Weekly Market Update (Jul 04, 2026)
HIGHLIGHTS
The decline in oil prices could ease inflation pressure and boost market sentiment. After Warsh spoke at the ECB annual forum, the 10Y Treasury yield increased by 5 bps.
- Fed: Fed Chair Warsh announced that he will stick with the 2% inflation target and disappoint those who expect otherwise. He reiterated his commitment to delivering price stability at the European Central Bank’s annual forum on Wednesday.
- China: Economic data indicate an export-led recovery. The labor market and domestic demand remain stable. The property market is weakening further. Markets are waiting for credit and inflation data.
- Japan: The draft policy plan aims for real growth above 1% through responsible and proactive fiscal policy. However, the proposal to reduce consumption taxes on food is facing strong opposition. In addition, higher inflation data are supporting the rate-hike outlook.
MARKETS
| Nasdaq | 25,832.67 | +2.12% |
| S&P 500 | 7,483.24 | +1.76% |
| Dow | 52,900.07 | +1.97% |
| 10-Year | 4.48% | +11bps |
| Brent | 72.13 | +0.19% |
| DXY | 100.86 | -0.49% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
UBS: Global equities had a positive second quarter. The MSCI All Country World Index increased by 14.5% last quarter, its highest quarterly gain in six years. Semiconductor stocks had their best quarter with an 87% rally.
Morgan Stanley: Although corporate earnings remain resilient and there is potential for cyclical broadening, we suggest being selective in stocks. Rapidly rising real rates are pressuring credit-market balance sheets, implying risks for high-yield and private-credit borrowers.
Fixed Income
Morgan Stanley: Spread resilience has been impressive this year, especially as investment-grade (IG) issuance has already exceeded $1 trillion. CCC bonds are weakening as geopolitical, oil price, and inflation risks are easing.
Goldman Sachs: Continuous AI capex spending and financing will likely limit the room for long-end yields to fall. We believe the upside for inflation longs is limited.
Economy
UBS: High and unexpected inflation will usually lead to negative returns for both stocks and bonds. Commodities are a good inflation hedge because they are embedded directly in inflation measures, especially energy and food.
J.P. Morgan: Although wages are growing faster than costs, people feel that wealth and their aspirations are increasingly unattainable, leading consumer sentiment to all-time lows.