Market Notebook

PRICE ACTION:
Equity prices, as measured by the ticker SPY, closed modestly higher while bond prices, as measured by the ticker BND, also closed modestly higher over the last week.

SPY     +0.57%
BND     +0.56%

TECHNICAL ANALYSIS:
SPY price appears to be trending higher.

BND price appears to be trending lower.

SENTIMENT:
The VIX closed the week at 17.68, down sharply from an intraweek high of 23, as peace deal optimism and SpaceX’s historic debut lifted market spirits heading into the weekend. Bets for a rate hike are rising which is a significant sentiment shift from earlier in the year when two cuts were the base case. The preliminary June University of Michigan Consumer Sentiment reading came in at 46, a modest improvement from 44.8 in May but still near record lows, reflecting the ongoing toll of elevated gasoline prices and inflation on the American consumer.

ECONOMY AND FUNDAMENTALS:
Three major stories defined the week: the hottest inflation print in three years, the largest IPO in history, and what may prove to be a turning point in the months-long Iran conflict.

The Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index rose 0.5% in May and 4.2% year over year, the fastest annual pace in three years and the highest reading since April 2023. Core CPI came in at a relatively contained 0.2% monthly gain, suggesting that while headline inflation is running hot, the underlying inflationary momentum outside of energy remains more moderate. 

On Thursday evening, President Trump announced he had called off planned military strikes on Iranian targets, and by Friday morning, Iranian state media was reporting that a draft agreement between the two countries consists of 14 provisions, including the reopening of the Strait of Hormuz within 30 days, the release of $24 billion in frozen Iranian assets, and 60 days of negotiations over nuclear issues, with a formal signing potentially as early as Sunday in Geneva.  Oil prices fell sharply on the news. If confirmed and durable, a peace deal would represent a significant disinflationary catalyst.

The other defining event of the week was Friday’s debut of SpaceX on the Nasdaq under the ticker SPCX. Priced at $135 per share and raising roughly $75 billion, SpaceX became the largest IPO in history, with an implied market capitalization of $1.77 trillion at the offering price. The offering’s sheer scale, however, carries its own market implications: history indicates that large IPO issuance occurs during periods of strong equity market sentiment, but the added equity supply can cause some indigestion, and with household equity exposure already sitting close to an all-time high, some existing investors may sell holdings to fund new positions.

The FOMC meets Tuesday and Wednesday of next week in what will be new Chair Kevin Warsh’s first policy meeting. A hold is nearly universally expected, but the statement, the updated dot plot, and Warsh’s first press conference as chair will be parsed intensely for any signal about the trajectory of rates in the second half of 2026. The Iran peace deal could fundamentally reshape that conversation.

All the best during the week ahead!

Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.