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The week in Global Markets
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The week moved from debate over possible Fed hikes to an explicit hawkish reset under Kevin Warsh, pushing up rate-hike bets, Treasury yields, and the dollar while delaying expected cuts. Markets also treated inflation data and guidance changes as sources of renewed borrowing-cost volatility.
The BOJ raised rates to its highest level since 1995, while ECB officials warned that wage and conflict-related inflation could delay easing. The Bank of England's hawkish dissent reinforced a broader pattern of central banks keeping policy restrictive despite lower energy prices.
Expectations of a US-Iran deal and a reopened Strait of Hormuz drove oil and fuel prices lower, reduced immediate supply fears, and supported equities. The relief remained fragile as markets continued to weigh whether renewed conflict could reverse the move.
Weak household spending and softer investment data appeared across the week, turning an isolated concern into a broader loss of confidence in China's recovery. The deterioration raised risks for commodities, regional supply chains, and global growth expectations.
Emerging-market currencies and stocks benefited from geopolitical relief and improving earnings, with stocks reaching an all-time high. The rally still depended on calm oil markets and risk appetite, leaving it vulnerable to renewed military threats and tighter US policy.
SpaceX's post-debut surge extended enthusiasm for Musk-linked growth assets before investors used ETF transactions to obtain temporary exposure to a potential IPO. The resulting multibillion-dollar flows distorted funds and prompted at least one manager to impose restrictions.
Day’s Recap