This content was published on
June 17, 2026 - 03:34
5 minutes
(Bloomberg) — Bonds advanced ahead of the Federal Reserve’s policy decision, as a slide in oil prices to a three-month low helped ease concerns of a renewed inflation shock.The yield on benchmark Australian 10-year notes fell five basis points while that on Japanese debt also retreated. The rate on similar-maturity Treasuries slipped one basis point to hold near a one-month low.MSCI Inc.’s gauge of Asian equities was little changed after a three-day rally, with South Korea’s chip-heavy Kospi benchmark losing 0.3%. That came after a pullback in semiconductor makers weighed on US equities, dragging the S&P 500 lower and sending the Nasdaq 100 down almost 2%.Brent traded below $80 a barrel, after sinking 15% over four days in the longest losing run this year on bets that the US-Iran deal to reopen the Strait of Hormuz will unleash a wave of supply. The slide in oil prices has prompted investors to reassess the global interest-rate outlook just as the Fed meets for the first time under Chairman Kevin Warsh.“An actual end to the war and oil flowing freely will bring yields lower in the short term,” said Byron Anderson, head of fixed income at Laffer Tengler Investments, which oversees more than $1.7 billion. “Rate hikes will disappear once energy inflation dissipates.”With a well-flagged hike from the Bank of Japan seen as an exception, most developed-world central banks, including the Fed, are expected to make no changes this week. The bigger focus for investors is what the policy outlook looks like under Warsh. Bloomberg Economics sees a shift in how the Fed communicates with markets as Warsh is unlikely to submit his own “dot” to the closely scrutinized dot plot, breaking with precedent under Jerome Powell, Janet Yellen and Ben Bernanke.“In a matter of months, the narrative has shifted from ‘how many rate cuts this year?’ to ‘how many rate hikes are on the table?’” said Bret Kenwell of eToro. “That’s a big swing, and it puts Warsh in a difficult spot: He can acknowledge the recent pullback in oil prices and sound patient, but he can’t afford to look complacent if broader inflation pressures are moving the wrong way.”Options traders are increasingly divided over the Fed’s near-term rate path, with conflicting bets that span from cuts to various degrees of hikes over the coming months.Policy forecasts from Wall Street strategists also run the gamut. US asset manager PGIM this week said the Fed will raise rates three times this year, while Citigroup Inc.’s Andrew Hollenhorst has said the central bank will cut rates this year. BNP’s recent call is for three rate hikes starting in December.Meanwhile, the US and Iran are preparing to formally sign an interim peace deal that’s left both sides claiming victory, with details of the accord still emerging and leaving many European governments, energy investors and shipping companies with reservations about how fast the Strait of Hormuz can return to pre-war conditions.“The backdrop has actually tilted more dovish over the past 48 hours, with oil falling sharply on Hormuz reopening expectations, providing a real disinflationary impulse,” said Billy Leung, an investment strategist at Global X Management. “But the market won’t get ahead of that until it hears directly from Warsh.”Elsewhere in markets, gold and silver edged higher while Bitcoin saw a marginal decline.Corporate Highlights:SpaceX jumped for a third straight day on Tuesday, overtaking Amazon.com Inc. in value to become the fifth-largest stock in the world. SpaceX formally agreed to take over Cursor in a deal that values the artificial intelligence coding startup at $60 billion, cementing a key part of Elon Musk’s efforts to catch up with rivals on coding tools. US Commerce Secretary Howard Lutnick warned Anthropic PBC in a letter last week that it would need government permission to grant foreign nationals access to its most advanced AI models and threatened criminal and civil penalties if the firm failed to comply, according to a copy obtained by Bloomberg News. Yum! Brands Inc. is selling its struggling Pizza Hut division for $2.7 billion, allowing the restaurant operator to focus on its better-performing KFC and Taco Bell chains. Robinhood Markets Inc. said it’s cutting 10% of its workforce, a reduction of around 300 positions, to “remain lean and disciplined” as it develops new products. Some of the main moves in markets:StocksS&P 500 futures rose 0.2% as of 10:28 a.m. Tokyo time Japan’s Topix rose 0.7% Australia’s S&P/ASX 200 rose 0.1% Hong Kong’s Hang Seng was little changed The Shanghai Composite fell 0.4% Euro Stoxx 50 futures fell 0.2% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1613 The Japanese yen was little changed at 160.33 per dollar The offshore yuan was little changed at 6.7560 per dollar The Australian dollar was little changed at $0.7069 CryptocurrenciesBitcoin fell 0.4% to $65,512.06 Ether fell 0.7% to $1,783.93 BondsThe yield on 10-year Treasuries declined one basis point to 4.43% Japan’s 10-year yield declined 1.5 basis points to 2.630% Australia’s 10-year yield declined five basis points to 4.78% CommoditiesWest Texas Intermediate crude rose 0.3% to $76.31 a barrel Spot gold rose 0.2% to $4,341.66 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Masaki Kondo, Winnie Hsu and Ruth Carson.©2026 Bloomberg L.P.
