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June 17, 2026 - 20:31
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(Bloomberg) — Stocks fell and bond yields rose after the Federal Reserve decided to stay on hold, signaling the possibility of higher interest rates as the central bank assesses the impacts of the Iran war on inflation.Following the decision, money markets fully priced in a Fed hike by the end of 2026. The S&P 500 fell 0.5%. The yield on two-year Treasuries climbed eight basis points to 4.14%. The dollar rose against all developed-world currencies.Policymakers’ new projections indicated nine officials foresee at least one hike this year, with six anticipating at least two. Another nine expected no move or a cut. Notably, only 18 officials out of 19 entered their projections for rates at the end of 2026. The absence of an entry suggests new Chairman Kevin Warsh declined to submit a forecast.In their post-meeting statement, officials said inflation remained elevated and vowed to deliver price stability. They continued to characterize growth as “solid.” Officials also described productivity growth and capital investment as strong.The Fed’s decision came with a hawkish tilt, with policymakers signaling they are preparing markets for the possibility of higher borrowing costs, JPMorgan Asset Management’s Bob Michele told Bloomberg Television.“Today’s meeting confirms that the Fed’s recent hawkish shift was not just about higher energy prices,” said Kay Haigh at Goldman Sachs Asset Management. “Despite the recent pullback in oil, half of the members of the FOMC expect rate hikes as soon as this year, reflecting strong labor market and inflation data.”Haigh’s base case remains that the Fed can just about avoid hikes, but the path is narrow and there will be a high premium on the incoming inflation data.“Warsh may have reshaped the optics – dropping the dot and cutting the statement – but the substance of this FOMC is hawkish,” said Seema Shah at Principal Asset Management. “With half the 18 dots signaling a hike this year, alongside higher inflation forecasts, the Fed may be just a few strong inflation and jobs releases away from tightening.”Shah says Warsh is set to face an uphill struggle to convince the committee that policy easing is required – if he even still believes that himself.On the geopolitical front, President Donald Trump defended the interim peace deal he’s reached with Iran and said the memorandum of understanding could be signed “shortly, tomorrow, maybe the next day.”A draft seen by Bloomberg foresees the rapid reopening of the Strait of Hormuz, along with immediate sanctions waivers for Iranian oil. Talks on nuclear issues, and potential further financial gains for Iran, will follow.Corporate Highlights:SpaceX fell for the first time since its initial public offering, snapping a three-day rally that vaulted it past Amazon.com Inc. as the world’s fifth-largest company. Blue Origin is already rebuilding the Florida launch site where its New Glenn rocket exploded last month, making way for the space company to fly again this year and rejuvenate its ambitions to challenge SpaceX. CME Group Inc. Chief Executive Officer Terry Duffy is handing over the reins after more than 25 years at the world’s largest derivatives exchange. He’ll will step down on March 1 and transition to executive chairman. Chief Financial Officer Lynne Fitzpatrick will take over as CEO. La-Z-Boy Inc. jumped after the home furniture store’s reported adjusted earnings per share for the fourth quarter beat the average analyst estimate. UniQure NV soared after the company announced it will be able to seek US approval for its Huntington’s disease gene therapy before conducting a new study. Some of the main moves in markets:StocksThe S&P 500 fell 0.5% as of 2:30 p.m. New York time The Nasdaq 100 fell 0.2% The Dow Jones Industrial Average fell 0.2% The MSCI World Index fell 0.3% CurrenciesThe Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.5% to $1.1548 The British pound fell 0.5% to $1.3353 The Japanese yen was little changed at 160.47 per dollar CryptocurrenciesBitcoin fell 0.7% to $65,316.59 Ether fell 1.8% to $1,764.48 BondsThe yield on 10-year Treasuries advanced one basis point to 4.45% Germany’s 10-year yield was little changed at 2.93% Britain’s 10-year yield declined four basis points to 4.75% CommoditiesWest Texas Intermediate crude rose 1.2% to $76.95 a barrel Spot gold fell 0.9% to $4,290.65 an ounce ©2026 Bloomberg L.P.
