Economic Update 6-22-2026

On a holiday-shortened week, economic data included the Federal Reserve holding interest rates steady, gains in retail sales and industrial production, while housing starts and homebuilder sentiment deteriorated.

Equities rose globally in response to the U.S.-Iran preliminary peace deal. Bonds were little-changed, along with a flattish yield curve. Commodities fell back with a strong correction in crude oil prices globally, along with the noted peace deal.

U.S. stocks experienced gains for the week as the prior Sunday included a ‘memorandum of understanding’ between the U.S. and Iran, which was seen as a roadmap to end military hostilities. (While it appeared to be threatened by continued action in Lebanon, a ceasefire between Israel and Hezbollah eased some concern by Friday, when domestic markets were closed for Juneteenth.) Most importantly in the near-term, the agreement includes a re-opening of the Strait of Hormuz, with both blockades being lifted. That news overwhelmed the bit of a negative reaction mid-week when the FOMC statement under new Fed Chair Warsh was seen as a bit more hawkish than anticipated. By sector, technology and industrials saw gains of around 3% each. Laggards included energy, down over -6% along with a pullback in oil prices, as well as defensive health care and consumer staples, as investors took on risk again. Real estate also fell by several percent for the week, with some volatility in interest rates.

Foreign stocks saw gains for the same reasons, with Asia particularly benefiting, being the destination for most Middle East oil. However, a rise of about a percent in the value of the U.S. dollar put a bit of a damper on net returns for U.S. investors. The Bank of England kept rates steady at 3.75% (in a 7-2 vote), while the Bank of Japan hiked their policy interest rate by a quarter-percent to 1.00% (the first time it’s been at that level in 30 years). A key catalyst there was the weakness in the yen, more so than inflation concerns. Emerging markets were mixed, with continued gains in technology-oriented South Korea and Taiwan, while Brazil and China pulled back a bit, with the former cutting policy rates by a quarter-percent in stimulate the economy further, while the latter saw a mix of stronger industrial data but continued weakness in domestic demand and real estate.

Bonds were little-changed last week, along with minimal changes in yields across the U.S. Treasury curve. International bonds were mixed, with unhedged developed market debt down solely due to the rise in the U.S. dollar.

Commodities fell back, along with extreme easing in energy markets along with a stronger dollar. Otherwise, a small gain in agriculture offset a drop in industrial metals. West Texas crude oil prices fell by -10% last week to $77/barrel, along with Brent crude falling -9% to $79/barrel. Such a correction was in line with a Middle East peace deal being in the works, although the pace of further price normalization remains under debate. While it may take a bit more time to reach the $55-65 range of late 2025 and early 2026, current levels are certainly a lot closer than they were from April through early June. The ride since December has been extreme to say the least, with prices up 104% from a Dec. 16 low of $55 to $113 on Apr. 7, and now back down -32% from that peak.

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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.