Overnight & Global
The two arbiters this leg hinged on both cleared. Core PCE (May) ran hot on the headline — 3.4% y/y, the highest since October 2023, with all-items PCE at 4.1% — but the monthly core was an in-line +0.3% (CNBC/BEA, 25 Jun), and the market treated the level as known and the path as unbroken: Treasury yields slipped (10Y −9bp to 4.40%, 2Y to 4.18%), the S&P finished flat at 7,357 — sitting exactly on its 50-DMA — and September-hike odds were trimmed at the margin. The reason a 3.4% print did not bite was sitting in the commodity column: Brent crashed 4.8% to $72.86, a fourth straight fall to a near pre-war low, with the prompt spread flipping into bearish contango for the first time since the war as the Strait reopens and a 2026 glut comes into view. That oil collapse is a powerful disinflationary offset to the hot PCE. Underneath, Micron's record print kept working — the Nasdaq 100 rose 0.75% as semis rebounded — so the AI-doubt selloff and the rate scare both resolved the constructive way.
Session Read
United States — the anchor. A textbook digestion: the S&P closed flat at 7,357, holding its 50-DMA for a third session, while the Nasdaq 100 (+0.75%), Dow (+0.14%) and Russell (+0.71%) all firmed — breadth improving as the Micron-led semis rebound broadened. The hot 3.4% core PCE landed without a tantrum because the monthly was in-line and yields fell (10Y −9bp); the read is that the Fed path is capped, not re-accelerating, and the oil crash hands the disinflation case a gift. The set-up into month/quarter-end is a market that has reclaimed its footing on both the AI and the rate questions.
Europe. Euro Stoxx 50 +0.85% and DAX +1.03%, recovering the week's tech wobble as the Micron read-through lifted ASML and the semi-cap chain. The ECB's 2.25% deposit rate (first hike since 2023, 11 Jun) anchors EUR/USD at 1.138 and the Bund near 2.9%. The defence complex stayed under pressure after Rheinmetall's −18.6% F126-frigate shock — the peace-dividend / Forever War-premium unwind running in parallel with the deflating Hormuz premium.
Asia / EM. Whippy: the Nikkei surged on 25 Jun then gave back 3.6% overnight (26 Jun) — round-trip volatility around the BoJ's 1.00% stance and a firmer yen (USD/JPY 161.4). MSCI EM firmed (+1.1%) as the dollar eased and crude's collapse relieved the energy-importer bloc. USD/CNH held at 6.80. Cheaper oil is an unambiguous tailwind for the Asian importers.
Greece — the franchise. The oil crash rewired the Greek tape: refiners and airlines caught the bid — Motor Oil +2.1%, HELLENiQ +0.9% on fatter cracks, Aegean +1.7% on fuel relief, OTE +1.6% and ADMIE +1.1% (+53% YTD) on the duration/disinflation pull — while banks faded a third day into today's Alpha Bank AGM (€519m payout, €259m buyback): EUROB/ETE −2.4%, TPEIR −1.3%. The deflating Brent premium pulls Greek real rates and the GGB lower, underpinning the long-duration infra block (GEK TERNA +77%, Cenergy +55% YTD); METLEN traded ex-div €1.00 with its €600m buyback running.
Theme of the Day — The oil crash defuses the hike scare
The single thread tying the session together was that a hot inflation print and a market that rose are not a contradiction when oil is collapsing. Core PCE at 3.4% y/y is the highest since 2023 and would, in isolation, validate the BofA up-to-three-hikes scare. But the monthly core was in-line, and — more powerfully — Brent crashed to $72.86 with its curve flipping into contango for the first time since the war, as the Strait of Hormuz reopens (Saudi tankers restarting Gulf exports for the first time since March), a 2026 supply glut comes into view, and Iraq threatens to leave OPEC over its quota. Energy is ~7% of the headline PCE basket; a sustained move from the high-$70s to the low-$70s mechanically pulls future inflation prints lower and hands the Fed the disinflation it has been waiting for. The bond market saw it — yields slipped despite the hot core — and the read flips from "rates re-accelerating" to "the Strait is doing the Fed's work." The risk is symmetry: an IAEA-access standoff that re-bids crude would reverse the offset just as fast.
The Call
Both questions that defined the drawdown have now resolved constructively. The AI-doubt that triggered it was refuted by Micron and the semis re-led; the rate scare that compounded it was contained — a hot 3.4% core PCE met an in-line monthly and, decisively, an oil crash that flipped Brent into contango and is doing the Fed's disinflation work from the Strait. The bond market ratified the read by slipping yields into the hot print, and the S&P sat precisely on its 50-DMA — the line held, the scare digested. The Markets Radar's down-path signpost that fired on 23 Jun is resetting, and the structural backdrop still favours the bulls: 6.3% above the 200-DMA, the cycle half its median life, and a deflating Hormuz / Forever War premium feeding disinflation across the tape. The standing caveat is symmetry — the same Strait that is cutting crude can re-bid it if the IAEA-access dispute hardens. Net: respect the resilient-tightening regime, treat the 50-DMA and the oil tail as the two arbiters, and let the disinflation offset run until verification risk forces it to stop.
