Tech Wobbles, Oil Retreats

For the week ending 26 June 2026

As of midday Friday, global equities were lower for the week, with large-cap growth stocks lagging other asset classes. The yield on the US 10-year Treasury note fell to 4.39% from 4.43% last Thursday. The price of a barrel of West Texas Intermediate crude oil (WTI) fell to $69.50 from $74.50 as Mideast supplies gradually started normalizing. Volatility, as measured by futures contracts on the Cboe Volatility Index (VIX), rose to 19.6 from 18.6 last week.

MACRO NEWS

White House gives Warsh room to maneuver

Central bankers past and present were in the spotlight this week as former Federal Reserve Chairman Alan Greenspan died at age 100. New Chairman Kevin Warsh overlapped briefly with Greenspan at the Fed when he was appointed as a governor by President George W. Bush. Last week in his first press conference as Fed chair, Warsh brought Greenspan’s inscrutable communications out of mothballs, dispensing with forward guidance — a tool Greenspan’s successors leaned on heavily — in a decision that may lead to increased bond market volatility.

The combination of falling oil prices and renewed Fed resolve to rein in inflation saw yields fall this week. It also seems to have bought Warsh a bit of leeway from the Trump administration, which has thus far been supportive of his actions. Treasury Secretary Scott Bessent said this week that he’s confident Warsh “will take the best path to satisfy both the inflation mandate and the growth mandate,” adding that President Trump retains complete confidence in the new chairman. Separately, the Wall Street Journal framed Warsh’s central dilemma around AI productivity thusly: if the payoff arrives soon, the Fed can sit still and let supply catch up with demand, as Greenspan did in the 1990s; if it is years away, however, current AI-fueled demand is already overheating the economy and waiting may prove costly.

Oil retreats to prewar levels as Hormuz reopens

WTI traded below $70 late this week, and Brent slipped below $75 to near pre-Iran-war levels, as traffic through the Strait of Hormuz continued to recover. Insurance rates have more than halved over the past week, with at least 172 ships transiting the strait since June 18, according to the Financial Times. Oman said it will keep the strait toll-free, while Iran is seeking fees for security and other services. However, the Wall Street Journal reported Thursday that US officials believe Iran attacked a Singapore-flagged cargo vessel near Oman; no injuries were reported. Diplomatically, US and Iranian negotiators reported progress in Switzerland toward a final agreement within 60 days. The US Treasury authorized dollar-invoiced Iranian crude sales via sanctions waiver, and the US and Qatar are working to give Iran access to about $6 billion in frozen funds for humanitarian purchases. On Friday, the US and Iran reportedly opened a communications line to coordinate on the Strait of Hormuz and avoid military escalation.

Tech wobbles as the AI valuation debate intensifies

South Korea’s KOSPI Index slid 10% on Tuesday, and the SOX semiconductor index dropped nearly 8% as tech shares came under pressure amid growing valuation concerns. The jitters eased somewhat after Micron Technologies reported blowout earnings and posted upbeat guidance after the close on Wednesday, though selling pressure returned early Friday. Investors are grappling with a familiar trio of concerns: higher interest rates, stretched valuations, and the risk that the billions being spent on AI infrastructure will outstrip eventual profits. Meanwhile, memory chip shortages are filtering into consumer goods pricing as illustrated by Apple raising prices 20% on a range of devices this week. This move sparked concern among investors that demand for devices will be undermined, sending shares of component makers lower late in the week.

US growth revised higher, PCE in line

In May, core PCE rose 3.4% year over year and 0.3% month over month, both in line with forecasts, while personal income climbed a stronger-than-expected 0.7% and personal spending rose the same amount. The final reading of Q1 US GDP was revised up from 1.6% to a 2.1% annualized pace. Durable goods orders fell 4.5% in May amid volatility in commercial aircraft orders, but April was revised higher to an 8.5% gain. Core capital goods orders rose a robust 1.6% in May, reversing April's 0.7% decline. US new home sales unexpectedly fell 7.3% in May.

Inflation may soon peak as oil prices ease, but still-elevated core inflation suggests the Fed has more work to do to reach its target.

QUICK HITS            

Preliminary purchasing managers’ indices for June showed a bounce back in activity for most major economies except the United Kingdom. 

British Prime Minister Keir Starmer resigned on Monday but will stay on as caretaker until a new Labour leader is selected. Newly elected MP Andy Burnham was sworn into Parliament and immediately put himself forward for the position.

Analysts estimate that the recent wave of Ukrainian attacks on Russian energy infrastructure has knocked more than 20% of Russian refining capacity offline.

Goldman Sachs this week cut the odds of a US recession over the next 12 months to 15% from 25% on the back of the sharp drop in energy prices after the US and Iran signed a memorandum of understanding to end the war.

JP Morgan raised its 2026 year-end S&P 500 target to 7,800 from 7,600, citing AI capex and a supportive macro backdrop.

The big US banks passed the Fed’s annual stress tests, with the central bank concluding they are positioned to withstand a deep recession and absorb roughly $700 billion in losses.

The “debasement trade” of rising bond yields, a falling dollar, and rising gold and crypto prices continues to unwind. The newly hawkish Fed is no doubt contributing to the trend reversal.

US investment-grade bond issuance hit $175 billion in June — a record for the month and running about 60% above June 2025 — amid a scramble to fund AI infrastructure.

The European Union’s trade deal with the US is set to take effect after final EU member-state sign-off. The agreement will eliminate levies on US industrial goods and some agricultural products in exchange for a 15% tariff ceiling on its  exports to the US.

Iraq is reportedly weighing an exit from OPEC if production quotas are not raised significantly.

After its annual market-classification review, MSCI said South Korea will remain in the emerging market category, citing structural bottlenecks despite recent Korean reform efforts.

The US Department of Energy is making $17.5 billion in low-interest loans available for nuclear power equipment, with seven utility companies signing letters of intent; Walmart signed a long-term contract to buy nuclear power, indicating that demand is spreading beyond data centers.

Oil exports from the United Arab Emirates have reportedly reached 85% of prewar levels.

On Thursday, the US dollar reached a nearly 40-year high of 161.95 against the Japanese yen.

President Trump called top defense industry executives to the White House on Wednesday to aggressively press for a ramp-up in US munitions production. The administration is moving urgently to replenish sophisticated missile and air-defense stockpiles that have been heavily depleted by recent military operations in Iran.

The US Congress this week passed a bipartisan housing bill aimed at lowering costs for homeowners and renters. Key provisions include limits on institutional ownership of single-family homes,  cutting red tape and helping to fund the conversion of commercial properties into housing.

On Thursday, Japanese Prime Minister Sanae Takaichi unveiled a sweeping investment roadmap aimed at reshaping Japan’s economy over the long term. The plan targets the equivalent of $2.3 trillion in public–private spending by channeling money into strategic sectors tied to growth and economic security, from AI and semiconductors to health care and other advanced industries.  

New York Fed President John Williams said Thursday that inflation is “unquestionably elevated,” driven by tariffs, energy and AI investment.

OpenAI is reportedly considering delaying its IPO until 2027.

The May US trade deficit widened to $105.8 billion, the largest deficit in over a year, as exports of petroleum cooled but demand for imported capital goods, likely tied to AI infrastructure, continued to swell.

THE WEEK AHEAD

Monday: Japan retail sales

Tuesday: Japan industrial production; UK GDP; US JOLTS job openings

Wednesday: Global manufacturing PMIs; eurozone CPI

Thursday: Eurozone unemployment rate; US nonfarm payrolls

Friday: Non-US services and composite PMIs; US closed for Independence Day

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Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research.