From a macro perspective, the US Consumer Price Index (CPI) release was firmly in focus last week as inflation concerns intensified against the backdrop of the ongoing conflict in the Middle East. Energy markets have remained highly volatile in recent months, with prices reacting sharply to developments in Iran and shifting signals from the White House. While there are finally signs of real progress in diplomatic talks, oil supply remains constrained, suggesting the inflationary impact will persist even if transit through the Strait of Hormuz resumes. Against this backdrop, headline CPI rose by a further 40bps to 4.2% in May, pushing inflation above the 4.0% mark for the first time in three years and underlining the renewed challenge facing policymakers, particularly new Federal Reserve Chair Kevin Warsh¹. Despite this, Treasury yields edged lower, with the 10‑year falling 6bps to 4.48%, while equity markets ended a volatile week in positive territory. The S&P 500 rose 0.7%, with the highly anticipated SpaceX IPO dominating headlines, raising $75.0bn to make it the largest listing on record whilst minting the world’s first trillionaire in Elon Musk².

Elsewhere, equity momentum was more constructive across Europe, building on the firmer tone seen in the US. The MSCI Europe ex‑UK index rose +0.7% (in euro terms), while the FTSE 100 advanced +1.0%, supported by improved risk sentiment. As expected, the European Central Bank (ECB) delivered its first rate hike since 2023, reflecting growing upside risks to inflation³, although investors took some comfort from the continuation of peace discussions between the US and Iran. In Asia, performance was more mixed. Japanese equities were notably volatile, with the Nikkei 225 ultimately ending the week -1.0% lower (in yen), though a sharp rally into Friday limited the extent of losses. In China, the Shanghai Composite finished broadly flat, as investors balanced a stronger‑than‑expected trade report against a meaningful pick‑up in producer price inflation.

Finally, commodity markets moved in line with the broader shift in sentiment, with energy prices retreating while precious metals also came under pressure. Brent crude declined -6.3% over the week to $87.36 a barrel, giving back earlier gains after a strong start to the week, as improving prospects for a diplomatic resolution in the Middle East weighed on prices. A key catalyst came on Friday, when President Trump announced that planned military action had been called off and that a potential agreement with Iran could be reached in the coming days. While similar rhetoric has surfaced in recent weeks, markets appear to be attaching greater credibility to the latest developments. Gold followed a similar path lower, falling -3.2% to $4,214 an ounce, marking a second consecutive weekly decline. The move reflects growing expectations that US interest rates may need to remain higher for longer, particularly as inflation pressures re‑emerge.

¹ Bureau of Labor Statistics – Consumer Price Index Summary, May 2026
² US Securities and Exchange Commission – Space Exploration Technologies Corp Form S‑1 Registration Statement, 20/05/2026
³ European Central Bank – Monetary Policy Statement, 11/06/2026

SJP Approved: 15/06/2026

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