Week in Review

Activity indicators surprised to the upside. S&P Global Manufacturing PMI Flash rose on June 23 and beat consensus, while the services reading exceeded expectations and the composite index climbed. ADP Employment Change lifted the prior figure and signaled continued labor demand into late June. These prints aligned with the mid-expansion narrative carried forward from the prior week, where US outperformance had already shifted terminal rate expectations higher.

Housing data delivered a clear downside surprise. New Home Sales dropped on June 24 versus consensus and prior, producing a month-over-month contraction that extended the prior decline. The current account deficit widened against consensus, reflecting firmer domestic demand that absorbed higher borrowing costs without immediate contraction. Mortgage rates eased only modestly, leaving affordability constrained.

Policy and inflation signals remained steady. Core PCE Price Index Month-over-Month matched consensus on June 25 after the prior print, while Durable Goods Orders contracted in line with expectations following the earlier surge. Fed Governor Waller’s June 22 remarks offered no fresh forward guidance, preserving the data-dependent stance. Equity markets digested the mixed releases with selective rotation, as the S&P 500 closed the week lower while the Dow Jones edged up.

Energy prices extended their disinflationary impulse. WTI Crude fell amid US sanctions relief on Iranian exports and larger-than-expected inventory draws, adding to the external price relief already visible in recent weeks. This configuration left the expansion intact but tilted financial conditions tighter through the dollar channel, with USD/JPY holding near the recent level.

Fed Watch

Fed Governor Waller’s June 22 speech provided no new policy signals, leaving markets focused on incoming data rather than shifts in forward guidance. Core PCE matching consensus reinforced the view that inflation remains on a gradual path consistent with the prevailing funds rate. Large banks passed the June 24 stress test, confirming capital buffers sufficient for severe scenarios and reducing near-term regulatory pressure on lending.

The combination of strong PMI prints and contained PCE left Fed OIS curves showing limited repricing for cuts before mid-2027, extending the higher-for-longer stance established after the prior week. ADP employment strength further supported the labor-market resilience narrative that has kept policy expectations anchored. No additional speakers were scheduled through midweek, keeping the data-dependent framework intact. Market pricing therefore continues to reflect tolerance for above-target inflation prints to sustain the expansion.

Data Review

S&P Global Manufacturing PMI Flash reached a level exceeding consensus and the prior reading, pointing to continued expansion in factory activity. The services component printed above expectations, lifting the composite and confirming broad-based momentum that supports above-trend growth. ADP Employment Change surpassed the prior reading, reinforcing labor-market resilience consistent with recent prints.

New Home Sales missed consensus and fell from the prior reading, producing a month-over-month drop that signals housing demand remains sensitive to elevated mortgage rates. The current account deficit widened against forecast, illustrating that domestic absorption continues to outpace external balances. Core PCE Month-over-Month held at consensus, matching the prior print and leaving the year-over-year path aligned with recent inflation levels.

Durable Goods Orders contracted in line with expectations after the prior gain, tempering the capital-spending signal without derailing the overall cycle view. GDP final estimates and personal spending data released on June 25 remained consistent with the prior quarter-over-quarter pace, indicating no abrupt shift in the mid-expansion trajectory. These outcomes collectively point to a labor- and manufacturing-supported expansion that tolerates above-target inflation prints, keeping Fed OIS curves priced for policy stability rather than near-term easing.

The Week Ahead

Monday features Japan housing starts and UK BoE Pill speech, with markets watching for any cross-border signals on rate paths. Tuesday brings US ISM Manufacturing PMI and construction spending, both expected to echo recent manufacturing strength. Wednesday includes ADP national employment and EIA crude inventories, providing an early read on labor and energy balances ahead of the holiday.

Thursday highlights initial jobless claims and factory orders, which will test whether the durable goods contraction extends. Friday delivers the employment situation report with consensus unemployment near recent levels and nonfarm payrolls in focus, alongside personal income and spending data. Any deviation from the recent Core PCE pace could shift OIS curves. Central bank speakers remain light, keeping attention on US data dependence.

Risks & Themes

Stronger-than-expected PMIs raise the possibility that growth momentum could keep inflation above target longer, pushing terminal rate expectations even higher than the mid-2027 cut already priced. Housing weakness introduces downside risk if mortgage rates remain elevated, potentially feeding into consumption softness later in the quarter. Oil’s drop adds disinflationary impulse that could eventually ease policy pressure, yet markets appear to be underweighting this channel relative to activity data.

Positioning shows modest long equity exposure in small-caps while the Nasdaq 100 underperformed, hinting at crowded growth trades that could unwind further on any labor-market surprise. Volatility remains contained but could rise around the employment report if payrolls deviate from the resilient ADP print. Upside growth scenarios support dollar strength, while downside housing data could steepen the Treasury curve modestly.

Cross-Asset

The S&P 500 declined 1.59 percent to 7354.02 while the Nasdaq 100 fell 4.05 percent to 29118.24, reflecting rotation away from growth stocks amid lower energy prices and steady inflation data. The Dow Jones rose 0.32 percent to 51876.11 and the Russell 2000 gained 0.19 percent to 3010.08, showing relative strength in value and small-cap segments. US 2-year yields closed at 4.09 percent after trading as high as 4.24 percent midweek, and 10-year yields settled at 4.40 percent following a peak near 4.51 percent.

EUR/USD fell 0.64 percent to 1.14 and GBP/USD declined 0.08 percent to 1.32 as the dollar held firm against the backdrop of resilient US activity. USD/JPY rose 0.18 percent to 161.72, extending the prior week’s modest advance. WTI Crude dropped 7.47 percent to 69.23 while gold declined 2.05 percent to 4096.30, both pressured by sanctions relief and risk-on flows into equities. Bitcoin fell 6.06 percent to 59406.84, tracking the broader risk-asset pullback.

Global Context

US sanctions relief on Iranian oil exports contributed to the WTI decline, easing supply concerns that had previously supported higher energy prices in prior weeks. Cross-border spillovers from resilient US activity continued to tighten financial conditions via the dollar, with EUR/USD falling. Geopolitical tensions between the United States and Iran remained elevated but contained within the recent truce framework, limiting broader risk-off flows. Trade dynamics showed the US current account deficit widening, reflecting domestic demand strength that absorbs external imbalances without immediate global contraction signals.

Week in Review

PMI Divergence Highlights Regional Split French flash PMIs delivered clear beats on 23 June while German equivalents missed, establishing the dominant narrative of uneven euro-area momentum. French Composite PMI rose against consensus and Services PMI jumped versus expected. German Manufacturing PMI slipped versus consensus and Composite PMI declined versus forecast. These prints reversed the modest recovery signals seen in the prior week ending 21 June when German ZEW sentiment had improved.

Consumer and Business Sentiment Remains Fragile Dutch Consumer Confidence improved from the prior reading on 22 June, yet German GfK printed softer than consensus on 24 June. French Consumer Confidence edged up versus expected on 24 June while Italian Consumer Confidence missed forecast. German Ifo Business Climate held steady at the consensus level on 24 June, providing the only clear match among high-impact releases.

Markets Reprice Policy Path Amid Data Dependence German 10-year Bund yields rose over the week as swap curves trimmed near-term ECB cut pricing. EUR/USD closed the week lower while Euro Stoxx 50 fell. Brent Crude’s decline reinforced external price relief that has yet to translate into synchronized domestic easing expectations. The week therefore left the euro-area expansion intact but data-dependent, with OIS curves showing only limited repricing relative to the US-driven global cycle described in prior reports.

ECB Watch

No Governing Council members spoke during the week, leaving markets to interpret data through the lens of existing forward guidance. German 10-year Bund yields rising prompted OIS curves to price fewer Deposit Rate cuts by year-end relative to the prior week. French PMI beats and German misses together reinforced the data-dependent stance articulated in recent ECB communications, with the Deposit Rate remaining the anchor. The Ifo match and GfK miss left medium-term growth and inflation projections broadly unchanged from the Bundesbank’s earlier upward revision to 2026 inflation. External oil-price relief via Brent’s decline further supports the view that above-target inflation will persist, keeping the first cut timing beyond the next several meetings. Overall, this week’s releases validated the ECB’s tolerance for selective resilience without altering the higher-for-longer rate path signaled in prior weeks.

Data Review

French S&P Global Manufacturing PMI Flash printed above consensus on 23 June, extending the modest expansion signal first visible in May. French Services PMI rose against expected, lifting the Composite and confirming broadening momentum in the largest euro-area economy. German Manufacturing PMI Flash missed consensus on the same day, while German Services PMI fell against expected and Composite PMI declined versus forecast. These German misses reversed the ZEW improvement recorded in the week ending 21 June. German Ifo Business Climate matched consensus exactly on 24 June, yet GfK Consumer Confidence disappointed versus expected, pointing to persistent household caution. French Consumer Confidence beat consensus while Italian Business Confidence met expectations and Consumer Confidence missed. Spanish Trade Balance widened. The combined releases indicate the euro area remains in mid-expansion with above-target inflation risks still dominant, supporting a higher-for-longer ECB Deposit Rate path and limiting near-term OIS repricing.

The Week Ahead

Monday brings Finnish Business and Consumer Confidence indices alongside Japanese housing starts data that may influence external demand views. Tuesday features UK BoE Pill speech that could spill into euro-area rate expectations through sterling and gilt channels. Wednesday includes euro-area unemployment and German retail sales prints expected to test consumption resilience after the mixed GfK outcome. Thursday highlights Italian industrial production and French industrial production, both viewed as cycle indicators following the divergent PMI prints. Friday closes the period with Spanish and Italian PMI final releases that will confirm or revise the flash readings. Markets will also monitor any additional ECB speakers for clues on the medium-term Deposit Rate trajectory. The calendar contains no high-impact central-bank decisions, leaving data dependence as the dominant theme.

Risks & Themes

The week’s PMI divergence raises the probability of a more prolonged higher-for-longer ECB stance if German weakness fails to broaden. Upside risks center on further French services strength lifting the euro-area composite while downside risks stem from continued German services contraction. Market positioning shows limited OIS repricing relative to US curves, suggesting potential for volatility if next week’s retail sales or industrial production surprise to the downside. Brent’s decline reduces imported inflation risks yet may delay the ECB’s willingness to ease if core prints remain sticky. Flow data from prior weeks indicate continued preference for Bunds over peripheral debt, keeping 2s10s spreads vulnerable to steepening. Overall, the data shift tilts the balance toward cautious positioning ahead of the July releases.

Cross-Asset

Euro Stoxx 50 closed the week at 6,221.55 after a 1.42 percent decline, with daily moves including a 1.28 percent drop on 23 June and a 0.85 percent gain on 25 June. DAX fell 1.86 percent to 24,671.22 while CAC 40 declined 0.18 percent to 8,384.87. German 10-year Bund yields rose, pushing the 2s10s spread wider amid reduced easing odds. EUR/USD ended at 1.14 for a 0.64 percent weekly loss, EUR/GBP fell 0.72 percent to 0.86, and EUR/JPY declined 0.54 percent to 184.04. Brent Crude dropped 6.8 percent to 72.60 on successive daily declines of 1.05 percent, 4.33 percent, and 3.53 percent. Gold fell 2.05 percent to 4,096.30 while Bitcoin declined 6.06 percent to 59,408.01. Equity-bond divergence reflected data-driven repricing of ECB policy while commodity weakness added external disinflation support.

Global Context

US data resilience described in the week ending 21 June continued to anchor global rate expectations higher, limiting ECB easing scope through the dollar channel. Brent Crude’s further decline extended the disinflationary impulse visible since early June while supporting euro-area external balances. EUR/USD weakness mirrored the broader USD strength that followed the FOMC’s upward 2026 inflation revisions. Trade-balance widening in Spain highlighted ongoing external demand pressures amid the global mid-expansion phase. No new geopolitical developments altered the euro-area outlook in the last seven days, leaving cross-border spillovers centered on commodity prices and US policy spillovers.

Week in Review

PMI Strength Signals Resilience Japan’s June S&P Global flash PMIs exceeded expectations. Manufacturing and services both rose, reinforcing steady domestic demand even as external price pressures eased. The data aligned with prior export growth trends and narrowed the gap between activity expectations and realized outcomes.

Policy Signals Accelerate Repricing The BoJ Summary of Opinions revealed multiple members calling for further rate increases amid persistent inflation risks. Board member remarks flagged a higher neutral rate, well above the current policy setting. This language shifted market focus toward faster normalization and lifted the 10-year JGB yield.

Yen and Equity Divergence Persists USD/JPY remained anchored near 161.72. The Nikkei 225 posted a net 4.14 percent weekly decline to 69,360.88. Yen crosses showed limited follow-through after Ministry of Finance warnings, highlighting the dominance of US-Japan rate differentials.

Retail Sales and Fiscal Backdrop Markets awaited the retail sales release. The government’s draft long-term blueprint emphasized BoJ support for private demand while urging measured policy adjustments. These elements kept the growth-inflation trade-off in focus without altering near-term data dependence.

Cross-Asset Flows Reflect Carry Pressure Brent crude declined 6.8 percent to 72.60 and gold declined 2.05 percent to 4,096.30, removing safe-haven support for the yen. Bitcoin dropped 6.06 percent to 59,406.84 amid broader risk reduction. The configuration left BoJ OIS curves pricing a higher terminal rate path relative to the prior week.

BoJ Watch

The BoJ Summary of Opinions and successive speeches collectively reinforced the case for additional tightening. Communications moved the 10-year JGB yield higher while the 2-year yield stayed steady. BoJ OIS pricing shifted higher for the next meeting, reflecting reduced odds of a prolonged pause. Record intervention outlays failed to alter the rate-differential narrative sustaining USD/JPY near 161.72. The data flow leaves the Bank of Japan on a gradual but data-dependent path toward further normalization.

The Week Ahead

Housing starts and construction orders on Monday will provide the first read on investment momentum ahead of the next BoJ decision. Retail sales year-over-year carry medium impact and will test whether consumer demand is keeping pace with PMI strength. Any follow-up comments from remaining BoJ speakers could refine guidance on the timing of the subsequent move. Markets will also monitor Ministry of Finance statements on intervention effectiveness. The combination should clarify whether recent activity resilience supports a faster pace of policy adjustment. OIS curves currently embed limited near-term repricing, leaving room for data surprises to shift terminal-rate expectations. Broader fiscal coordination signals from the government blueprint may influence perceptions of BoJ independence in coming quarters.

Risks & Themes

Persistent yen weakness near 161.72 risks further carry-trade unwinds that could spill into JGB and US asset markets. Upside surprises in retail sales or housing data would reinforce the case for accelerated hikes, while downside prints could delay the next move. Markets appear to underprice the speed of normalization implied by neutral-rate discussion. Intervention fatigue raises the possibility of sharper volatility if verbal warnings lose credibility. The data dependence shared with other DM central banks leaves Japan exposed to any renewed US inflation resilience that widens rate differentials further.

Week in Review

Inflation overshoot dominates the narrative. May CPI rose more than consensus on a year-over-year basis and posted a larger month-over-month increase than expected. Core CPI also moved higher. The data confirmed energy-driven price pressures rather than broad-based demand strength.

Policy signals remain unchanged. The Bank of Canada kept the policy rate unchanged through the period, with both Governor Macklem and Deputy Governor Rogers delivering speeches that stressed ongoing data dependence. Markets absorbed the hotter prints without repricing near-term cuts.

Asset prices reflected the mixed backdrop. The S&P/TSX closed the week at 34,980.00 after a net 0.06% decline, while USD/CAD held near 1.42 amid a 0.10% weekly rise. WTI Crude fell 7.47% to 69.23, extending the commodity pressure on the currency. Canada 2-year yields stayed steady and the 10-year yield held its ground.

Growth concerns persist alongside the inflation print. Prior-week context of subdued domestic demand and downward revisions to the medium-term growth outlook continued to frame the expansion as moderate. Retail and housing indicators remained soft, yet officials avoided recession language. The combination left the Bank of Canada on hold while external USD strength tightened financial conditions through the exchange-rate channel.

BoC Watch

The Bank of Canada maintained the policy rate after the May CPI overshoot, with Governor Macklem noting moderate growth ahead and warning of potential external imbalances. Deputy Governor Rogers’ speech provided no fresh forward guidance on the timing of easing. BoC OIS curves showed only modest shifts, retaining limited cuts priced by year-end despite the higher headline. The data reinforced a higher-for-longer stance relative to earlier expectations, consistent with the multi-week pattern of tolerating above-target prints to support activity. Speeches emphasized reaction-function stability rather than any imminent policy pivot.

The Week Ahead

The domestic calendar carries no high-impact releases, shifting focus to external data and any follow-up Governing Council commentary. Japan housing starts and construction orders on Monday will provide indirect signals on global demand that could influence commodity-linked CAD crosses. UK BoE Pill speech on the same day may affect rate-differential pricing versus the Bank of Canada. Mid-week euro-area and US activity prints will test whether resilience elsewhere continues to anchor global financial conditions tighter through the dollar. Markets will monitor energy prices for any reversal that could ease imported inflation pressures ahead of the next Bank of Canada decision. Overall, the absence of Canadian data keeps the rate path dependent on incoming global prints and any evolution in OIS-implied probabilities.

Risks & Themes

Hotter CPI raises the risk that inflation persistence delays easing more than current BoC OIS pricing reflects, particularly if gasoline effects prove sticky. Downside growth scenarios remain live given prior GDP contraction and demographic headwinds that continue to weigh on household formation. A sharper WTI decline could further pressure CAD and widen USD/CAD, tightening conditions without any BoC action. Markets appear to underprice the tension between above-target inflation and subdued domestic demand, leaving room for curve steepening if the next decision window approaches without fresh disinflation evidence.

Week in Review

Policy Hold Reinforced by Disinflation Mexican markets absorbed a steady Banxico decision that left the policy rate unchanged, consistent with the prior setting and market expectations. The move followed an inflation print that surprised to the downside, reinforcing the case for patience at the next meeting. The yield curve steepened, pricing only gradual easing ahead.

External Balances Weaken The May trade balance delivered a clear consensus miss and narrowed the surplus relative to the prior reading. This outcome occurred alongside continued nearshoring inflows and record remittances that had previously supported the current account. The data highlighted softening external momentum even as USMCA-related investment flows remained intact.

Equity and FX Divergence IPC Bolsa posted a modest weekly gain to close at 67226.01 after daily moves that included a rebound on June 25 and a subsequent decline. USD/MXN advanced 1.03 percent to 17.53 over the same period. EUR/MXN rose 0.38 percent to 19.96, reflecting peso underperformance against both the dollar and euro.

Commodity Channel Tightens Conditions WTI crude fell 7.47 percent to 69.23 while Brent declined 6.8 percent to 72.60, extending the disinflationary impulse visible in prior weeks. Silver dropped 8.93 percent and gold eased 2.05 percent, weighing on related equity sectors. These moves occurred against a backdrop of resilient US data that kept global rate expectations anchored higher.

Positioning Ahead of Quiet Close Markets entered the final trading day with light positioning after the Banxico announcement and trade balance release, leaving volatility contained. The combination of softer inflation, a policy hold, and external price relief supported a soft-landing narrative even as the peso absorbed dollar strength.

Banxico Watch

Banco de Mexico left the policy rate unchanged on June 25, aligning with consensus and the prior decision while markets parsed the statement for any adjustment in inflation guidance. The softer-than-expected inflation outcome broadened the window for maintaining the restrictive stance without immediate growth risks. Banxico OIS curves showed only modest repricing for cuts at the next meeting, consistent with the observed steepening in the yield structure. Data dependence remains the dominant theme, with the central bank tolerating above-target prints to support the expansion. Forward guidance continued to emphasize inflation convergence, leaving the terminal rate path data-dependent rather than pre-committed.

The Week Ahead

The coming week features a light domestic calendar that leaves attention on external data and any USMCA-related commentary. Monday brings limited releases, keeping focus on how the prior trade balance miss informs external demand views. Mid-week updates on global growth indicators will matter for the peso and Mbono yields ahead of the next Banxico decision. Markets will monitor any signals on nearshoring momentum and remittances that could offset the recent surplus narrowing. The data flow should clarify whether the disinflationary impulse from lower commodity prices persists into coming quarters. OIS pricing for the upcoming decision is expected to remain stable absent large surprises, preserving the measured easing trajectory. Overall, the period reinforces data dependence that balances inflation convergence against growth support.

Risks & Themes

The sharp decline in WTI crude introduces downside risks to Pemex-linked revenues and fiscal accounts even as it aids near-term disinflation. Upside scenarios center on continued nearshoring FDI that could offset the trade balance shortfall and support the peso. Markets appear to underprice the persistence of US data resilience that keeps Banxico OIS curves from shifting aggressively toward cuts. Trade tensions around Chinese vehicles produced in Mexico add a layer of uncertainty to USMCA dynamics without immediate tariff triggers. The combination tilts the balance toward selective resilience rather than outright contraction, with the rate path remaining conditional on incoming inflation and activity prints.

Week in Review

Labor Market Data Absent No employment figures were released. Markets instead responded to external commodity prices.

Policy Communication Remains Cautious Copom minutes published June 23-24 stressed that future adjustments will depend strictly on incoming inflation and activity data rather than a pre-set pace. Markets interpreted the language as hawkish relative to earlier expectations of faster easing, keeping BCB OIS forward pricing anchored near current levels.

Commodity-Driven Asset Rotation Equity and currency markets reflected external price moves more than domestic data. Bovespa advanced 1.72 percent across the week while Vale declined 4.07 percent and Petrobras fell 4.23 percent as WTI Crude dropped 7.47 percent. USD/BRL edged 0.37 percent higher despite the absence of offsetting domestic releases, illustrating the dominance of global oil and iron-ore flows.

Fiscal and External Pressures Persist Export volumes to the United States remained at multi-year lows following tariff changes.

Through-Line Across the Five Days The arc moved from post-decision volatility on June 22-23 to measured moves after external data. Commodity weakness offset the lack of domestic releases, leaving the real little changed on net and BCB OIS curves stable.

BCB Watch

Copom minutes released June 23-24 clarified that the committee reviewed multiple Selic paths before settling on the latest reduction and will calibrate future steps solely on inflation convergence and activity prints. The language explicitly flagged persistent services price pressures, tempering expectations for rapid further easing at the next meeting. BCB OIS curves shifted only modestly, with markets continuing to price limited cuts through year-end. External dollar strength and softer commodity revenues add upside risks to the inflation outlook, keeping the easing cycle measured.

The Week Ahead

Attention centers on external data releases that will shape the inflation and growth backdrop for the next Copom decision. US activity and inflation prints scheduled early in the week will influence dollar and commodity trajectories, directly feeding into BRL volatility and fiscal revenue projections. Japan housing starts and UK BoE speeches on June 29 may affect global risk sentiment and OIS curves. Brazil faces no high-impact domestic releases through July 3, leaving markets to monitor iron-ore and oil price swings for signals on export earnings and trade balance momentum. Any follow-up Copom member comments will be parsed for confirmation that the data-dependent framework remains intact. The combination should keep BCB OIS pricing stable ahead of the upcoming decision, with downside risks to growth from weaker commodities balanced against contained labor-market readings.

Risks & Themes

Weaker-than-expected global commodity prices represent the dominant downside scenario for BRL and fiscal accounts, as evidenced by the 7.47 percent WTI decline this week. Upside risks center on continued labor-market strength that could delay further easing and support the real through domestic demand channels. Markets appear to underprice the persistence of services inflation flagged in the minutes, leaving BCB OIS curves vulnerable to upward repricing if core prints remain firm. Fiscal debt projections add duration pressure on longer-dated yields should external financing conditions tighten further. The data-dependent stance reduces the probability of a pre-committed easing path, limiting the scope for sharp front-end rallies even if activity data soften.

Week in Review

Equity and FX Dynamics The S&P Merval closed the week lower after declining from the prior Friday, with the sharpest daily drop occurring on June 24 following MSCI’s confirmation of no change in market classification. USD/ARS rose over the seven days to finish at 1,477.00, extending the managed depreciation path at roughly the 1% monthly pace. EUR/ARS advanced, reflecting parallel moves in cross rates.

Growth and Fiscal Developments Argentina’s Q1 GDP print exceeded consensus expectations even as unemployment rose and real wages lagged, with the outperformance concentrated in agriculture and services. The government authorized new multilateral borrowing, explicitly aimed at strengthening reserves and lowering domestic financing costs. Treasury plans to roll over maturing debt via LETRAS and additional issuance supported primary surplus targets under the IMF programme.

Commodity and Reserve Flows Soybean futures climbed on renewed export demand, lifting expected tax collections and export registrations that feed directly into BCRA reserve accumulation. Brent crude fell, providing a modest disinflationary offset while gold moved lower. No INDEC releases occurred during the week, leaving market pricing driven by commodity proceeds and the new facility rather than fresh domestic data surprises.

Policy and Market Positioning The combination of stronger Q1 growth and multilateral inflows reinforced the view that fiscal consolidation remains on track, even as persistent recession pressures continue to weigh on household finances. Bitcoin declined, adding a mild risk-off tone that aligned with the equity sell-off but did not alter peso depreciation dynamics.

BCRA Watch

The BCRA maintained the crawling peg without adjustment, allowing USD/ARS to advance while soybean-driven export proceeds supported reserve rebuilding. No monetary policy meetings or forward guidance updates occurred, leaving OIS curves anchored to the existing 1% monthly pace. The new multilateral facility reduces immediate pressure on domestic issuance and preserves room for the BCRA to prioritize net international reserve targets ahead of the next IMF review. Weekly monetary aggregate releases due next week will provide the first read on liquidity conditions following the loan authorization. Market participants continue to monitor blue-chip swap levels for any signs of month-end demand that could test the peg’s credibility.

The Week Ahead

Attention centers on the Treasury’s inflation-linked CER bond and dual-currency auctions scheduled for the opening session, targeting the rollover of maturing debt. Weekly BCRA reserve and monetary aggregate updates will offer the first post-loan read on net international reserves and liquidity. Soybean export registration data will be watched closely for signs of accelerated sales ahead of the harvest peak. No INDEC releases are listed through the period, shifting focus to fiscal cash-flow prints and any supplementary budget execution signals. Markets will assess whether the new facility alters near-term BCRA OIS pricing for the subsequent policy path. Global commodity moves, particularly soybean and Brent, remain key external drivers of reserve accumulation and peso stability into the following decision window.

Risks & Themes

The equity sell-off after the MSCI decision highlights downside risk to local asset prices if classification concerns persist, even as soybean strength provides an offset. Faster-than-expected reserve accumulation from the new loans could reduce devaluation pressure on the crawling peg, yet any slippage in primary surplus execution would reprice BCRA OIS curves higher. Upside scenarios center on sustained export-tax receipts supporting the current account, while downside risks include renewed Brent weakness that could widen the trade gap. Markets appear to be underpricing the durability of multilateral support relative to domestic recession signals, leaving room for repricing if Q2 activity data disappoint.

Week in Review

Election Outcome Reshapes Colombian Asset Pricing Colombia’s June 22 presidential runoff produced a narrow win for conservative Abelardo de la Espriella, triggering immediate repricing that left MSCI Colombia unchanged while USD/COP posted only a 0.17 percent weekly rise to 3,450.94. The outcome contrasted with prior weeks’ political uncertainty and reduced near-term external financing premia for Colombian assets.

Commodity Weakness Pressures Chile and Peru Copper’s 2.35 percent decline to 6.21 and Brent’s 6.8 percent drop to 72.60 weighed directly on mining-exposed equities, sending MSCI Chile down 3.16 percent to 39.53 and MSCI Peru lower by 4.81 percent to 83.40. USD/CLP rose 2.29 percent to 921.85 and USD/PEN advanced 2.85 percent to 3.41, widening the performance gap versus the more stable COP.

Absence of Domestic Data Leaves External Drivers Dominant No Tier-1 releases occurred in Colombia, Chile or Peru during the seven-day window, confirming the week’s narrative was driven entirely by commodity prices and the Colombian political result. Daily equity moves remained modest after the initial election reaction, with MSCI Chile posting successive daily declines before a modest rebound.

Fiscal and External Account Implications Emerge Lower Brent levels near 72.60 trimmed Colombia’s oil-linked fiscal buffer while copper at 6.21 reduced projected royalty inflows for both Chile and Peru. The peso’s relative outperformance narrowed Colombia’s current-account gap compared with CLP and PEN depreciation.

Risk Sentiment Spillovers Remain Contained Bitcoin’s 6.05 percent weekly decline to 59,410.14 added peripheral pressure but produced negligible direct read-through to Andean equities. Gold’s 2.05 percent fall to 4,096.30 offered limited offset for Peruvian and Colombian mining revenues.

Through-Line Centers on Selective Political Relief The data arc shows Colombian assets decoupling from regional commodity beta after the June 22 result, while Chile and Peru remained fully exposed to the 2.35 percent copper and 6.8 percent Brent declines. No consensus misses materialized because no domestic prints were scheduled.

Andean Central Banks Watch

BanRep, BCCh and BCRP maintained unchanged policy settings with the Chile short-term rate fixed and no meetings or forward-guidance updates recorded. The absence of inflation or activity surprises left BanRep/BCCh/BCRP OIS curves anchored, pricing no near-term shifts ahead of the next decisions. Commodity-driven currency moves widened external financing differentials but did not alter central-bank reaction functions given stable domestic data. Markets therefore continue to price measured easing paths contingent on future inflation moderation rather than immediate responses to copper or Brent volatility.

The Week Ahead

The coming session features no scheduled releases for Colombia, Chile or Peru, keeping attention on external commodity prices and any early signals from the incoming Colombian administration. Copper and Brent price action will continue to drive daily CLP and COP moves while PEN remains range-bound near 3.41. Investors will monitor global risk sentiment for potential effects on Andean equity beta ahead of the next BanRep, BCCh and BCRP decisions. Any certification updates on the Colombian vote could produce limited sovereign-spread tightening. External demand indicators from major trading partners will shape expectations for coming-quarters current-account balances and royalty revenues. OIS pricing is expected to stay stable absent fresh domestic data that could alter rate-path probabilities.

Risks & Themes

Copper’s further decline risks widening Chile’s and Peru’s current-account gaps beyond levels already implied by the 2.35 percent weekly drop, while Brent near 72.60 caps Colombia’s fiscal surplus. The market may be under-pricing the durability of the Colombian political shift if early policy signals disappoint, reopening external financing premia. Upside scenarios center on copper stabilization supporting royalty inflows and narrowing CLP/PEN depreciation; downside cases involve additional commodity weakness that forces faster BanRep/BCCh/BCRP OIS repricing. The week’s data shift reinforces a higher-for-longer regional rate outlook until inflation prints confirm sustained moderation.

Week in Review

PMIs signal services contraction. The week opened with S&P Global flash prints that missed across both sectors, confirming a sharper slowdown in services activity than markets had priced. Manufacturing PMI eased while services fell, marking the first contraction reading in several quarters. These outcomes followed the prior week’s contained inflation prints and reinforced the view that domestic demand is cooling faster than the Bank of England’s latest projection.

CBI surveys confirm industrial weakness. CBI Industrial Trends Orders deteriorated versus consensus, extending the prior reading and highlighting softening order books. The subsequent CBI Distributive Trades release also missed, pointing to further contraction in consumer-facing demand. Together these releases shifted the narrative from selective resilience to broad-based softening within the domestic cycle.

Political noise and BoE communications. Political developments added a layer of uncertainty that weighed on sterling crosses early in the week. Multiple Bank of England speakers delivered remarks without altering the gradual easing bias. Markets responded by trimming cut probabilities, lifting 10-year gilt yields.

Cross-asset repricing. Equities recovered modestly into month-end while Brent crude extended its decline, providing an external disinflationary impulse. Sterling posted limited net movement against the dollar at 1.32, reflecting the balance between softer domestic data and firmer global risk sentiment. The week therefore closed with clearer evidence that UK growth momentum is fading while inflation remains above target.

BoE Watch

Bank of England speakers Breeden, Taylor, Dhingra and Pill addressed markets across the week without shifting the committee’s gradual easing bias. Remarks focused on inflation persistence and the need to monitor services activity after the PMI contraction. No fresh forward guidance altered market pricing for the next policy decision. The softer flash PMIs and CBI prints reinforce the view that growth risks have tilted lower, yet above-target inflation continues to limit the pace of any easing cycle. OIS curves therefore show only modest repricing for near-term moves. The Bank’s analysis that Brexit reduced output continues to weigh on medium-term potential growth estimates. Overall the communications kept policy expectations anchored while data dependence remains the dominant theme.

Data Review

The S&P Global Manufacturing PMI Flash missed consensus, indicating a modest loss of momentum in the factory sector. The Services PMI Flash delivered a larger downside surprise, confirming contraction for the first time in several quarters. These prints together suggest the services-led expansion that supported earlier growth is now reversing. The CBI Industrial Trends Orders balance fell versus consensus, underscoring weaker industrial demand. CBI Distributive Trades then missed expectations, pointing to further deterioration in retail and wholesale activity. Taken together the data releases indicate the UK economy is moving into a softer patch of the cycle with growth below the Bank of England’s latest forecast. Inflation and unemployment continue to constrain the scope for aggressive easing. The combination leaves the BoE OIS curve pricing only gradual cuts over the medium term.

The Week Ahead

Monday brings BoE Pill speech at 01:00, which markets will parse for any update on the inflation outlook after the PMI weakness. No high-impact data releases are scheduled through mid-week, leaving sterling and gilt futures sensitive to further MPC member comments. Thursday offers limited UK-specific indicators while attention turns to month-end positioning. Consensus expectations for any follow-up surveys remain subdued given the recent contraction signals. The releases matter because they will update the growth and inflation backdrop ahead of the next Bank of England meeting. Central bank speakers carry elevated weight in the absence of fresh hard data. Overall the week is expected to remain data-light but policy-sensitive.

Risks & Themes

The PMI and CBI misses shift the outlook toward downside growth risks while above-target inflation keeps upside inflation risks in focus. Markets appear to have underpriced the speed of services contraction, creating potential for further gilt yield volatility. Positioning in sterling crosses remains light after the limited weekly move in GBP/USD to 1.32. An upside scenario would require stronger-than-expected distributive trades or hawkish BoE comments that re-anchor rate expectations higher. A downside scenario centers on further services weakness feeding into softer Q2 GDP prints and earlier BoE OIS repricing. Flow considerations favor defensive positioning into the holiday-shortened week ahead.

Cross-Asset

The FTSE 100 ended the week at 10508.0, up 0.67 percent, after closing Monday at 10428.9 and recovering through Thursday’s 10529.9 print. The FTSE 250 finished at 23147.2, down 0.21 percent week-over-week. The 10-year gilt yield rose on reduced easing expectations. GBP/USD closed at 1.32 with a weekly net change of -0.08 percent, while GBP/EUR rose 0.70 percent to 1.16. Brent crude declined 6.8 percent to 72.6, extending the prior week’s move lower, while gold fell 2.05 percent to 4096.3. Bitcoin dropped 6.02 percent to 59428.9 amid broader risk-off flows. Daily moves showed the sharpest equity pressure on Monday and Tuesday before modest stabilization into month-end.

Global Context

US data resilience continues to shape global rate paths, with the dollar channel transmitting tighter financial conditions to the United Kingdom. Brent crude’s 6.8 percent weekly decline to 72.6 adds an external disinflationary impulse that partially offsets domestic inflation persistence. European officials stressed unity on trade policy, indirectly supporting UK export sentiment amid ongoing EU-UK sanitary and phytosanitary discussions. Geopolitical developments including fresh US-Iran tensions added to risk-off flows that pressured gold and bitcoin. Overall the last seven days reinforced selective DM resilience alongside shared data dependence across central banks.

Week in Review

Equity and Currency Divergence Under Oil Pressure Nordic equity markets closed the week with clear splits as Brent crude declined 6.8 percent to 72.6, weighing most heavily on energy-linked names. Oslo Bors fell 2.37 percent to 1,900.57 while OMX Helsinki 25 dropped 2.87 percent to 6,143.93; OMX Stockholm 30 ended 1.16 percent lower at 3,153.55. OMX Copenhagen 25 provided the sole advance, rising 0.51 percent to 1,800.88. The Norwegian krone and Swedish krona both weakened, with USD/NOK rising 2.21 percent to 9.91 and USD/SEK climbing 1.52 percent to 9.73. EUR/NOK advanced 1.81 percent to 11.32. These moves occurred against a backdrop of no Tier-1 Nordic data releases, leaving external oil and risk sentiment as the dominant drivers.

Policy Signals and Yield Stability Riksbank June minutes released mid-week pointed to board divisions on the speed of future easing, consistent with higher Swedish producer prices. Sweden and Norway 10-year yields held steady. Norges Bank maintained its prior hold stance, with no fresh speeches altering the path. Danish and Finnish markets tracked euro-area developments closely, reflecting the currency peg and ECB transmission. The absence of domestic releases kept focus on global flows and Brent’s 6.8 percent weekly decline.

Growth and External Demand Context Export-oriented sectors in Sweden and Denmark faced mixed external signals amid softer euro-area sentiment. Norwegian fiscal balances stayed supported by Brent near 72.6 despite the weekly drop. Finnish retail sales and housing data offered limited new signals, aligning with the broader mid-expansion narrative from prior weeks. Barclays noted modest consolidation potential in both SEK and NOK on any improvement in growth prints. Overall activity showed resilience without synchronized easing signals across the four economies.

Nordic Central Banks Watch

Riksbank June minutes highlighted internal splits on easing pace, with hotter producer prices supporting arguments for caution. Norges Bank held policy steady, leaving Norges Bank OIS curves showing only modest shifts toward later cuts as Brent fell to 72.6. Danmarks Nationalbank maintained its peg to the euro without fresh intervention data. Bank of Finland followed ECB signals, with the deposit rate unchanged and limited OIS repricing across the region. The data reinforced data dependence rather than near-term policy changes.

The Week Ahead

Monday brings Finland Business Confidence Index and Consumer Confidence Index alongside UK BoE Pill speech. Tuesday features limited Nordic releases, keeping attention on any Riksbank or Norges Bank follow-up comments. Wednesday includes potential Norway oil production figures that could influence NOK flows. Thursday may see Danish and Finnish markets track euro-area PMI prints for ECB rate-path implications. Friday closes the period with month-end positioning and any final speeches ahead of upcoming decisions. Markets will assess whether Brent stabilization near 72.6 alters Norges Bank OIS pricing or supports SEK rebound. The releases matter for confirming whether external demand resilience persists into coming quarters without forcing earlier policy adjustments.

Risks & Themes

Brent’s 6.8 percent drop raises downside risks for Norwegian fiscal flows and NOK stability if energy prices extend lower. Riksbank policy divisions could produce volatility in SEK if minutes are read as signaling faster easing than priced. Upside scenarios center on any growth-print improvement that supports krona and krone consolidation per Barclays forecasts. Markets appear to underprice the persistence of above-target inflation prints across DM economies, leaving OIS curves vulnerable to further repricing higher if US data resilience continues. Selective equity outperformance in Copenhagen suggests rotation potential if euro-area sentiment stabilizes.

Week in Review

Labor market shows resilience Poland’s unemployment rate improved modestly, matching the consensus forecast. The print reinforced steady labor demand despite manufacturing caution flagged in business sentiment indices. Turkey’s consumer confidence climbed, the first sequential gain since March, pointing to household adaptation amid still-elevated inflation.

Policy divergence emerges in Hungary Hungary’s central bank reduced its key rate, citing forint appreciation and cooling price pressures. The move contrasted with the broader global tightening tilt visible in US rate expectations. Hungary’s 10-year yield fell following the decision and debt-management changes.

Equity and commodity pressure weighs on sentiment BIST 100 closed the week at 14,274.00 after a 3.09 percent decline, while iShares Poland slipped 2.77 percent to 38.27. Brent crude’s 6.8 percent drop to 72.60 added downside pressure to energy importers across the five economies. EUR/PLN advanced 0.7 percent to 4.28 and EUR/HUF rose 0.83 percent to 353.37 on positioning ahead of the Polish labor print.

ECB convergence gaps remain wide The ECB’s latest assessment showed Poland, Czech Republic, Hungary and Romania still miss euro-adoption criteria on price stability, fiscal metrics and legal compatibility. Regional equity and FX moves reflected thin summer liquidity and limited follow-through from the report. Overall, the week reinforced selective domestic resilience offset by external commodity and dollar-driven headwinds.

Emerging Europe Central Banks Watch

Hungary’s central bank delivered the widely expected modest reduction, highlighting forint stability and subdued inflation as the rationale for further easing room. NBP held policy steady with no new signals during the week, consistent with the unemployment print matching consensus. CNB, BNR and CBRT also refrained from fresh moves or explicit forward guidance.

The ECB convergence report underscored persistent gaps in price stability and legal compatibility for the four EU members, limiting near-term euro-adoption momentum. Hungary’s rate cut diverges from the higher-for-longer tilt visible in US OIS curves, reflecting domestic forint appreciation. Data releases this week therefore tilt the medium-term path toward measured easing in Hungary while leaving NBP, CNB and BNR on hold. CBRT continues to monitor USD/TRY stability near 46.59 for any intervention signals.

Data Review

Turkey’s Consumer Confidence Index printed at 87.9 versus the prior 85.8 reading, exceeding the modest sequential improvement markets had anticipated. The beat signaled household resilience even as inflation pressures persist. Poland’s headline unemployment rate came in in line with consensus and below the prior month.

The labor-market stability aligns with earlier NBP communications that growth remains supported by domestic demand. No other high-impact releases occurred across Czech Republic, Hungary or Romania during the week. Hungary’s central bank delivered a modest rate cut as expected and was framed around forint gains rather than outright growth concerns.

Brent’s 6.8 percent decline to 72.60 eased imported-energy costs, supporting the disinflation narrative visible in Hungary’s policy decision. The combination of contained unemployment and rising Turkish confidence points to a mid-cycle expansion that remains intact but vulnerable to external price shocks. Data dependence therefore continues to dominate rate-path expectations for NBP, CNB, MNB, BNR and CBRT.

The Week Ahead

No high-impact data releases are scheduled for Poland, Czech Republic, Hungary, Romania or Turkey between June 29 and July 3. Markets will instead focus on central-bank speakers and any follow-through from the ECB convergence assessment. Monday features low-impact producer-price and business-confidence prints in Malaysia and Finland that carry limited regional read-through.

Tuesday brings Japanese housing starts and UK BoE Pill speech, both of which may influence global rate expectations and spill into CEE FX. Wednesday includes potential comments from MNB Governor Varga on the scope for additional cuts. Thursday and Friday remain quiet on the data calendar, leaving positioning in EUR/PLN and EUR/HUF sensitive to euro-area developments. Traders will also monitor any CBRT signals on intervention amid USD/TRY stability near 46.59. The quiet week should keep volatility contained unless external commodity or dollar moves accelerate.

Risks & Themes

The week’s data shift the outlook toward selective easing in Hungary while reinforcing data dependence elsewhere. Upside risks center on further Turkish confidence gains and Polish labor-market stability that could support domestic demand. Downside risks stem from Brent’s continued decline and any renewed dollar strength that tightens financial conditions through the FX channel.

Market positioning appears light ahead of the holiday period, with limited OIS repricing visible in NBP or CNB curves. Mispricing signals are most evident in Hungarian yields, which fell sharply after the central bank cut despite still-elevated regional inflation prints. Volatility remains subdued but could rise quickly on any ECB or Fed speaker surprises that alter global rate expectations.

Cross-Asset

Equities closed lower across the region, with BIST 100 falling 3.09 percent to 14,274.00 and iShares Poland declining 2.77 percent to 38.27.

Bonds showed divergence: Poland’s 10-year yield rose while Hungary’s 10-year yield fell after the central bank decision. FX markets saw EUR/PLN advance 0.7 percent to 4.28 and EUR/HUF climb 0.83 percent to 353.37. EUR/CZK edged up 0.22 percent to 24.23 and USD/TRY rose 0.29 percent to 46.59.

Commodities delivered the clearest downside move as Brent crude dropped 6.8 percent to 72.60, while gold fell 2.05 percent to 4,096.30. Bitcoin declined 6.04 percent to 59,419.08. The cross-asset configuration reflected risk-off flows and commodity relief rather than synchronized regional stress.

Global Context

US data resilience continues to anchor global rate expectations higher, with the first Fed cut now priced no earlier than mid-2027. Brent’s 6.8 percent drop to 72.60 extended the disinflationary impulse visible across energy importers in CEE and Turkey. Euro-area sentiment indicators showed modest improvement but have not yet translated into synchronized easing signals from the ECB.

Trade linkages remain tight, leaving Poland and Czech Republic exposed to any further German wholesale-price contraction. Geopolitical tensions between Poland and Ukraine showed limited market impact this week but continue to shape longer-term fiscal priorities. Overall, external commodity relief and dollar stability provided the dominant cross-border spillover for the five economies.

Week in Review

Equity and commodity pressure dominates flows. South African equities closed the week lower as the JSE Top 40 declined 2.24 percent to 58.99. Resource names faced direct headwinds from platinum falling to 18.72 and Brent crude settling at 72.6, both posting weekly declines exceeding 6 percent. The absence of any Stats SA releases left price action driven entirely by external flows rather than domestic surprises.

Rand resilience tested by dollar strength. USD/ZAR closed at 16.45 after reaching 16.55 mid-week, marking the weakest level in over a month and producing a net weekly change near zero. EUR/ZAR moved lower. This configuration shows limited SARB OIS repricing despite the currency move.

Yield curve steepening signals fiscal focus. The long-term rate climbed, widening the spread versus the short-term rate and aligning with SARB statements that lower inflation plus fiscal reform are prerequisites for cheaper borrowing. Naspers closed at 79953.0 after a 2.39 percent weekly decline, providing only partial offset to the broader index.

Data vacuum reinforces external dependence. With zero South African economic events recorded across the five trading days, markets priced global dollar direction and commodity swings directly into local assets. Gold moved to 59429.11 while Bitcoin fell to 59429.11, mirroring the risk-off tone seen across emerging markets.

Policy signals remain consistent with prior weeks. The SARB’s repeated focus on inflation within the 3-6 percent band and offshore payment scrutiny kept near-term rate expectations stable, consistent with the trimming of hike probabilities noted after the earlier below-consensus CPI print. Overall, the week confirmed that South African assets continue to trade as a function of US policy spillovers and commodity cycles rather than domestic catalysts.

SARB Watch

The SARB highlighted that sustained lower inflation together with credible fiscal consolidation remains essential to cut borrowing costs, leaving the policy rate steady. No MPC speakers appeared and no minutes were released, so markets took direction from the central bank’s emphasis on offshore payment rules aimed at curbing money laundering. SARB OIS curves showed only marginal shifts, with the data vacuum preventing any material repricing of the next decision. The combination of stable short-term rates and a higher long-term yield suggests markets continue to price a gradual path that tolerates external volatility provided domestic inflation stays contained.

The Week Ahead

Attention will center on any SARB commentary around the next meeting, with markets watching for further signals on how fiscal consolidation and inflation outcomes will shape the rate path. Leading business indicator data and consumer confidence prints are expected to provide the first domestic read-through on household and corporate sentiment after recent fuel-price pressure. Global risk sentiment and US dollar moves will likely dictate rand flows ahead of upcoming decisions, given the empty domestic calendar. Commodity price rebounds could support mining equities and ease pressure on export earnings, while any escalation in regional diplomatic tensions may weigh on capital inflows. OIS pricing will respond to whether incoming data confirm or challenge the SARB’s current forward guidance on inflation within the target band over coming quarters.

Risks & Themes

The week’s external-driven moves highlight downside risks to growth if commodity weakness persists and the dollar remains elevated, potentially widening the current-account gap in coming quarters. Upside scenarios hinge on a softer US policy signal that could ease rand pressure and allow the SARB to maintain its measured stance. Markets appear to underprice fiscal slippage risks given the steepening yield curve and ongoing expenditure concerns, which could force faster consolidation than currently embedded in OIS curves. Xenophobic tensions and related regional frictions add a further layer of uncertainty to investment flows that the data do not yet capture.

Week in Review

Activity indicators firm while inflation shows mixed signals. Australian S&P Global manufacturing and services PMIs both exceeded prior readings and pointed to modest expansion. These prints aligned with a sharp labor-market rebound that added jobs and full-time positions, leaving the unemployment rate unchanged. The data arc therefore showed activity resilience that tempered earlier concerns about cooling momentum.

Inflation trends produced a split outcome. Headline CPI declined month-over-month and year-over-year, both below consensus, yet RBA trimmed-mean measures lifted. The combination left underlying price pressures elevated and supported the RBA’s decision to hold the cash rate with the door open to further tightening. Commodity price weakness, including Brent crude falling 6.8 percent to 72.6, added external disinflation but did not alter the core trajectory.

Markets reflected the policy repricing. The ASX 200 ended the week 0.59 percent lower at 8764.2 while AUD/USD declined 1.45 percent to 0.69, driven by Fed rate expectations and limited RBNZ commentary. NZX 50 posted a modest 0.37 percent gain to 13495.24 with no major domestic releases. Overall, the week confirmed selective resilience in Australia that challenges near-term easing bets while New Zealand data remained quiet.

Cross-asset moves reinforced the higher-for-longer narrative. Australian 10-year yields stayed elevated and BHP shares fell 2.24 percent to 58.99 amid softer iron-ore sentiment. The through-line across the four days was therefore one of labor-market strength and core inflation persistence overriding headline softness.

ANZ Central Banks Watch

The RBA held the cash rate with hawkish forward guidance intact after trimmed-mean CPI rose. Governor Bullock’s speech reinforced data dependence without shifting the bias, while Assistant Governor Hauser highlighted labor-market resilience. RBA OIS pricing showed only modest adjustment for near-term cuts, leaving the next decision path anchored to upcoming inflation and activity prints. RBNZ remained silent, producing no material shift in NZ OIS curves and preserving the divergence narrative versus the RBA. The week’s core inflation outcome therefore tilted the balance toward a later rather than earlier easing cycle for both banks.

The Week Ahead

Next week opens with limited Australian and New Zealand releases, keeping focus on external drivers and any follow-up RBA commentary. China industrial production and retail sales data will influence commodity-linked AUD and NZD flows given their direct impact on export revenues. Japanese housing starts and construction orders may add regional color but carry lower weight for local rate paths. Markets will watch for any RBA or RBNZ speakers that could refine guidance ahead of upcoming decisions. The absence of major domestic prints leaves OIS curves sensitive to global risk sentiment and USD direction. Overall, the week is expected to test whether the prior employment rebound sustains the higher-for-longer stance or allows modest repricing lower in terminal rates.

Risks & Themes

The employment beat and core CPI lift reduce the probability of an early RBA cut while leaving downside risks to growth if commodity prices extend their decline. AUD weakness may overshoot if Fed repricing accelerates, creating an asymmetric move versus NZD. Markets appear to underprice the persistence of trimmed-mean inflation, which could delay easing even if headline prints moderate further. Upside scenarios center on stronger China stimulus lifting iron ore and supporting both currencies; downside scenarios hinge on labor-market softening that would finally shift OIS curves toward earlier cuts. The data therefore tilts the balance toward tighter policy settings than currently discounted for the coming quarters.

Week in Review

Equity markets declined across Greater China. Mainland indices closed the week lower, with Shanghai Composite at 4,027.26 and CSI 300 at 4,868.22, while Hong Kong and Taiwan recorded steeper losses. Commodity price moves weighed on growth-sensitive assets. Brent crude fell 6.8% to 72.60 while copper declined 2.35% to 6.21. Taiwan’s TAIEX recorded the largest regional decline at -6.64% to 44,571.76. USD/HKD remained anchored at 7.84 inside the peg band. Overall, the week reinforced external demand strength alongside softer domestic indicators.

Greater China Central Banks Watch

USD/HKD remained anchored at 7.84 inside the peg band with aggregate balance trends confirming ample reserves. The market configuration suggests the medium-term rate path remains on hold, with OIS curves showing limited repricing. Overall, the week reinforced a data-dependent stance that tolerates external demand signals without shifting toward outright easing.

Data Review

No high-impact mainland, Hong Kong or Taiwan releases occurred during the week. The data configuration points to a mid-expansion phase where export-led industrial activity supports headline growth while consumption remains soft. This keeps policy on hold, with the rate path tilted toward maintaining liquidity support. Overall, the week’s market moves reinforced that external channels are sustaining activity without requiring immediate monetary accommodation.

The Week Ahead

Monday brings Malaysia PPI and Japan housing starts that may influence regional sentiment. Tuesday features limited Asia-Pacific data, keeping focus on open-market operations. Wednesday includes Finland and Japan construction orders alongside potential HKMA foreign reserve updates. Thursday offers no major Greater China releases. Friday closes the period with no scheduled mainland or Hong Kong prints, leaving commodity price action and USD/CNY levels as primary market drivers. Overall, the calendar points to thin data dependence, with external trade headlines likely dominating price action.

Risks & Themes

Equity positioning shows crowded long exposure in Taiwan semiconductors that could amplify volatility on any inventory signals. Commodity downside, including Brent at 72.60, signals potential growth mispricing if demand data disappoint further. Upside scenario centers on continued export resilience supporting a shallower equity correction, while downside hinges on escalation in trade tensions.

Cross-Asset

Equities led the downside, with Shanghai Composite closing at 4,027.26, CSI 300 at 4,868.22, Hang Seng at 22,671.86, and TAIEX at 44,571.76. FX markets saw USD/CNY rise 0.43% wow to 6.80 while USD/HKD edged 0.06% higher to 7.84 inside the band. Commodity prices declined across the board, with copper falling 2.35% to 6.21, Brent crude dropping 6.8% to 72.60, and gold declining 2.05% to 4,096.30. Bitcoin fell 6.04% wow to 59,415.21. Bond markets showed limited movement, with China 10Y yields remaining directionally stable. The configuration reflects growth-sensitive assets pricing softer near-term demand against resilient export channels.

Global Context

US-China tariff disputes intensified over the past seven days, with third-country gains proving uneven as rerouted supply chains benefited Taiwan but pressured Hong Kong intermediaries. These developments tighten financial conditions through the dollar channel without altering the mid-expansion trajectory for Greater China.

Week in Review

Equity Market Correction KOSPI closed the week at 8,411.21, down 7.72 percent, while KOSDAQ ended at 851.37, down 12.08 percent. Samsung closed at 339,500, down 3.96 percent, and SK Hynix finished at 2,673,000, down 8.43 percent.

Currency Movements USD/KRW closed at 1,535.00, up 0.24 percent on a Friday-to-Friday basis.

Commodity and External Price Developments Brent crude fell 6.8 percent to 72.60, adding to disinflationary forces that offset domestic price pressures.

BoK Watch

BoK speakers emphasized that policy must remain vigilant against housing market excesses and elevated household leverage, directly influencing forward guidance. No rate decision occurred this week. Semiconductor wage gains added a domestic inflation channel that challenges earlier disinflation assumptions. The combination leaves the upcoming decision biased toward hold or hike rather than easing, consistent with the prior week’s global data-dependence theme.

The Week Ahead

Monday opens with limited Korean-specific releases, keeping focus on global risk sentiment and USD direction that will influence USD/KRW flows. Mid-week attention turns to any follow-up BoK commentary on financial stability and debt risks ahead of the next policy meeting. Treasury supply rising in July may exert further pressure on longer yields. Equity investors will monitor semiconductor supply-chain updates after the prior week’s volatility. Markets will also parse any new export or inflation prints for implications on the BoK rate trajectory over coming quarters. The absence of major domestic data leaves external cues, particularly US yields and Fed rhetoric, as the dominant drivers of KRW and KTB trading. Overall, the week should clarify whether recent policy communications have anchored OIS pricing for upcoming decisions.

Risks & Themes

The equity correction and won movement highlight downside risks if global chip demand moderates or US rate expectations rise further. Upside scenarios center on continued semiconductor export strength sustaining growth. Markets appear to underprice the persistence of household debt vulnerabilities that could force a higher BoK terminal rate than currently reflected in OIS curves. The divergence between chip-driven external surpluses and soft domestic confidence readings creates a two-speed economy that complicates the rate path over coming quarters.

Week in Review

Policy Divergence and Currency Pressure Bank Indonesia raised its policy rate again to defend the rupiah after USD/IDR rose to 17,957 over the week. The central bank paired the hike with stimulus measures and state-bank liquidity support. These steps coincided with a 3.61 percent decline in the JCI to 5,896.13 and renewed MSCI downgrade concerns that triggered portfolio outflows.

BoT Hold and Growth Revision The Bank of Thailand left its benchmark rate unchanged and lifted its 2026 GDP projection. The decision followed a 1.15 percent weakening of the baht to 33.3 and persistent household-debt concerns. Thailand’s SET index closed the week 2.02 percent lower at 1,542.34.

Commodity and External Shock Transmission Brent crude fell 6.8 percent to 72.6, easing import costs for energy-dependent ASEAN economies yet failing to offset broad dollar strength. The ringgit outperformed, with USD/MYR declining 1.22 percent to 4.09 after Bank Negara Malaysia stepped up foreign-income conversion requirements. Malaysia’s KLCI finished 1.95 percent lower for the week.

Equity and Flow Divergence Across Peers The Philippine PSEi rose 0.62 percent to 6,072.24 while Singapore’s STI slipped 0.24 percent to 5,191.73. Vietnam and the Philippines saw continued supply-chain FDI interest, yet short-term currency volatility remained the dominant market theme. No high-impact domestic data prints occurred in any of the six economies, leaving external USD and oil moves as the primary drivers.

Stimulus and Liquidity Response Indonesia’s liquidity measures into state banks aimed to cushion growth. Overall, the week confirmed that capital-flow management rather than domestic activity data set the tone for ASEAN markets.

ASEAN Central Banks Watch

Bank Indonesia tightened policy again to counter rupiah depreciation pressures near 17,957, with market participants now pricing a higher probability of sustained rates through the next decision. The Bank of Thailand’s hold and upward 2026 GDP revision left BoT OIS curves little changed and signaled tolerance for further baht softness. Bank Negara Malaysia maintained its foreign-income conversion push, supporting the ringgit’s 1.22 percent weekly gain and keeping BNM OIS pricing anchored for no near-term move. BSP and MAS stayed on hold with no scheduled communications, while SBV data remained light; regional curves therefore reflected only modest shifts in terminal-rate expectations despite the week’s external volatility.

The Week Ahead

Monday’s Malaysia Producer Price Index year-over-year release will provide the first inflation read since the ringgit’s recent appreciation and could influence BNM’s assessment of imported-price pressures ahead of the next policy meeting. Japan housing-starts and construction-order data on the same day may affect regional risk sentiment through the yen channel. Mid-week BoE speeches and euro-area confidence indicators will be watched for any spillover into USD strength that could again test ASEAN currencies. No central-bank decisions are scheduled for BI, BoT, BNM, BSP, MAS or SBV, so markets will focus on whether the prior week’s rate-hike and hold combination has stabilized flows. Any further Brent crude moves will matter for Thailand’s current-account outlook and the BoT’s tolerance for baht levels. Overall, the absence of domestic data leaves external USD and commodity prints as the key variables for near-term rate-path expectations.

Risks & Themes

The week’s sharp Brent decline and continued USD strength highlight downside risks to growth forecasts if external demand softens further, while upside surprises in Malaysian PPI could delay any BNM easing signals. Indonesia’s stimulus and liquidity injections may support near-term activity but risk widening the current-account gap if capital inflows remain volatile. Markets appear to underprice the persistence of BI’s tightening bias given ongoing MSCI concerns, while pricing for BoT appears more balanced after the growth upgrade. A stronger-than-expected ringgit could ease imported inflation risks for Malaysia yet pressure exporters, creating a two-sided growth outlook into the coming quarters.

Week in Review

PMI moderation signals cooling momentum. The HSBC Composite PMI Flash eased from the prior reading, while Manufacturing and Services PMI both declined, confirming a broad-based slowdown after stronger readings in prior weeks.

Equity markets absorb the data without material downside. Nifty 50 advanced on most sessions, supported by bank and IT names even as the Composite PMI decline represented the steepest drop in three months.

Currency markets reflected external yield differentials. USD/INR climbed mid-week before retracing to 94.39, consistent with ongoing RBI intervention that limited further depreciation.

Oil-price relief provided an offset to imported inflation risks. Brent crude declined, easing pressure on the current-account balance.

Liquidity support and inflows underpinned fixed-income stability. The 10-year G-Sec yield remained stable as foreign debt inflows continued following tax-relief measures, while short-term rates stayed anchored.

Core-sector weakness earlier in the month foreshadowed the PMI outcome. May core-sector output growth hit a seven-month low, aligning with the subsequent private-sector survey moderation and pointing to softer industrial production prints ahead.

Monsoon progress and FDI trends offered counterbalancing positives. Cumulative rainfall ran above the long-period average while FDI equity inflows remained solid in April-May, supporting rural demand and services-sector resilience despite the PMI dip.

Overall, the week reinforced a mid-expansion narrative with selective softening. Data confirmed that above-target inflation tolerance and steady RBI policy continue to shape the near-term growth path without triggering immediate repricing in RBI OIS markets.

RBI Watch

The Reserve Bank of India maintained the repo rate throughout the week while conducting liquidity operations, keeping short-term rates stable. No policy speakers or minutes were released, and forward guidance remained unchanged with markets continuing to price steady settings through the next meeting. The HSBC PMI moderation and Brent decline together reduced near-term inflation risks, yet RBI OIS curves showed only marginal shifts as participants awaited further confirmation on growth and food-price trends. Record SIP inflows and foreign debt purchases reinforced the central bank’s ability to manage rupee volatility around the 94.39 level without altering the current policy stance. Overall, the week’s data reinforced expectations that the Reserve Bank of India will maintain its measured approach, tolerating above-target prints while monitoring external balances.

The Week Ahead

No high-impact Indian data releases appear on the calendar for June 29–July 3, leaving markets to focus on global risk sentiment and any updates to US-India trade talks. EY’s projection of FY27 GDP growth will remain in view as participants assess whether the June PMI easing signals a sustained moderation into coming quarters. Oil-price stability will continue to influence inflation expectations and the current-account outlook ahead of the next Reserve Bank of India decision. RBI weekly statistical releases on deposits and forex reserves are expected to provide further insight into liquidity conditions and intervention patterns. Markets will also monitor cumulative monsoon rainfall updates for their implications on food inflation and rural consumption in the coming quarters. Overall, the absence of major domestic prints should keep RBI OIS pricing anchored unless external yield differentials intensify pressure on USD/INR.

Risks & Themes

The June PMI decline raises the possibility that growth is moderating faster than expected, potentially shifting the Reserve Bank of India’s reaction function if subsequent industrial production and GDP prints disappoint. Oil volatility remains a key uncertainty, with Brent’s decline providing relief but any reversal could quickly re-anchor inflation expectations higher and pressure the rupee. Market pricing continues to understate downside risks to the current-account balance given India’s oil-import reliance, while upside surprises in FDI or export policy could support a stronger rupee path. The combination of steady RBI policy and resilient equity inflows suggests markets are positioned for continuity, yet any acceleration in global rate repricing could tighten financial conditions through the dollar channel more than currently discounted.

Week in Review

Consumer sentiment improves modestly. The sole Turkey-specific release showed the Consumer Confidence Index climbing to 87.9 from the previous 85.8 reading. This gain reversed part of the earlier softening and aligned with resilient external demand signals visible in narrower trade balances elsewhere.

Equity markets extend their decline. BIST 100 posted a 3.09 percent weekly loss, closing at 14,274.00. The move occurred even as USD/TRY rose only 0.29 percent to 46.59, indicating the equity weakness was not driven by a sharp currency depreciation.

TRY crosses show limited volatility. EUR/TRY advanced 2.48 percent to 107.38 while GBP/TRY gained 1.26 percent to 796.3, reflecting euro and sterling strength against the lira rather than domestic selling pressure. Daily USD/TRY changes remained contained.

Data flow remains thin. With only one medium-impact release during the June 22–28 window, markets lacked fresh inflation or activity prints to reassess the growth trajectory.

Global factors weigh on sentiment. Brent Crude’s 6.8 percent drop to 72.6 offered external disinflation support, yet the equity sell-off suggests investors focused instead on the stronger dollar channel and higher terminal-rate pricing in major economies.

No policy surprises emerge. The absence of CBRT minutes, speeches, or OIS repricing kept the monetary-policy outlook stable, consistent with the data-dependent stance observed across CEEMEA central banks in recent weeks.

CBRT Watch

No Central Bank of the Republic of Turkey speakers or decisions occurred during the week, leaving forward guidance unchanged from the prior higher-for-longer signal. The modest improvement in Consumer Confidence to 87.9 does not yet alter the inflation trajectory. CBRT OIS curves therefore showed no material shift in pricing for the next meeting, with markets continuing to embed measured easing only in coming quarters once inflation momentum is confirmed lower. The stable USD/TRY print at 46.59 reinforced that external financing conditions remain the dominant near-term constraint on policy flexibility.

The Week Ahead

The June 29–July 05 calendar contains no high-impact Turkey releases, producing a quiet window ahead of the next CBRT decision. Markets will therefore monitor global data dependence, particularly US and euro-area prints that continue to shape terminal-rate expectations and the dollar channel. Any BoE or ECB signals on the timing of upcoming decisions could indirectly influence TRY crosses and capital-flow prospects. The lack of domestic inflation or activity data means the rate path will remain anchored to the existing inflation reacceleration narrative until fresh prints arrive in subsequent weeks. OIS pricing is expected to stay stable absent external shocks.

Risks & Themes

The week’s thin data flow leaves the outlook exposed to external surprises, particularly renewed US inflation resilience that could keep the dollar bid and delay any CBRT easing. Upside risks center on further Consumer Confidence gains that might support domestic demand and reduce the urgency of tight policy. Downside risks include a sharper BIST correction if global equity rotation intensifies, which could widen credit spreads and pressure TRY funding costs. Markets appear to underprice the persistence of above-target inflation into coming quarters given the absence of new disinflation evidence this week.

Week in Review

Oil Price Weakness Dominates Sentiment Brent crude declined 6.8 percent to 72.6, while WTI crude fell 7.47 percent to 69.23. Softer external demand and inventory builds drove the move, directly weighing on energy-linked fiscal outlooks across the GCC.

Equity Markets Show Selective Resilience MSCI UAE declined 3.7 percent to 19.24, while DFM General fell 2.67 percent to 6,018.35. MSCI Saudi eased 1.31 percent to 37.8, with Saudi Aramco ending at 26.6. MSCI Qatar and MSCI Kuwait posted weekly declines of 2.13 percent and 3.35 percent respectively, highlighting divergence within the region.

Currency Pegs Remain Anchored USD/SAR closed at 3.76 after a 3.19 percent weekly move, while USD/AED held steady at 3.67. USD/KWD ended at 0.31 with minimal net change. These levels preserved standard dollar pegs across most GCC currencies despite the oil-driven volatility.

GCC Central Banks Watch

GCC central banks delivered no policy decisions or forward guidance this week, consistent with their pegged regimes. OIS curves showed no material repricing for near-term rate changes, as USD/SAR stability at 3.76 and USD/AED at 3.67 reinforced alignment with the Federal Reserve path. The sharp Brent decline to 72.6 did not alter domestic inflation or liquidity signals enough to shift expectations ahead of the next meeting. Data dependence remains the dominant theme, with external US inflation resilience continuing to anchor global rate paths that GCC policymakers follow.

The Week Ahead

Monday brings Malaysia Producer Price Index year-over-year and Japan Housing Starts year-over-year, both relevant for external demand signals that influence GCC oil revenues. Tuesday features UK BoE Pill speech and additional Japanese construction data, which may shape global rate expectations and dollar strength. Wednesday includes euro-area and US activity prints that could affect oil demand forecasts and GCC fiscal planning. Thursday highlights potential BoE or ECB speakers alongside any OPEC+ compliance updates ahead of the July ministerial meeting. Friday closes the period with US employment-related releases that will inform the broader rate path. These data points matter because they feed into oil price stability and the dollar channel that determines GCC monetary conditions through the peg.

Risks & Themes

The 6.8 percent Brent drop to 72.6 shifts the fiscal outlook toward greater reliance on non-oil revenues. Downside risks center on further oil weakness if regional supply disruptions ease, potentially delaying diversification timelines. Markets appear to underprice the persistence of US data resilience that keeps terminal rates higher and supports a stronger dollar, which could tighten GCC financial conditions through the peg. Geopolitical headlines from the Strait of Hormuz remain the dominant near-term variable for energy prices and regional equity rotation.