Economic Update 6-3-2026

On a holiday-shortened week, economic data included U.S. GDP growth being downgraded slightly for Q1, stronger durable goods orders, mixed housing metrics, along with continued weak consumer spending.

Equities experienced gains globally for the most part last week, as hopes for Middle East resolution and a reopening of supply lines was cautiously cheered by markets. Bonds fared well also, as inflation fears were reduced, pulling down yields. Commodity prices fell back for energy and agriculture, largely for the same reasons.

U.S. stocks saw gains again last week, as sentiment was helped by the higher chances of a Middle East peace deal, or at least a 60-day ceasefire extension and reopening of Strait of Hormuz shipping traffic. Markets had taken a step back by Thurs., as U.S. airstrikes again appeared to raise the temperature in the region and pushed out hopes for resolution. Sentiment continues to be dominated by the Middle East on a week-to-week, or even day-to-day basis, coinciding with the most recent media reports, coupled with strong demand for AI hardware that has sharply rewarded specific industry groups and world regions. By sector, technology, consumer discretionary, and materials stocks fared positively; on the negative side were energy (as oil prices corrected sharply), as well as defensive consumer staples and utilities. Real estate also fell back slightly, despite a drop in yields.

Foreign stocks in developed market performed largely in line with U.S. equities, although emerging markets outperformed sharply. The latter were led by continued strength in South Korea and Taiwan, offsetting declines in China and Brazil. Korea and Taiwan have become close bellwethers for technology and AI sentiment, having benefited from the surge in semiconductor chip demand, having gained 240% and 98% over the past year, respectively.

Bonds fared positively as U.S. Treasury yields fell across the curve, in keeping with the cascade of lower future inflation expectations if a U.S.-Iran deal is reached. Investment-grade corporate outperformed governments slightly, along with their coupon advantage, while floating rate bank loans ended flattish for the week. International bonds were boosted by a weaker U.S. dollar.

Commodities largely fell back for the week, led by energy and agriculture, while metals were little-changed. Crude oil prices declined by -9% last week to $88/barrel, as hopes for Middle East conflict resolution led to similar hopes for a Strait of Hormuz reopening, and potentially ending the supply shortage fears.

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Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.