9 min read Weekly recap
US markets ended a shortened four-day week with mixed index results. The Dow Jones rose 1.97% to a record 52,900.07 on Thursday, its last session before the July 3 Independence Day holiday. The S&P 500 increased 1.76% to 7,483.24, while the Nasdaq advanced 0.64% to 29,556.67. Q2 was the strongest quarter since 2020, with the S&P 500 up about 15% and the technology sector up approximately 31%.
A key event was Kevin Warsh’s international debut on Wednesday. Speaking with Christine Lagarde, Andrew Bailey, and Tiff Macklem at the ECB Sintra Forum, Warsh did not indicate the July FOMC decision and joined the panel in rejecting forward guidance as a policy tool. He called inflation “too high” and reaffirmed the 2% target, noting he had “not submitted a dot” at the June meeting. The panel signaled a lasting change in central bank communication practices beyond individual rate decisions.
Thursday’s Non-Farm Payrolls report shifted market positioning. Employment increased by 57,000 in June, below the 113,000 consensus, ending a three-month streak of strong gains. The unemployment rate unexpectedly fell to 4.2% from 4.3%. Weaker jobs data supported expectations that the Fed will hold rates at 3.50 — 3.75% at the July 29 meeting, reducing the likelihood of a rate hike. Gold rose 1.49% to $4,187.30, the 10-year Treasury yield eased to about 4.37%, and the VIX declined to 15.81.
Nasdaq underperformed despite overall market strength. Tesla fell 7% despite exceeding Q2 vehicle delivery estimates, while Apple’s earlier 6% decline following price-hike announcements also weighed on the index. The US 100, which reflects growth-focused stocks most affected by rate changes since May’s strong NFP report, continues to provide a clear view of how the higher-for-longer rate environment is moderating.
Oil & OPEC+
Brent closed Thursday at approximately $71.72. The reversal of the supply-shock premium accelerated as Hormuz traffic normalized and Saudi tanker movements remained steady. The energy-driven inflation that raised Eurozone CPI to 3.2% and US Core PCE to 3.4% in May is now reversing.
At Sunday’s OPEC+ ministerial, the seven core voluntary-cut producers—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—agreed to increase August output by 188,000 barrels per day, marking the fifth consecutive monthly rise. The group has added about 800,000 bpd from April to August. As of August, 379,000 bpd remain from the original 1.65 million bpd voluntary cut agreed in 2023. If this pace continues, the remaining cuts will be unwound by the end of September. The next meeting is scheduled for 2 August.
Brent is losing support after support, heading toward the major supply level at 60.40. If the US dollar continues to strengthen amid hawkish insights from the Federal Reserve meeting minutes, Brent may reach 60.40 within a week.
Week Ahead
US ISM Services PMI June (Monday, 14:00 UTC+0)
ISM will release the June Services PMI at 14:00 UTC+0 on Monday, providing the first major US activity data of the week and an early look at how the services sector, which accounts for about two-thirds of US GDP, is performing amid softer NFP results. The May reading was 54.5, marking the 23rd straight month of expansion, though the prices-paid component rose to 71.3, the highest since August 2022.
The June reading will be important for two reasons. First, it will show whether the prices-paid subcomponent declines as lower Brent prices and normalized Hormuz traffic take effect. Second, it will indicate whether new orders and employment remain stable despite the weaker June NFP data. The employment subcomponent was already contractionary at 47.9 in May and will be closely monitored as a leading indicator for the July FOMC.
A strong headline with lower prices would likely extend the equity rally that ended Q2 with a 15% gain, easing stagflation concerns and confirming a positive outlook for activity. Conversely, higher prices combined with contracting employment would renew stagflation worries, pressuring the S&P 500 as technology stocks remain volatile.
FOMC minutes (Wednesday, 18:00 UTC+0)
The Federal Reserve will release minutes from the 17 June FOMC meeting at 18:00 UTC+0 on Wednesday. That meeting delivered a hawkish surprise: the median 2026 dot rose from 3.4% in March to 3.8%, suggesting a rate hike before year-end. Nine of 18 participants projected a 2026 hike, and 17 of 18 highlighted upside inflation risks. Warsh held his first press conference as Chair, shortened the statement from 341 to 130 words, removed the easing bias, and did not submit his own dot.
The minutes provide the main insight into internal FOMC discussions. Wall Street will examine them for details on the split between participants expecting two 2026 hikes and those expecting one, as well as any signals on how the committee viewed the labor market softening seen in May’s data. Warsh’s rejection of forward guidance at Sintra increases the importance of these minutes as the primary channel for policy expectations.
Friday’s soft NFP pushed the metal up 1.49% to $4,187.30 on Thursday. Hawkish minutes that support a September rate hike would likely raise real yields and push Gold lower. Dovish minutes, especially those acknowledging employment risks, would reinforce the labor market cooling already reflected in prices and further support Gold.
China CPI & PPI June (Thursday, 01:30 UTC+0)
China’s National Bureau of Statistics will release June CPI and PPI at 01:30 UTC+0 on Thursday. May CPI remained at 1.2% year-on-year for the second month, just below the 1.3% consensus. Non-food inflation rose to 1.9%, driven by a 5.4% increase in transport costs, while food prices stayed weak. PPI was -3.3% in May, continuing the deflationary trend at the wholesale level.
The June data will be the first inflation reading to fully reflect the reversal of the Iranian energy shock and lower Chinese import costs. BBVA Research maintains a 1.2% full-year CPI forecast for 2026, with the PBoC expected to keep policy unchanged for the rest of the year. Domestically, weak property prices, slow retail sales as subsidies expire, and ongoing wholesale deflation continue to shape the economic outlook despite fiscal stimulus.
The Hang Seng has reacted to inflation surprises that affect expectations for policy support. A stronger-than-expected reading would reduce pressure on the PBoC to ease and support the index. A weaker result, especially if PPI deflation worsens, would reinforce the case for policy accommodation but highlight the persistent weakness in demand limiting Chinese equities.
UK GDP May monthly (Friday, 06:00 UTC+0)
The Office for National Statistics will release the UK monthly GDP estimate for May at 06:00 UTC+0 on Friday. April saw a 0.1% month-on-month contraction, the first since August 2025, as the Iranian energy shock affected services and administrative sectors. Annually, the economy grew 1.2% in April. Q1 2026 GDP rose 0.6% quarter-on-quarter, the strongest since early 2024.
The May data covers the period just before Brent prices peaked and the Iran deal progressed. Consensus expects a modest rebound of about 0.1% month-on-month as services stabilize. The Bank of England kept rates at 3.75% on 18 June, with a 7-2 vote split as Greene joined Pill in dissent for a hike. Softer UK CPI at 2.8% in May reduced the near-term case for a rate increase, and the BoE now expects headline inflation to peak “a little over 3¼%” in Q4.
GBP/USD is influenced by the Bank of England’s balance between growth and inflation. A rebound in May services activity would support GBP/USD by highlighting economic resilience and reinforcing the hawkish dissent. A weaker result, especially if consumer-facing services contract again, would put pressure on the pair and strengthen the case for future rate cuts, as lower Brent prices weigh on inflation.
Bottom line
The main driver this week is the interplay among softer US labor data, Brent returning to pre-war levels, and the release of the FOMC minutes, as markets reduce expectations for further rate hikes. The July 29 FOMC decision is now expected to be a hold, with the minutes clarifying the outlook for future moves.
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