10 min read Weekly Recap
US Core PCE hits 3.4%, Q1 GDP revised up to 2.1% in surprise upgrade
The Bureau of Economic Analysis released key inflation and growth data on Thursday, June 25. May Core PCE, the Fed’s preferred inflation measure, rose 0.3% for the month, in line with expectations. The annual rate increased to 3.4% from 3.3% in April, the highest since October 2023. Headline PCE rose 0.4% month-over-month and 4.1% year-over-year, the highest since April 2023 and the fourth consecutive month of rising inflation. April Core PCE was revised up to 0.3% from 0.24%.
Q1 2026 GDP was revised up to 2.1% in the third estimate from 1.6% previously, a larger increase than anticipated. This primarily reflects a downward revision in import growth from 21.1% to 11.8%, reducing the drag from net trade. However, consumer spending was revised down to 0.5% annualized from 1.4%, with services consumption cut from 1.8% to 0.5%, indicating a narrower base for growth. Personal income and spending both rose 0.7% in May, exceeding expectations.
A strong June NFP and ongoing inflation pressures could push the S&P 500 toward 7,200 by supporting expectations for a September rate hike, which is priced at about 62% by CME FedWatch. Conversely, a weaker jobs report could lift equities and allow the index to approach 7,600.
Iran ceasefire test: US retaliation strikes after Hormuz drone attack
The US-Iran ceasefire was tested on Thursday, June 25, when an IRGC drone struck the Singapore-flagged container vessel Ever Lovely in the Strait of Hormuz. President Trump called the attack a “foolish violation” of the June 17 memorandum of understanding, noting that Iran launched at least four one-way attack drones at ships in the strait. Three were intercepted, while one hit the vessel’s upper deck, though it continued its journey.
UK Brent fell 9.5% for the week to about $72.41 per barrel by Friday, nearing pre-war levels despite late-week tensions. US oil dropped to $69.23. Continued progress on the 60-day MoU could push UK Brent below $70, while further escalation in Hormuz or Lebanon could drive prices above $80.
Global tech sell-off as Apple price hikes spark AI valuation jitters
US tech stocks had their worst week since April 2025, with the main technology benchmark down 4.6%. The US 100 recorded its fifth straight loss on Friday, June 26. The sell-off began mid-week after Apple announced iPhone and Xbox price increases, the first in years, prompting a global decline in mega-cap tech and chip stocks as investors questioned the sustainability of the AI capex narrative.
The sell-off deepened Friday after a New York Times report indicated OpenAI may delay its IPO to 2027, citing SpaceX’s poor post-IPO performance and broader volatility in AI stocks. JPMorgan analysts raised concerns about the “sustainability of infrastructure spending given the delay in funding from the capital markets.” Asian markets were hit hardest, with South Korea’s Kospi index dropping 5.8% on Friday after an 8% intraday decline triggered a circuit breaker.
A strong NFP and renewed tensions with Iran could push the US 100 toward 26,200, especially if concerns about an OpenAI IPO delay persist. A weaker jobs report and a clear de-escalation in Iran could help the index stabilize near 32,700 as buy-the-dip sentiment returns.
Gold remains under pressure
Gold posted its fourth consecutive weekly decline, settling at $4,096.30 on Friday, June 26 — down approximately 3% on the week despite a 1.20% Friday bounce after the in-line PCE print. The metal tested $4,000 mid-week, hitting an intraweek low after markets fully digested the hawkish Fed dot plot delivered the previous Wednesday and absorbed renewed evidence of inflation stickiness. The 2-year Treasury yield reached 4.04% — its highest since February 2025 — while the 10-year yield climbed to 4.50%, applying steady pressure on non-yielding assets.
Markets now price a 62-70% chance of a Fed rate hike in September and 80% for December, according to CME FedWatch. Goldman Sachs cut its year-end gold forecast to $4,900 from $5,400. The World Gold Council’s annual Central Bank Reserves survey found nearly 90% of central banks expect global gold reserves to rise over the next year, supporting the long-term outlook despite short-term challenges.
A strong June NFP would likely push gold toward $3,900, while a weaker report could support a rebound to $4,367. Continued escalation in Iran and disruptions to the Strait of Hormuz would add a geopolitical premium to gold, regardless of Fed policy.
Week Ahead (US & Asia)
Pakistan CPI June — Tuesday, 1 July, ~06:00 UTC
Pakistan’s June CPI, released by the Pakistan Bureau of Statistics on Tuesday, July 1, is the week’s key regional data. May CPI rose to 11.7% year-on-year, the highest since June 2024 and well above the State Bank of Pakistan’s 5-7% target. Price pressures increased across food (+7.9%), transportation (+36.8%), and housing/utilities (+16.8%), driven by high post-war energy costs. Petrol and diesel prices remain 48% and 38% above pre-war levels, respectively.
A lower June CPI, helped by falling oil prices, would support the SBP’s pause and lift the KSE-100 toward 190,000. A reading above 12% would renew rate-hike speculation and could push the rate hike to 174,300.
US ISM Manufacturing PMI — Wednesday, 1 July, 14:00 UTC
The ISM Manufacturing PMI for June lands at 10:00 ET (14:00 UTC) on Wednesday, July 1, alongside JOLTS Job Openings and ADP Employment Change earlier in the morning. The May reading came in at 54%, the highest since May 2022, marking the 19th consecutive month of overall economic expansion. The Prices Index registered an elevated level of 82.1%, reflecting persistent input cost pressures stemming from the war in Iran and tariff dynamics. The Employment Index rose to 48.6%, still below the 50 expansion threshold.
The June PMI is a key indicator ahead of NFP, as its Employment sub-index often leads nonfarm payrolls. ADP Employment Change at 08:15 ET (12:15 UTC) and JOLTS Job Openings at 10:00 ET (14:00 UTC) will further shape expectations for Thursday’s NFP release. Markets currently price about a 62% chance of a September rate hike, with manufacturing growth supporting a hawkish outlook.
A manufacturing PMI above 54 and a lower Prices Index would support the Dow Jones, pushing it to record highs around 53,300. A reading near 50 or renewed price increases would pressure the index toward 49,800, especially if accompanied by weak ADP or JOLTS data indicating labor market weakness.
India HSBC PMIs — Wednesday, 1 July & Friday, 3 July
India’s HSBC Manufacturing PMI for June will be released at 10:30 IST (05:00 UTC) on Wednesday, July 1, with the Services PMI following on Friday, July 3. May’s Manufacturing PMI was 57.6, among the highest in Asia, while Services PMI remained above 60, indicating strong domestic demand despite global challenges. The Indian economy continues to outperform regional peers due to robust consumption and increased private investment.
The Nifty 50 closed at 24,029.20 on Thursday, June 25, down 112 points or 0.5% for the week, ending a two-week winning streak. The Sensex finished at 77,100.5, down 309 points or 0.4%. Indian markets were closed on Friday, June 26, for Muharram. Nifty Metal was the biggest sector laggard, down 4.3%, followed by Nifty IT at -4%, as global tech weakness, driven by Apple’s price hikes and OpenAI’s IPO delays, weighed on markets. Nifty Pharma was the top gainer, up 2.8%.
A Manufacturing PMI above 56 and Services PMI above 58 would reinforce India’s growth outlook and support the Nifty 50 toward 24,600. Unexpected weakness, especially in services, combined with ongoing global tech declines, could push the index down to 23,600.
US Nonfarm Payrolls June — Thursday, 2 July, 12:30 UTC
The June Nonfarm Payrolls report will be released at 08:30 ET (12:30 UTC) on Thursday, July 2, one day earlier than usual due to the July 4 holiday (US markets will close on Friday, July 3). Consensus expects payrolls to increase by about 172,000, matching May’s figure. The unemployment rate is expected to remain at 4.3% for the fourth month, with average hourly earnings forecast to rise 0.3% month-over-month and 3.4-3.5% year-over-year.
This report follows last week’s strong PCE at 4.1% and the unexpected Q1 GDP revision to 2.1%. The Warsh-era Fed dot plot, released on June 17, raised the median 2026 rate projection to 3.8% from 3.4% in March, signaling one rate hike rather than a cut. USD/JPY traded near 160 after the BoJ’s 25-basis-point rate hike to 1.00%, which offered limited support for the yen against a strong dollar.
An NFP above 200,000, with strong wage growth, would likely push USD/JPY toward 163 by reinforcing September rate-hike expectations. A weak report at or below 100,000, especially with higher unemployment, could push the pair lower toward 160.62 as markets adjust their Fed expectations.
Bottom line
This holiday-shortened week compresses four major data releases into three trading days, with US markets closed Friday for the July 4 holiday and NFP released early on Thursday. The key question is whether the labor market remains strong enough to support the Warsh-era Fed’s hawkish 2026 outlook. A strong June report, combined with last week’s 4.1% PCE, could push September rate hike odds above the current 62%.
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