Jones Industrial Average fell -0.0% to 52305. The technology sector, particularly semiconductor and memory chip stocks, saw significant declines, with the Philadelphia Semiconductor Index dropping down -6.3% to 13353. This downturn was largely attributed to reports of Meta Platforms' plans to sell excess AI compute capacity, sparking concerns about peak capital expenditure and potential oversupply. Conversely, Meta Platforms surged 8.8%, and software stocks generally performed well. European markets mostly declined, while Japanese equities posted gains, and South Korea's KOSPI fell down -2.0% to 8303.

Major Government Bonds

US Treasury yields were broadly higher, with the 10-year Treasury yield climbing up 0.06 percentage points to 4.5%, despite Federal Reserve Chair Warsh's remarks suggesting easing inflation risks which initially tempered some immediate rate hike expectations. The yield curve saw some steepening. In Europe, the Germany 10-year Bond Yield edged up 0.01 percentage points to 2.9%, while other major government bond yields also saw slight increases.

Major Commodities

Crude oil prices continued their downward trend for a third consecutive session, with WTI crude settling down -2.0% to $68.1 per barrel, reaching its lowest level since March 2, 2026. This decline was primarily driven by positive sentiment surrounding indirect US-Iran talks in Doha and increased oil shipments through the Strait of Hormuz, easing supply disruption concerns. Meanwhile, spot gold prices rose by 0.3% to $4052.0 per ounce, supported by the slightly less hawkish tone from Fed officials and weaker US employment data.

Highlight

The Institute for Supply Management (ISM) released its June Manufacturing Purchasing Managers' Index (PMI), which came in at 53.3, slightly below the forecast of 53.8 and down from May's 54.0. This indicates a slower expansion in the manufacturing sector than anticipated.

Components

• New Order: The index decreased to 56.0 from 56.8.
• Production: Dropped to 52.2 from 54.3.
• Employment: Rose to 49.7 from 48.6, marking the highest level since January 2025.
• Supplier Deliveries: Fell to 57.4 from 60.6.
• Inventories: Increased to 51.4 from 49.9.
• Customers' Inventories: Slightly decreased to 42.3 from 42.7.
• Price: Significantly decreased to 73.0 from 82.1.
• Backlog of Orders: Declined to 50.5 from 52.2.
• Exports: Decreased to 48.5 from 50.6.
• Imports: Slightly decreased to 52.9 from 53.0.

Highlight

The June ADP Nonfarm Employment report indicates a monthly change of 98,000, falling short of the forecasted 118,000 and the previous month's 122,000. The ADP Job Stayer Median Salary saw a consistent growth of 4.4%, while the ADP Job Changer Median Salary increased slightly to 6.6% from the previous 6.5%.

Components

• Construction employment rose by 2,000, a decrease from the previous 8,000.
• Education and Health Services added 48,000 jobs, down from 57,000.
• Financial Activities saw a significant increase to 14,000 from 7,000.
• Information sector rebounded with a gain of 7,000, compared to a previous loss of 9,000.
• Leisure and Hospitality added 2,000 jobs, a decline from 8,000.
• Manufacturing employment increased by 5,000, up from 3,000.
• Natural Resources and Mining saw a decrease of 5,000, compared to a previous decrease of 3,000.
• Other Services gained 8,000 jobs, doubling the previous 4,000.
• Professional and Business Services saw a modest increase of 2,000, down from 11,000.
• Trade, Transportation, and Utilities added 15,000 jobs, a decrease from 36,000.

Macroeconomics

The U.S. labor market showed resilience with May JOLTS job openings rising to 7.594 million, exceeding the 7.30 million forecast, though June consumer confidence dipped to 91.2 against an expected 94.4. Meanwhile, inflation eased across Europe, with June HICP year-over-year rates falling in Germany to 2.4%, France to 2.0%, and Italy to 3.0%, all below expectations. China's manufacturing sector returned to expansion, with its June PMI at 50.3%.

Major Stock Markets

Major global stock markets closed the quarter on a strong note, with U.S. equities extending gains. The S&P 500 rose 0.8% to 7499 and the Nasdaq Composite climbed 1.5% to 26214, both marking their best quarterly returns since 2020. The Dow Jones Industrial Average added 0.3% to 52319, reaching a record high for its best quarterly performance since 2022. Technology and semiconductor stocks were key drivers of the rally. European markets also saw broad advances, with the Euro Stoxx 600 gaining 0.9%.

Major Government Bonds

U.S. government bond yields rose across the curve, with the 10-year Treasury yield increasing by 0.09 percentage points to 4.5% and the 2-year yield up 7 basis points to 4.17%. This reflected a market adjusting to stronger-than-expected labor market data and renewed hawkish sentiment from some Federal Reserve officials, leading to a modest curve steepening.

Major Commodities

Oil prices declined significantly as hopes for de-escalation in the Middle East and increased shipping activity through the Strait of Hormuz eased supply concerns. WTI crude settled down -1.2% at $69.9 per barrel, marking its worst quarterly performance since 2020. Gold prices were down -0.2% to $4028.9 per ounce for the day, but recorded their largest quarterly decline since 2013.

Macroeconomics

The US Supreme Court denied former President Trump's attempt to remove Fed Governor Lisa Cook, reinforcing the Federal Reserve's independence. White House economic advisor Hassett suggested the upcoming US employment report would be strong, and AI's deflationary impact could mean no further rate hikes are needed. The US - Dallas Fed Manufacturing Index registered 0.0 in June, indicating unchanged business conditions. In Europe, ECB President Lagarde noted increased economic resilience, while China and the EU established a new trade and investment consultation mechanism.

Major Stock Markets

US equities rallied significantly, led by a strong rebound in technology and semiconductor stocks. The S&P 500 advanced 1.2% to 7440, the NASDAQ Composite Index surged 2.1% to 25820, and the Dow Jones Industrial Average gained 0.6% to 52183, reaching a record high, partly driven by Alphabet's strong performance on its first day as a Dow component. European markets were mixed, with the Euro Stoxx 50 up 0.16%, while the German DAX and UK FTSE 100 both declined, with the German DAX down -0.2% and the UK FTSE 100 down -0.2%. Asian markets generally closed higher.

Major Government Bonds

US Treasury yields saw modest movements, with the US - 10-Year Treasury Note Yield remained unchanged at 4.4% and the 2-year yield also up 1 basis point to 4.10%, leading to a slight flattening of the yield curve. German 10-year Bund yields increased by 0.01 percentage points to 2.9%, while Japan 10-year Government Bond Yields rose 0.03 percentage points to 2.6%. The US Dollar Index softened by -0.3% to 101.1, and the Japanese Yen touched a record low against the dollar, reaching 161.9.

Major Commodities

Crude oil prices rebounded, with WTI Crude Oil settling up 1.6% at $70.3 per barrel and Brent Crude Oil rising 1.61% to $73.15 per barrel, as market participants reacted to renewed US-Iran tensions over the weekend and the prospect of upcoming peace talks. Conversely, gold prices fell sharply, with spot gold down -1.5% to $4033.9 per ounce, pressured by inflation concerns driven by rising oil prices and strengthened expectations for higher interest rates.

Economic Sentiment Overview

The Eurozone Economic Sentiment Indicator for June has shown an increase, registering at 95.0, up from the previous 93.7, and surpassing the forecast of 94.3. This indicates a positive shift in economic sentiment across the Eurozone.

Main Countries

Germany saw an improvement in its economic sentiment, with the latest stats at 91.5, up from 89.8. Italy also experienced a rise, moving to 99.1 from 97.8. Spain's sentiment increased to 103.3 from 102.6. In contrast, France's sentiment slightly decreased to 92.5 from 92.7. Greece continued its positive trend, with an increase to 108.3 from 107.7.

Sector Details

The Industrial Confidence Indicator slightly improved to -7.7 from -7.9. The Services Confidence Indicator rose to 3.2 from 2.6, while the Consumer Confidence Indicator showed a significant improvement, moving to -17.7 from -19.0. The Retail Confidence Indicator also improved, registering at -9.7 from -10.9. However, the Construction Confidence Indicator fell to -4.5 from -3.9, marking its lowest level since August 2024.

Macroeconomics

US inflation data showed the Personal Consumption Expenditures (PCE) Price Index rose 4.1% year-over-year in May, the highest in three years, with core PCE up 3.4% year-over-year, both aligning with expectations. May personal spending and income were higher than anticipated, while initial jobless claims improved. Flash June PMIs indicated accelerating business activity but elevated prices. Q1 GDP growth was revised up to 2.1%. Minneapolis Fed President Kashkari suggested a potential rate hike this year, and the US Dollar Index strengthened, rising 0.5% for the week to its highest since May 2025, supported by resilient economic data and hawkish Fed expectations.

Major Stock Markets

Major US equity indices were mixed on Friday, but the S&P 500 and Nasdaq Composite posted weekly declines of approximately 2% and over 4% respectively, primarily driven by weakness in the technology sector. Concerns over OpenAI reportedly considering delaying its IPO until 2027, along with Apple and Microsoft announcing price increases on hardware due to rising memory costs, weighed heavily on tech stocks. The healthcare sector was a notable outperformer, gaining over 3% on Friday, while a broader market rotation saw some cyclicals gain as investors diversified beyond mega-cap tech.

Major Government Bonds

Treasury yields edged lower on Friday, with the benchmark 10-year Treasury yield settling near 4.4%, down -0.03 percentage points. This contributed to a weekly decline across the curve, with the yield down over 10 basis points for the week, while the 2-year Treasury yield fell by 8.8 basis points to around 4.135%. This movement resulted in a flattening of the yield curve, reflecting firmer demand for government bonds.

Major Commodities

Commodity markets were softer overall, with WTI crude oil prices falling significantly, settling around $69.2 per barrel, down -3.7% and reaching its lowest level since March 2026. Brent crude at $71.99 per barrel, both down nearly 8-10% for the week and reaching pre-Iran war levels. This decline was largely attributed to increased flows through the Strait of Hormuz. Gold prices rose on Friday, gaining 1.2% to settle around $4,096.3 per ounce, as the dollar weakened and rate hike expectations slightly eased, though it still recorded a weekly loss.

Highlight

The June MM Fundamental Index Reports reveal notable changes across various global markets. The US stock index saw a decrease from 4.63 to 3.22, while Taiwan's stock index increased slightly from 2.58 to 2.72. China's stock index rose significantly from 3.29 to 4.46. European stocks experienced a decline, moving from 0.87 to -0.05. Japan's stock index reached its highest level since July 2021, climbing from 1.63 to 1.88. Emerging market stocks decreased from 3.1 to 2.83.

Components

US bonds improved from -0.08 to 0.19. Investment grade corporate bonds fell to their lowest level since September 2023, from 5.37 to 5.17. High yield bonds dropped to their lowest level since February 2024, from 3.27 to 1.99. The US dollar weakened further, moving from -1.16 to -1.34. The Taiwan dollar reached its highest level since August 2021, rising from 7.47 to 8.36. The Japanese yen fell to its lowest level since February 2025, from -0.4 to -1.21. Oil prices decreased from -3.65 to -4.52, while copper prices reached their highest level since March 2018, increasing from 4.33 to 5.22.

Macroeconomics

US economic data presented a mixed picture, with the first-quarter US - Real GDP Growth by Component (SAAR) revised upwards to 2.1% annualized, exceeding the prior 1.6% estimate. However, May's US - Personal Consumption Expenditure Price Index [PCE] showed headline inflation at 4.1% year-over-year, matching forecasts, while core PCE inflation rose to 3.4%, slightly above expectations. Personal spending (US - Saving Rate vs. Consumption Expenditures) and income (US - Disposable Personal Income) both increased by 0.7% month-over-month, with real spending (US - Real PCE - Goods & Services) up 0.3%. US - Initial & Continuing Jobless Claims improved to 215,000, though continuing claims (US - Initial & Continuing Jobless Claims) rose to 1.821 million. US - Durable Goods Orders declined by 4.5% month-over-month, primarily due to transportation equipment (US - Durable Goods Orders by Item), but core orders (US - Durable Goods Orders by Item) increased by 1.6%. In Japan, Tokyo's June Japan - Tokyo CPI headline rose to 1.7% year-over-year, exceeding projections.

Major Stock Markets

Global equity markets displayed divergent trends. In the US, major indices closed mixed, with the Dow Jones Industrial Average gaining 0.1% to 51921, the S&P 500 ending largely flat at 7358, and the NASDAQ Composite Index declining by -0.5% to 25359 for its fourth consecutive session of losses. This reflected a significant rotation beneath the surface, as US - PHLX Semiconductor Sector Index stocks, particularly memory names like Micron, surged 3.6% to 13941 on strong demand signals, while some mega-cap technology companies, notably Apple, fell over 6% after announcing hardware price hikes due to rising component costs. European bourses generally advanced, with the Germany DAX Index up 1.0% to 24995 and the Euro Stoxx 50 rising 0.85%. Asian markets were varied, with Chinese A-shares posting gains, but Hong Kong's Hong Kong Hang Seng Index declining by -1.4% to 23077, its lowest level since May 12, 2025.

Major Government Bonds

Government bond markets saw US - 10-Year Treasury Note Yield mostly firmer, with the benchmark US - 10-Year Treasury Note Yield settling at 4.4%, down -0.01 percentage points. The US 2-year Treasury Note Yield declined by approximately 2 basis points to 4.12%, contributing to a twist-steepening of the curve. Demand for the $44 billion 7-year note auction was solid. Europe's 10-year bond yields largely mirrored the US trend, with Germany's 10-year government bond yield settling at 2.9%, down -0.01 percentage points, its lowest level since March 11, 2026.

Major Commodities

Commodity markets reacted to geopolitical developments, with international crude oil prices rebounding significantly. US WTI Crude Oil Futures rose by 1.5% to $71.4 per barrel, and Brent Crude Oil advanced by 2.39% to $75.18 per barrel, following reports of a cargo ship attack in the IMF - Strait of Hormuz - Daily Transit Calls & Transit Trade Volume. Precious metals also saw gains, with Gold climbing 0.7% to $4038.4 per ounce and Silver increasing by 0.64%. Copper also moved higher, up 3.2% to $6.1. China's Iron Ore Price experienced a decline of -1.3% to $734.0, its lowest level since July 9, 2025.

Macroeconomics

Macroeconomic data showed US - New Home Sales unexpectedly fell to 580,000 units, the weakest since January 2026, while the Q1 current account deficit widened to -$226.8 billion. In Europe, Germany - ifo Business Climate Index rose to 85.6, indicating improved business sentiment. All 32 major US banks successfully passed the Federal Reserve's annual stress tests, demonstrating resilience to severe economic downturns. US Treasury Secretary Bessent reiterated the importance of dollar dominance and projected US - Real GDP could return to 3% this year, though President Trump later canceled the signing of a bipartisan housing bill.

Major Stock Markets

Major stock markets exhibited a mixed performance as a rotation out of high-flying technology names continued, with the S&P 500 down -0.1% to 7358 and the NASDAQ Composite Index down -0.4% to 25477, while the Dow Jones Industrial Average gained 0.4% to 51849. Technology stocks, particularly semiconductors, initially lagged, but after-hours trading saw a significant boost in sentiment as Micron Technology reported stronger-than-expected earnings and guidance, causing its shares to surge and lifting Nasdaq futures. European equities were also mixed, with the Euro Stoxx 600 up 0.1%.

Major Government Bonds

Government bond yields broadly declined as easing geopolitical tensions in the Middle East and falling oil prices tempered US - Consumer Price Index (CPI) concerns. The US - 10-Year Treasury Note Yield was down -0.1 percentage points to 4.4%, and the US 2-year Treasury Note Yield fell 5 basis points to 4.15%. Similarly, the Germany 10-year Bond Yield was down -0.1 percentage points to 2.9%, its lowest level since March 11, 2026.

Major Commodities

Crude oil prices plummeted to pre-Middle East conflict levels, with WTI Crude Oil down -4.6% to $69.8 per barrel, its lowest level since March 2, 2026, and Brent Crude Oil declining over 4% to $73.42 per barrel, driven by the reopening of the IMF - Strait of Hormuz - Daily Transit Calls & Transit Trade Volume and increased supply flows. Precious metals also saw significant declines, with Gold down -3.1% to $4019.4 per ounce, its lowest level since November 10, 2025, after briefly trading below $4,000, and Silver plunging over 6.6%, pressured by a strengthening US Dollar Index, which rose 0.2% to 101.6, its highest level since May 13, 2025, and elevated US - FedWatch Probability of Rate Hike/Cut expectations.

Macroeconomics

US June Markit Manufacturing PMI preliminary reading rose to 55.7, marking a four-year high, while the factory employment indicator fell to a six-year low. The Eurozone's June Composite PMI improved to 49.5, a three-month high, though the UK's Composite PMI declined to a 14-month low of 49.4. Geopolitical tensions in the Middle East eased significantly as the US granted a 60-day sanctions waiver for Iranian oil, allowing dollar settlement and the unfreezing of $12 billion in Iranian assets, with Iran agreeing to high-level nuclear inspections.

Major Stock Markets

Major global stock markets experienced a broad sell-off, primarily driven by a sharp decline in technology and semiconductor shares due to profit-taking and concerns over AI valuations. The S&P 500 fell -1.4% to 7366, the Nasdaq Composite dropped -2.2% to 25587, while the Dow Jones Industrial Average was down -0.1% to 51667. Overseas, South Korea's KOSPI index plunged down -10.0% to 8204, marking its largest single-day drop, and European indices also closed lower, with the Euro Stoxx 50 down 1.3%.

Major Government Bonds

Government bond yields generally declined as investors sought safe-haven assets amid the equity market downturn. The US 10-year Treasury yield fell down -0.05 percentage points to 4.5%, and the 2-year yield dropped 3 basis points to 4.19%. Similarly, the German 10-year bond yield decreased down -0.03 percentage points to a record low of 2.9%, and UK Gilt yields also saw declines.

Major Commodities

Crude oil prices retreated significantly as Middle East tensions eased, with WTI crude falling down -1.0% to a record low of $73.1 per barrel and Brent crude dropping 1.38% to $76.62 per barrel, erasing all gains since the recent US-Iran conflict. Gold prices fell down -1.7% to $4131.5 per ounce, pressured by a strengthening US dollar and investor liquidation, while silver plunged 5.48% to a three-month low of $61.53 per ounce.

Eurozone PMI Overview

The Eurozone's Purchasing Managers' Index (PMI) reports for June revealed mixed results across the manufacturing and services sectors. The Manufacturing PMI came in at 51.3, slightly below both the previous and forecasted figures of 51.6. Meanwhile, the Services PMI showed a stronger performance than expected, recording a value of 48.9 compared to the previous 47.7 and the forecasted 48.6. The Composite PMI, which combines both sectors, improved to 49.5 from the previous 48.5.

European Countries PMI Details

In Germany, the Manufacturing PMI remained stable at 50.0, a slight decrease from the previous 50.1. However, the Services PMI declined to 46.8 from 48.1. In France, the Manufacturing PMI increased to 50.7 from 49.7, while the Services PMI saw a significant rise to 47.4 from 44.3. These figures highlight the varying performance across the Eurozone's major economies, with France showing notable improvements in both sectors.

Macroeconomics

Macroeconomic sentiment was shaped by significant progress in US-Iran peace talks, with a roadmap for a final agreement in 60 days and a temporary 60-day US Treasury waiver allowing Iranian oil sales. Eurozone June consumer confidence improved slightly to a preliminary -17.7 from -19.0. In the UK, Prime Minister Starmer announced his resignation, paving the way for a new Labour Party leader. Markets are now anticipating the US May Personal Consumption Expenditures (PCE) inflation report, with consensus forecasts at 4.1% year-over-year for headline PCE and 3.4% for core PCE, as several major banks now project Federal Reserve rate hikes this year. China's 5-year and 1-year Loan Prime Rates remained unchanged at 3.5% and 3% respectively for the 13th consecutive month.

Major Stock Markets

US equities closed mixed, with technology stocks experiencing sharp declines that weighed heavily on the Nasdaq, which fell down -1.3% to 26167, and the S&P 500, down -0.4% to 7473. This underperformance was notably driven by large-cap tech names, while the Dow Jones Industrial Average managed a gain of 0.3% to 51713 and the small-cap Russell 2000 index rose around 0.8%, reaching new record highs, suggesting a rotation in market leadership. European markets generally advanced, with the Euro Stoxx 600 up 0.6% and the FTSE 100 gaining 0.7% to 10438, though France's CAC 40 fell down -0.3% to 8400. Asian markets were varied, with Chinese mainland indices closing higher, while Hong Kong's Hang Seng index fell down -0.7% to 23769, reaching its lowest level since June 24, 2025.

Major Government Bonds

US Treasury yields rose across the curve, reflecting continued hawkish expectations for the Federal Reserve following last week's policy meeting. The 10-year US Treasury yield increased by 0.03 percentage points to 4.5%, while the more interest-rate-sensitive 2-year US Treasury yield climbed 5 basis points to 4.23%, marking a new 2026 high. Conversely, European government bond yields saw declines, with the German 10-year bond yield falling down -0.03 percentage points to 3.0% and the UK 10-year bond yield also dropping 3 basis points to 4.81%.

Major Commodities

Oil prices plummeted significantly, with Brent crude futures dropping over 3% to settle around $77.90 per barrel and WTI crude futures falling down -3.1% to settle at $74.1 per barrel, reaching its lowest level since March 3, 2026. This sharp decline was primarily attributed to major progress in US-Iran peace talks and the US Treasury's issuance of a temporary 60-day waiver for Iranian oil sales, easing supply concerns. Gold prices, however, saw a modest rebound, rising 0.9% to settle at $4209.7 per ounce, maintaining its appeal as a geopolitical and inflation hedge despite the rise in US bond yields. Base metals were mixed, with LME copper remained unchanged at $6.3 per pound.

World Overview

The June MM Economic Expectation Index remained steady at 2.52%, showing no change from the previous month.

Main Countries Details

• US: The index slightly increased to 2.08% from 2.06%.
• Eurozone: The index decreased to 0.95% from 1.0%, marking the lowest level since April 2025.
• UK: The index rose to 1.05% from 0.92%.
• Germany: The index increased to 0.9% from 0.87%.
• Japan: The index fell to 0.7% from 0.74%, reaching the lowest level since May 2024.
• China: The index slightly increased to 4.53% from 4.52%.
• Italy: The index rose to 0.65% from 0.58%.
• Taiwan: The index significantly increased to 6.48% from 6.03%.
• Singapore: The index increased to 3.0% from 2.79%.

Other countries like Australia, Brazil, Canada, and Indonesia showed minimal changes in their economic expectation indices, reflecting a stable economic outlook. Meanwhile, India saw a slight decrease to 6.98% from 7.04%, and Malaysia's index slightly increased to 4.5% from 4.48%.

Macroeconomics

Global macroeconomic sentiment was shaped by a hawkish Federal Reserve, which revised its median 2026 interest rate forecast upward to 3.75%, with nearly half of FOMC members signaling a potential hike this year. U.S. initial jobless claims remained stable at 226,000, indicating a resilient labor market, while the Philadelphia Fed manufacturing index jumped to 10.3 in June. Inflation concerns were partially eased by national gasoline prices falling below $4 a gallon. Other central banks saw varied actions: the Bank of England held rates at 3.75% despite some dissent for a hike, the Swiss National Bank maintained its benchmark rate at 0% while raising its 2026 inflation outlook to 0.6%, and central banks in Indonesia and the Philippines both delivered 25bps rate hikes to 5.75% and 4.75% respectively. The U.S. dollar index surged 0.7% to 100.8, reaching its highest level since May 19, 2025.

Major Stock Markets

Major global stock markets largely rebounded, driven by optimism surrounding a preliminary Middle East peace agreement and strong performance in the technology sector, particularly semiconductors. The S&P 500 jumped 1.1% to 7500, the Nasdaq Composite surged 1.9% to 26518, and the Dow Jones Industrial Average rose 0.1% to 51565, erasing much of the previous day's losses. The semiconductor index climbed 6.4% to 14342, reaching a record high, fueled by news of significant chipmaking collaborations. European markets were mixed, with the German DAX30 rising 0.4% to 25027 and Euro Stoxx 50 up around 0.4%, while the UK FTSE100 was down -1.0% to 10400. Asian indices saw gains in Japan, South Korea, Taiwan, and mainland China, but declines in Hong Kong. Japan's Nikkei 225 gained 1.7% to 71054, reaching a record high; South Korea's KOSPI Index rose 2.3% to 9064, also a record high; and Taiwan's TSEC Weighted Index advanced 1.3% to 46465, marking a record high. Meanwhile, Hong Kong's Hang Seng Index was down -1.6% to 23925, its lowest level since July 10, 2025, and mainland China's Shanghai Shenzhen CSI 300 Index edged up 0.2% to 4942.

Major Government Bonds

Government bond markets saw mixed movements as investors continued to digest the Federal Reserve's hawkish stance. U.S. Treasury yields on the longer end eased, with the 10-year yield was down -0.02 percentage points to 4.4% and the 30-year yield declining to a three-month low of 4.9%. However, the front end of the U.S. debt market remained under pressure, with the 2-year Treasury yield little changed around 4.18%, just below its recent 2026 high. Elsewhere, gilt yields in the UK saw modest moves after the Bank of England's decision to hold rates steady.

Major Commodities

Commodity markets reacted sharply to geopolitical developments and central bank signals. Oil prices were volatile following the interim Middle East peace agreement and the reopening of the Strait of Hormuz; WTI crude settled up 0.7% at $76.6 per barrel, while Brent crude reversed earlier losses to close up 0.38% at $79.85 per barrel amid lingering regional uncertainties. Gold prices experienced a significant decline, down -1.7% to $4224.8 per ounce, pressured by the stronger U.S. dollar and fears of higher interest rates after the hawkish Fed meeting. Silver also saw a notable drop of over 3%, and base metals generally weakened.

Macroeconomics

The Federal Reserve maintained its benchmark interest rate at 3.5%-3.75% but signaled a hawkish shift by removing the projected 2026 rate cut from its dot plot, with nine policymakers now anticipating at least one rate hike this year. Chair Kevin Warsh, in his first press conference, emphasized the commitment to price stability and did not submit his own rate forecast, while the Fed significantly raised its 2026 inflation outlook to 3.6%. Concurrently, US retail sales in May grew 0.9% month-over-month, surpassing expectations and indicating resilient consumer spending. Geopolitically, the US and Iran signed an electronic memorandum of understanding aimed at peace and reopening the Strait of Hormuz, though uncertainty lingered following warnings from President Trump.

Major Stock Markets

Major U.S. stock indices closed lower, with the Dow Jones Industrial Average down -1.0% to 51493, the S&P 500 down -1.2% to 7420, and the Nasdaq Composite down -1.3% to 26022, as markets reacted to the Federal Reserve's more hawkish stance. Large-cap technology stocks generally saw declines, though some semiconductor names posted gains. European markets were mixed, while Asian equities also showed varied performance, with Hong Kong's Hang Seng index down -0.7% to 24312 and mainland Chinese A-shares posting gains.

Major Government Bonds

U.S. government bond yields rose across the curve, particularly at the shorter end, reflecting heightened expectations for a 'higher-for-longer' interest rate environment following the Federal Reserve's hawkish signals. The 10-year U.S. Treasury yield rose 0.06 percentage points to 4.5%, while the more policy-sensitive 2-year U.S. Treasury yield saw a sharper increase to 4.21%.

Major Commodities

Commodity markets saw varied movements, with WTI crude oil prices fell modestly, down -0.6% to $76.1 per barrel, reaching their lowest level since March 5, 2026, and Brent crude oil around $79.55 per barrel, as the US-Iran peace agreement and subsequent warnings from President Trump introduced volatility. Meanwhile, spot Gold prices dropped sharply, down -1.5% to $4284.5 per ounce, pressured by a stronger U.S. Dollar Index, which rose 0.9% to 100.4, and increased expectations for higher interest rates after the Fed's announcement. China - Iron Ore Price also fell, down -2.0% to $747.0 per ton, reaching its lowest level since February 25, 2026.

Retail Sales Overview

The latest data on US retail sales for May shows a significant increase, with a month-on-month (MoM) growth of 0.88%, surpassing the forecast of 0.5% and the previous month's 0.4%. Year-on-year (YoY), retail sales rose by 6.88%, marking the highest level since January 2023.

Retail Sales Control Group

The retail sales control group also experienced notable growth, with a MoM increase of 0.89%, higher than the expected 0.4% and the previous 0.29%. On a YoY basis, the control group saw a 6.28% rise, reaching its highest level since February 2023.

Components Details

• Motor Vehicle sales rebounded with a 4.39% increase from a previous decline of -1.8%.
• Gasoline Stations reported a significant YoY increase of 26.53%, up from 20.99%.
• Nonstore Retailers saw a robust growth of 12.24%, compared to 10.96% previously.
• Furniture sales improved, though still negative, at -1.19% from -3.5%.
• Food & Beverage sales rose to 2.04% from 1.31%.

The data indicates a strong consumer spending trend, with several sectors showing substantial growth compared to previous months.

Macroeconomics

Global macroeconomic sentiment was shaped by the US-Iran peace agreement, which eased inflation concerns. In the US, May housing starts plunged 15.4% to 1.177 million units, while import prices rose 1.9%. The Federal Reserve began its policy meeting, with expectations for no rate change. The Bank of Japan raised its policy rate by 25 basis points to 1.00%, a 31-year high. China's May industrial production increased 4.5%, but retail sales contracted 0.6%, its first decline since late 2022, primarily due to a 16% drop in car sales, and fixed-asset investment contracted 4.1% year-to-date. The Reserve Bank of Australia kept its cash rate at 4.35%, while maintaining a hawkish stance.

Major Stock Markets

Major global stock markets ended mixed, with a notable rotation out of technology and growth sectors into cyclicals. The Dow Jones Industrial Average closed up 0.6% at a record high of 51999, while the S&P 500 declined -0.6% to 7511 and the Nasdaq Composite fell -1.1% to 26376. European equities saw broad gains. In Asia, Japanese and South Korean markets rose, while Chinese and Hong Kong equities declined, impacted by weaker-than-expected domestic demand data from China.

Major Government Bonds

Global government bond yields generally declined, with US Treasury yields falling across the curve as the prospect of an US-Iran peace deal eased inflation fears and oil prices tumbled. The 10-year US Treasury yield decreased -0.04 percentage points to 4.4%. Conversely, the 10-year Japanese Government Bond yield rose 0.05 percentage points to 2.6% following the Bank of Japan's rate hike and hawkish stance. Chinese 10-year government bond yields also saw a slight decrease, down -0.01 percentage points to 1.7%.

Major Commodities

International oil prices plummeted, with WTI crude falling down -5.9% to $76.7 per barrel, reaching its lowest level since March 5, 2026, and Brent crude dropping 5% to $78.96 per barrel, driven by optimism surrounding the US-Iran peace agreement and the immediate resumption of Iranian oil exports. Gold prices advanced for the fourth straight day, rising 0.3% to $4,350.5 per ounce, as lower oil prices tempered expectations for aggressive Federal Reserve rate hikes. Silver also saw a significant gain.

Macroeconomics

Global markets were significantly impacted by the preliminary agreement between the U.S. and Iran to end hostilities and reopen the Strait of Hormuz, with a formal signing anticipated on June 19. This de-escalation lowered geopolitical risk and eased inflation concerns, particularly regarding energy. Economic data releases showed the June Empire State manufacturing index at 5.7, missing expectations, while May industrial production rose a modest 0.1% month-over-month. Additionally, June NAHB builder confidence posted a surprise decline to 35. Attention now shifts to the upcoming Federal Reserve FOMC meeting, with expectations for a less hawkish stance potentially emerging due to reduced inflationary pressures from lower oil prices.

Major Stock Markets

Global equity markets experienced a broad rally, driven by the U.S.-Iran agreement. The Dow Jones Industrial Average closed at a fresh record high of 51671, up 0.9%, and Russell 2000 also closed at fresh record highs, while the S&P 500 and Nasdaq Composite posted significant gains of 1.7% to 7554 and 3.1% to 26684 respectively. Technology and small-cap stocks led the advance, with 'big tech' broadly higher. Conversely, energy and traditional defensive sectors were relative laggards. Asian markets also saw strong gains, with Japan's Nikkei surging 5.0% to a record high of 69318.

Major Government Bonds

Treasury yields declined across the curve, with the 10-year U.S. Treasury yield falling down -0.01 percentage points to 4.5% and the 2-year yield dropping to 4.045%. This movement reflected reduced inflation risk and slightly flattened the perceived Fed rate hike path, as investors anticipated a less hawkish stance from the Federal Reserve following the geopolitical de-escalation.

Major Commodities

Oil prices fell sharply in response to the U.S.-Iran deal and the expected reopening of the Strait of Hormuz. WTI crude futures plummeted down -4.4% to settle at $81.1 per barrel, marking its lowest close since March 6th, while Brent crude also saw a significant drop. Conversely, precious metals benefited from the declining dollar and lower Treasury yields, with spot gold rising 2.2% to $4331.2 per ounce and silver gaining 2.91%.

Macroeconomics

Global macroeconomic sentiment was influenced by progress in US-Iran peace talks, with reports suggesting a deal could be signed soon, potentially leading to the reopening of the World - Strait of Hormuz - Crude Oil and Condensate Traffic - By Origin. In the US, preliminary June US - Consumer Confidence rose to 48.9 from 44.8 in May, and one-year inflation expectations declined to 4.6% from 4.8%, while US - 5-year Forward Inflation Expectation Rate fell to 3.4% from 3.9%. The Eurozone - ECB Benchmark Interest Rate raised its three key interest rates by 25 basis points, marking its first hike in nearly three years. China reported May new social financing at 2.03 trillion yuan, new RMB loans at 520 billion yuan, and M2 growth of 8.6% year-over-year. The World Bank lowered its global economic growth forecast to 2.5%.

Major Stock Markets

Global equity markets rallied, buoyed by improving risk sentiment stemming from hopes for a US-Iran peace agreement and the successful debut of SpaceX. Major US benchmarks closed higher, with the S&P 500 gaining 0.5% to 7432, the Dow Jones Industrial Average up 0.7% to 51202, and the NASDAQ Composite Index rising 0.3% to 25889. Small-cap stocks, as measured by the US - Russell 2000 Index, were a bright spot, advancing 0.8%. SpaceX's record-breaking $75 billion IPO saw its shares surge approximately 19% on their first day of trading, significantly impacting market sentiment. European and Asian markets also posted strong gains.

Major Government Bonds

US Treasury yields saw mixed movements, with the US - 10-Year Treasury Note Yield at 4.5% on the day, though it ended the week lower. The yield curve experienced some flattening, reflecting a cautious stance despite improved risk appetite in equity markets. Overall, bond yields remained below their recent highs.

Major Commodities

WTI Crude Oil prices experienced a decline, with WTI Crude Oil settling down -2.1% at $84.2 per barrel and Brent Crude Oil falling 3.37% to $87.33 per barrel, as optimism grew for a US-Iran peace deal that could reopen the World - Strait of Hormuz - Crude Oil and Condensate Traffic - By Origin and ease supply concerns. US Gold Futures, conversely, settled at $4,239.8 per ounce. The US Dollar Index was down -0.1% to 99.8 against a basket of major currencies.

Macroeconomics

Macroeconomic data showed the U.S. May Producer Price Index (PPI) rose 6.5% year-over-year, with core PPI (excluding food and energy) up 4.9% year-over-year, while initial jobless claims increased to 229,000. The European Central Bank raised its three key interest rates by 25 basis points, with the deposit rate now at 2.25%, citing broadening inflation pressures. The World Bank also cut its global growth forecast for the year to 2.5%, the slowest since the pandemic. A significant geopolitical shift occurred as President Trump announced the cancellation of planned military strikes against Iran, indicating progress toward a potential peace deal, which significantly eased market tensions.

Major Stock Markets

Major stock markets experienced a strong rally, primarily driven by the de-escalation of U.S.-Iran tensions. The S&P 500 surged 1.8% to 7394, the NASDAQ Composite Index climbed 2.5% to 25810, and the Dow Jones Industrial Average gained 1.9% to 50849, marking their best daily performances in months. European equities also advanced, with the Euro Stoxx 600 index closing up 0.5%. The technology and semiconductor sectors were notable outperformers, with the US - PHLX Semiconductor Sector Index soaring 7.9% to 13171.

Major Government Bonds

Government bond yields declined across the board as risk aversion receded. The U.S. 10-year Treasury yield was down -0.08 percentage points to 4.5%, while the 2-year Treasury yield dropped 8 basis points to 4.06%. In Europe, the German 10-year Bund yield was down -0.04 percentage points to 3.0%, following the ECB's rate hike but also reflecting the broader market sentiment shift.

Major Commodities

Commodity markets saw significant movements in response to the geopolitical news. Crude oil prices tumbled sharply, with WTI crude down -7.2% to settle around $85.9 per barrel, and Brent crude declining about 5.5% to around $90.38 per barrel, as fears of supply disruptions eased. Conversely, Gold surged, gaining 4.0% to close around $4233.7 per ounce, benefiting from a weaker dollar and lower bond yields.

Macroeconomics

Macroeconomic sentiment was dominated by escalating geopolitical tensions in the Middle East, with US-Iran conflict fueling inflation concerns. The US Consumer Price Index (CPI) for May rose 0.5% month-over-month and 4.2% year-over-year, marking a three-year high, largely driven by a 3.9% monthly increase in energy prices. Core CPI, excluding food and energy, showed a more moderate 0.2% month-over-month increase, below expectations. Meanwhile, the Bank of Canada held its policy rate steady at 2.25%, while the European Central Bank was widely anticipated to deliver a 25 basis point rate hike.

Major Stock Markets

Major global stock markets experienced a broad-based sell-off, primarily driven by heightened geopolitical risks and inflation fears. In the US, the S&P 500 fell -1.6% to 7267, the Dow Jones Industrial Average dropped -1.9% to 49919, and the Nasdaq Composite declined -2.0% to 25170. Technology and semiconductor stocks were particularly hard hit, while defensive sectors like energy, healthcare, and consumer staples showed relative resilience. European equities also mostly closed lower, with the German DAX down -1.0% to 24195 and the French CAC 40 down -0.5% to 8162, though the UK FTSE 100 edged up 0.3% to 10255. Asian markets also saw declines, with the KOSPI falling -4.5% to 7731 and the Nikkei 225 down -1.9% to 64179.

Major Government Bonds

Government bond yields generally rose as geopolitical tensions and inflation concerns took precedence. The US 10-year Treasury yield increased by 0.04 percentage points to 4.6%, while the 2-year Treasury yield climbed 3 basis points to 4.14%. This move reflected market participants pricing in a higher likelihood of the Federal Reserve maintaining a hawkish stance or even a potential rate hike by year-end, despite a cooler-than-expected core CPI reading. German 10-year bond yields also saw a modest increase of 0.01 percentage points to 3.1%.

Major Commodities

Commodity markets reacted sharply to the geopolitical developments. WTI crude oil surged 2.9% to settle at $91.8 per barrel, with Brent crude also rising over 1.8%, as the escalating US-Iran conflict fueled concerns over potential supply disruptions in the Middle East. Conversely, gold plunged significantly, down -4.0% to $4,076.1 per ounce, reaching its lowest level since 2025-11-10 and entering bear market territory, as increased inflation fears and expectations of higher interest rates diminished its appeal as a safe-haven asset. Silver also experienced a notable decline of over 3%.

Highlight

The US Consumer Price Index (CPI) for May recorded a year-over-year (YoY) increase of 4.25%, surpassing the forecast of 4.2% and marking the highest level since April 2023. On a month-over-month (MoM) basis, the seasonally adjusted (SA) CPI rose by 0.47%, which was lower than the anticipated 0.5%. The Core CPI, excluding food and energy, showed a YoY increase of 2.85%, slightly below the forecast of 2.9%. The Core CPI on a MoM basis rose by 0.21%, also falling short of the expected 0.3%.

Components

Energy prices surged significantly with a YoY increase of 22.97%, up from the previous 17.54%. Transportation also saw a notable rise, with an 8.95% increase compared to the previous 6.89%. Apparel prices rose by 4.81%, up from 4.17%. In contrast, Medical Care Commodities experienced a decline of 1.8%, compared to a previous decrease of 0.52%. Education & Communication prices rose by 0.84%, up from 0.16%. Shelter costs increased slightly to 3.35% from 3.29%, while Medical Care Services rose to 3.56% from 3.21%. Housing prices slightly decreased to 3.59% from 3.63%.

Macroeconomics

US private employers added 29,000 jobs weekly for the four weeks ending May 23, indicating slower but stable growth. The US trade deficit narrowed to $55.9 billion in April, while US - Existing Home Sales rose 3.2% to a 4.17 million unit annual rate in May. Geopolitical tensions escalated as the US conducted retaliatory strikes against Iranian military targets following an alleged helicopter incident, though President Trump continued to signal a potential near-term peace deal with Iran. Germany's industrial output increased by 0.4% in April and exports unexpectedly rose by 0.9%. China reported robust trade data for May, with China - Exports surging 19.4% year-on-year and China - Imports up 27.4%, driven by strong AI-related demand, while Japan's central bank signaled a potential interest rate hike to 1% in June.

Major Stock Markets

Global stock markets experienced a mixed day, largely influenced by a significant sell-off in technology shares and ongoing geopolitical concerns. The NASDAQ Composite Index was down -1.0% to 25679 and the S&P 500 was down -0.3% to 7387, as AI-related stocks faced renewed pressure, with the US - PHLX Semiconductor Sector Index dropping as much as 8.6% intraday before closing down -1.9% to 12658. Conversely, the Dow Jones Industrial Average gained 0.2% to 50872, as funds rotated into more defensive sectors. European markets were mostly lower, with the Stoxx 600 Index down 0.5% and the FTSE 100 down -1.4% to 10227, while Asian markets saw varied performance, with strong gains in South Korea - Korea Stock Exchange KOSPI Index gained 8.2% to 8097 and China's A-shares, but a slight dip in Hong Kong's Hong Kong Hang Seng Index was down -0.4% to 24566.

Major Government Bonds

Major government bond yields experienced mixed movements, reflecting a flight to safety amid market volatility and falling oil prices. The US - 10-Year Treasury Note Yield was down -0.02 percentage points to 4.5%, and the US 2-year Treasury Note Yield dropped 4 basis points to 4.12%. Similarly, the Germany 10-year Bond Yield remained unchanged at 3.1%. This movement in bond markets occurred ahead of key inflation data releases, with investors closely watching for further indications on central bank policy.

Major Commodities

Oil prices fell significantly, with US WTI Crude Oil Futures settling down -2.7% at $88.9 per barrel and Brent Crude Oil down 3.0% at $91.45 per barrel, initially pressured by reports of a potential Middle East ceasefire but paring some losses after news of US military strikes against Iran. US Gold Futures was down -1.9% to $4279.4 per ounce, reaching a record low since December 2025, as rising expectations of US interest rate hikes and a broader market sell-off reduced its appeal as a safe haven and inflation hedge. Silver also saw a substantial drop of 4.1%.

Macroeconomics

US inflation expectations remained a key focus, with the May Consumer Price Index (CPI) forecast at 4.2% year-over-year for headline inflation and 2.9% for core. The New York Fed's 1-year inflation expectations eased slightly by 0.1 percentage points to 3.5%, though household financial sentiment weakened, and the perceived probability of losing a job increased to 15.1% from 14.6%. In Europe, Q1 Euro area GDP was revised to a contraction of 0.2% quarter-over-quarter, with annual growth at 0.3% year-over-year, while South Korea's Q1 GDP was revised higher to 3.8% year-over-year.

Major Stock Markets

US equities closed mixed, partially recovering from Friday's sharp sell-off. The NASDAQ Composite Index advanced by 0.9% to 25930 and the S&P 500 gained 0.3% to 7406, largely driven by a strong rebound in the semiconductor sub-index. Conversely, the Dow Jones Industrial Average edged down -0.2% to 50786. Across Asia, major indices generally declined, with Japan Nikkei 225 Index falling down -3.9% to 64025, Hong Kong's Hang Seng down -1.2% to 24657, and South Korea's Kospi experiencing a significant drop of -8.3% to 7484, triggering a circuit breaker.

Major Government Bonds

US Treasury yields continued their upward trend, extending gains from Friday's stronger-than-expected jobs report. The benchmark US - 10-Year Treasury Note Yield rose 0.03 percentage points to settle around 4.6%, while the US 2-year Treasury Note Yield increased by about 1 basis point to 4.166%. This movement contributed to some curve steepening. Sovereign bonds across Asia also broadly sold off, tracking the higher yields in US Treasuries.

Major Commodities

Crude oil prices saw significant volatility but ultimately closed higher, with WTI Crude Oil settling up 0.8% at $91.3 per barrel and Brent Crude Oil rising 1.25% to $94.25 per barrel. Initial spikes driven by renewed Middle East tensions were largely pared after Iran announced a temporary halt to its military operations against Israel. Gold finished down -0.3% to $4353.8 per ounce, reaching its lowest level since January 5, 2026, after recovering from earlier session lows, while Silver declined by 0.8%. China - Iron Ore extended its losses, down -0.7% to 760.5, though Copper saw a modest gain of 1.1% to 6.3.

Macroeconomics

The U.S. labor market showed unexpected strength as May nonfarm payrolls surged by 172,000 jobs, significantly exceeding expectations of 80,000-90,000, while the unemployment rate remained steady at 4.3%. Revisions added a combined 93,000 jobs to the prior two months. Average hourly earnings rose 3.4%, in line with forecasts. This robust data intensified market expectations for potential Federal Reserve rate hikes, with some investors now pricing in a higher probability of an additional hike by year-end, leading to a reassessment of the monetary policy path. Elsewhere, initial jobless claims rose to 225,000, their highest since February, and Eurozone Q1 GDP unexpectedly contracted by 0.2%.

Major Stock Markets

Major U.S. equity indices experienced a sharp sell-off, marking their worst day since last year, as the strong jobs report fueled concerns about higher interest rates. The Nasdaq Composite plummeted down -4.2% to 25709, its largest daily drop since April 2025, while the S&P 500 fell down -2.6% to 7384, ending its nine-week winning streak. The Dow Industrials also declined down -1.3% to 50867. Technology and semiconductor index (SOX) stocks bore the brunt of the selling, with the semiconductor index (SOX) collapsing down -10.3% to 12221 after Broadcom's chip sales outlook disappointed, triggering widespread profit-taking and erasing over $1 trillion in market value. Defensive sectors like consumer staples and financials showed relative resilience. Internationally, South Korea's KOSPI index dropped down -5.5% to 8161, reflecting global concerns over the AI-driven rally.

Major Government Bonds

Government bond yields surged across the board following the robust U.S. jobs report, as investors recalibrated expectations for Federal Reserve policy. The benchmark 10-year Treasury yield climbed up 0.06 percentage points to 4.5%, while the rate-sensitive 2-year Treasury yield jumped to 4.16%, reaching a new 52-week high. The 30-year Treasury yield also moved above 5%. This sharp move in yields reflected increased conviction that the Fed may need to maintain a hawkish stance or even consider further rate adjustments to combat potential inflation pressures, leading to a notable curve flattening.

Major Commodities

Commodity markets were mixed, with precious metals and oil moving lower. Gold prices plunged down -3.1% to $4,365.3 per ounce, falling below its 200-day moving average and erasing year-to-date gains, reaching its lowest level since January 2026, while silver dropped 6.58% to $69.10 per ounce, both pressured by a stronger U.S. dollar, which rose 0.7% to 100.1, and heightened rate hike expectations. Crude oil prices also declined, with WTI crude settling down -2.7% at $90.5 per barrel and Brent crude falling 2.04% to $93.09 per barrel, partly due to renewed hopes for a Middle East ceasefire and concerns about potential oversupply if the Strait of Hormuz fully reopens. Bitcoin also experienced a significant downturn, falling down -3.5% to $61,544.4, reaching its lowest level since October 2024.

Highlight

The US Nonfarm Payrolls for May showed a monthly change of 172.0k, surpassing the forecast of 85.0k and slightly below the previous month's 179.0k. The unemployment rate remained steady at 4.3%, aligning with both previous and forecasted figures.

Components

Significant changes were observed in various sectors. The Construction sector reported a notable increase with a monthly change of 17.0k, up from 9.0k previously. Manufacturing saw a rise to 7.0k from 0.0k. The Retail Trade sector experienced a decline, with a decrease of 1.1k compared to a previous increase of 23.5k. Transportation showed a sharp drop to 0.6k from 39.3k. Financial Activities recorded a significant decrease of 22.0k, down from -6.0k. Leisure & Hospitality surged to 70.0k from 30.0k, while Government employment rose sharply to 52.0k from 2.0k. Private Service sector growth slowed to 92.0k from 163.0k in the previous month.

Macroeconomics

US initial jobless claims rose to 225,000, exceeding the 213,000 consensus and marking the highest level since February. First-quarter non-farm productivity was revised down to 0.3% from a preliminary 0.8% (consensus 0.5%), though unit labor costs increased a lower-than-expected 1.8% (consensus 2.5%). May tech sector layoffs reached a near two-year high, with AI frequently cited as a reason. Geopolitical developments saw initial optimism over US-Iran talks and an Israel-Lebanon ceasefire, which Hezbollah later rejected, maintaining uncertainty. Eurozone April retail sales decreased 0.4% monthly but increased 1.0% annually.

Major Stock Markets

US equity markets presented a mixed picture, with the Dow Jones Industrial Average surging 1.7% to a new record close of 51562, and the S&P 500 gaining 0.4% to 7584. However, the Nasdaq Composite edged down -0.1% to 26831, primarily due to weakness in the technology and semiconductor stocks sectors. This tech downturn was heavily influenced by Broadcom's disappointing AI chip outlook, which led to a significant drop in its shares and spillover selling in other AI-related and semiconductor stocks. European indices generally advanced, while most Asian markets, including the ASX 200 which fell 1.1%, closed lower.

Major Government Bonds

Major government bond yields broadly declined, reflecting a cautious market tone. The US 10-year Treasury yield fell -0.02 percentage points to 4.5%, while the 2-year Treasury yield decreased by 3-4 basis points to 4.04-4.05%. German 10-year bund yields also saw a slight dip of -0.01 percentage points to 3.0%. These movements suggested a bull steepening of the yield curve, as investors reacted to economic data and geopolitical developments.

Major Commodities

Oil prices experienced a significant decline, with WTI crude futures falling down -3.2% to trade around $92.9 per barrel, and Brent crude futures dropping nearly 3% to $94.37-$95.03 per barrel. This downturn was largely attributed to cautious optimism surrounding potential de-escalation in the Middle East, including US-Iran diplomatic talks and initial reports of an Israel-Lebanon ceasefire. Conversely, spot gold prices rose 0.8% to approximately $4503.9 per ounce, supported by a weaker US dollar, which was down -0.1%, and falling bond yields, while silver gained 1.6% and copper rose 0.8%.

Macroeconomics

US economic data continued to show strength, with May ADP Nonfarm Employment private payrolls rising to 122,000, exceeding forecasts and marking the highest level since January 2025. The ISM Services PMI also increased to 54.5, with its prices paid index reaching 71.3, the highest since August 2022, signaling persistent inflationary pressures. Factory orders for April jumped 4.8%. The Federal Reserve's Beige Book noted economic activity increased in 10 of 12 districts, with moderate to strong price increases driven primarily by energy-related costs due to the Middle East conflict, while employment remained stable across most regions.

Major Stock Markets

Global stock markets largely retreated as escalating Middle East tensions and rising inflation concerns dampened sentiment. In the US, the S&P 500 snapped a nine-day winning streak, falling down -0.7% to 7554, while the Dow Jones Industrial Average declined down -1.2% to 50687 and the Nasdaq Composite dropped down -0.9% to 26854. Technology and financial sectors lagged, though the semiconductor index defied the broader downturn, rising 1.4% to 13917, a record high. European equities also saw declines, with the Euro Stoxx 50 down 0.89%. Asian markets were mixed, with Japan's Nikkei 225 surging 2.5% to 68402, a record high, while Hong Kong's Hang Seng fell down -1.6% to 25633.

Major Government Bonds

Major government bond yields climbed, reflecting increased inflation worries stemming from the Middle East conflict and stronger-than-expected US economic data. The US 10-year Treasury yield rose by 0.04 percentage points to 4.5%, and the 2-year Treasury yield also increased by 2-4 basis points to around 4.08-4.09%. European bond yields followed suit, with 10-year Gilt yields rising by 7 basis points and Bund yields rising by 0.06 percentage points to 3.0%.

Major Commodities

Crude oil prices surged for a third consecutive session due to escalating Middle East hostilities, with WTI crude rising 1.8% to settle at $95.4 per barrel and Brent crude rising 1.89% to $97.81 per barrel. US crude inventories unexpectedly fell by 8 million barrels, further supporting prices. Conversely, gold prices declined down -1.3% to $4,462.7 per ounce, pressured by a stronger US dollar, which rose 0.3% to 99.5, and expectations that persistent inflation would keep interest rates elevated. Silver also saw a significant drop of 2.46%.

ISM Services PMI Overview

The Institute for Supply Management (ISM) reported that the Services Purchasing Managers' Index (PMI) for May rose to 54.5, surpassing both the previous month's figure of 53.6 and the forecast of 53.7. This marks a continued expansion in the services sector, maintaining a level above 50 since May 2025.

Main Components Details

• Business Activity increased to 57.7 from 55.9.
• New Orders saw a significant rise to 57.3 from 53.5.
• Employment slightly decreased to 47.9 from 48.0.
• Supplier Deliveries decreased to 55.2 from 56.8.
• Inventory showed a notable increase to 62.5 from 53.1.
• Prices rose to 71.3, the highest level since August 2022, from 70.7.
• Backlog of Orders decreased to 51.3 from 53.0.
• New Export Orders fell to 50.0 from 52.1.
• Imports decreased to 51.1 from 54.7.
• Inventory Sentiment remained relatively stable at 55.2 from 55.1.

Highlight

The US ADP Nonfarm Employment report for May showed a monthly change of 122,000 jobs, surpassing the forecast of 118,000 and the previous month's figure of 105,000. This marks the highest level since January 2025. The ADP Job Stayer Median Salary remained steady at a 4.4% increase , while the ADP Job Changer Median Salary saw a slight decrease to 6.5% from 6.6% previously.

Components

• Construction saw a decrease with 8,000 jobs added, down from 11,000 previously.
• Education and Health Services added 57,000 jobs, a slight decrease from 61,000.
• Financial Activities saw a decrease with 7,000 jobs added, down from 9,000.
• Information sector experienced a decline, losing 9,000 jobs compared to a gain of 3,000 previously.
• Leisure and Hospitality increased to 8,000 jobs from 4,000.
• Manufacturing added 3,000 jobs, recovering from a loss of 1,000.
• Natural Resources and Mining lost 3,000 jobs, down from a gain of 4,000.
• Other Services added 4,000 jobs, improving from a loss of 1,000.
• Professional and Business Services added 11,000 jobs, recovering from a loss of 7,000.
• Trade, Transportation, and Utilities saw a significant increase, adding 36,000 jobs compared to 22,000 previously.