Stocks fell last week as an up-and-down mix of trade progress and anxiety, economic news, and geopolitical tensions netted out. Beginning Friday morning, all three averages were under pressure all day following news of an escalated conflict in the Middle East. Oil prices pushed higher on Friday on supply concerns.
Outlook
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The effects of a rising TGA due to tax payments this week, increased repo usage heading into quarter-end, and higher overnight funding costs are likely to reduce overall market liquidity. This combination could make trading conditions challenging over the final two weeks of June, potentially placing significant downward pressure on stock prices.
Early in the week, markets notched steady gains as investors awaited key economic indicators and monitored ongoing trade discussions. Megacap tech names—particularly AI chipmakers—led the broader market higher, as sentiment stayed bullish on prospects for a U.S.-China trade deal.
Pricing power remains a growth lever, but volumes are showing strain. The new tariff regime is set to test the limits of pricing power further. Companies are still managing to push through price gains, but elasticity is no longer negligible. And tariffs threaten to raise input costs, squeezing margins.
When you take seven assets from various parts of the market, and six of them say one thing while one says something different, you wonder what that one asset knows that the others don’t.
The recent spike in U.S. 30-Year bond yields reflects investor concerns over long-term debt sustainability and fiscal policy shifts. Rising 30-Year yields in other major economies point to a global aversion to long duration, not just a U.S.-specific issue.
Despite the dollar’s recent weakness, the structural advantages of deep and liquid US financial markets, its dominant role in trade invoicing and as a monetary anchor, are sustaining its primary reserve currency status.
The primary focus this coming week will remain on the bond market, with the Treasury auctions drawing significant attention. These auctions should fare better than last week’s poorly received 20-year auction.
The increasingly confrontational developments related to cross-border commerce have pushed all major equity benchmarks and sectors into the red, as well as the greenback.
With the labor market already in balance, tariff risks greatly diminished amid ongoing negotiations, and the Fed Funds rate still in moderately restrictive territory, we believe that the Fed should calibrate rates lower.
Stocks pushed higher on Monday as investors cheered weekend news that the US and China temporarily agreed to back off steep reciprocal tariffs
Stocks are climbing up again as this morning’s lighter-than-expected CPI print bolsters spirits following yesterday’s optimism sparked by tariff reprieves between Beijing and Washington.