Hot Inflation, Cooler Oil, and the Largest IPO Ever

Stocks staged a clean rebound from last Friday's chip wreckage. The S&P 500 added +0.65% to 7,431.46, the Dow Jones gained +0.66% to a record 51,202.26, and the Nasdaq Composite eked out +0.70% to 25,888.84. The headline performance, however, belonged to small caps: the Russell 2000 surged +3.90% to 2,943.99, regaining nearly all of last week's chip-driven losses as cyclicals, regionals, and energy names led the rotation. The NYSE Composite jumped +1.46% to 23,595.79. The VIX cratered -17.8% to 17.68, signaling that fear over a Fed rate hike receded as Iran peace optimism took the wheel.

The week's biggest fundamental shock landed Wednesday morning: May CPI surged to 4.2% YoY - the highest annual rate since April 2023 - with monthly headline at +0.5% (in line) and core CPI accelerating to 2.9% YoY. The standout: energy prices jumped +3.9% MoM and now sit +23.5% higher year-over-year, accounting for over 60% of the headline gain. Thursday's May PPI piled on: +1.1% MoM headline (vs. +0.7% expected) pushing the annual rate to 6.5% YoY, the highest since November 2022. Goods PPI rose +2.8% MoM - the largest single-month gain since the series began in December 2009 - and energy PPI jumped +10.7%. The Fed has now confronted three consecutive hot inflation prints (April PCE, May CPI, May PPI), and yet bond yields FELL on the week. Why? Iran.

Iran Deal Watch: Oil Cracks, Hormuz Reopens?

Thursday and Friday brought a torrent of leaks about an imminent U.S.-Iran framework agreement mediated by Oman and Pakistan. President Trump told reporters Friday a deal could be signed "as soon as this weekend," with Iranian state media reporting the Strait of Hormuz would reopen under the framework. The market response was violent: WTI crude crashed -9.3% on the week to $84.33 (Friday alone -3.85%), Brent settled at $87.33 (-3.4% Fri, lowest since early March), the 10-year Treasury yield eased to 4.48% (down 7 bps despite the hot inflation prints), and the DXY slipped to 99.80. Markets are betting that an Iran resolution unwinds the Middle East energy premium and lets the Fed quietly thread the needle without hiking.

SpaceX: $75 Billion IPO, Largest in History

Friday's market got a separate jolt of euphoria: SpaceX (SPCX) went public on the Nasdaq in the largest IPO ever, raising approximately $75 billion at an offer price of $135. The stock opened at $150 (+11%) and closed at $161.11 (+19.34%) after surging as high as $176.52 intraday, giving SpaceX a closing market valuation above $2.1 trillion. Trading volume hit more than 500 million shares - approaching Facebook's first-day record from 2012. With Musk's roughly 42% stake (~4.8 billion shares), Elon Musk officially became the world's first trillionaire, with an estimated net worth of $1.1 trillion. The IPO injected massive demand into both AI-adjacent names and high-beta growth, helping fuel Friday's broad rally.

Michigan Sentiment: Off the Mat, Still Grim

Friday's preliminary University of Michigan Consumer Sentiment for June rose to 48.9 from May's all-time-low final reading of 44.8 - the first monthly gain in four months and a ~9% jump as gasoline relief offered a glimmer. But the absolute level remains the second-lowest reading in the survey's history (dating to the 1970s), and 19% below a year ago. Critically, 1-year inflation expectations fell to 4.6% (from 4.8%) and 5-10 year expectations dropped to 3.4% (from 3.9%). The drop in long-run expectations is the data point Warsh and the Fed care most about: it suggests the public still believes the Fed will eventually win.

Warsh's First FOMC, Retail Sales, and a Juneteenth Close

Everything funnels into Wednesday afternoon. Kevin Warsh chairs his first FOMC meeting on June 16-17, with the rate decision at 2:00 PM ET Wednesday, a fresh Summary of Economic Projections and dot plot, and Warsh's debut press conference at 2:30 PM. CME FedWatch shows a 97% probability of a hold at 3.50-3.75% - but the real action is the dot plot. Will the median 2026 dot still show two cuts (as in March), one cut, zero cuts, or - the tail risk - one HIKE? Warsh's tone, his framing of inflation persistence, and any signaled shift from "easing bias" to "neutral" will define the next leg of the equity rally. Retail sales Tuesday and Philly Fed Thursday round out a calendar capped by the Juneteenth holiday closure Friday June 19.

Mon Jun 15: NY Empire Manufacturing

Empire State Manufacturing Survey for June at 8:30 AM ET - the first regional Fed read of the month. Markets quiet on the eve of the FOMC.

Tue Jun 16: Retail Sales May & FOMC Day 1

Retail sales for May at 8:30 AM ET - consensus around +0.2% MoM headline. After Walmart's cautious guidance and Target's blowout, this is the umpire. The FOMC two-day meeting begins. Housing starts and import prices also release.

Wed Jun 17: FOMC Decision, SEP & Warsh Presser

The main event. Rate decision at 2:00 PM ET (consensus: hold at 3.50-3.75%). Fresh dot plot and SEP. Warsh's first press conference at 2:30 PM ET - any deviation from the "data-dependent" script, any hint at the inflation-persistence threshold for action, will move markets sharply. Mortgage applications also release.

Thu Jun 18: Jobless Claims, Philly Fed, LEI

Day after FOMC. Initial jobless claims at 8:30 AM ET. Philly Fed Manufacturing Index - the second regional gauge of the week. Conference Board Leading Economic Indicators also release.

Fri Jun 19: Juneteenth - Markets Closed

U.S. equity and bond markets are CLOSED for the Juneteenth federal holiday. No trading. Use the day to digest the FOMC.

With WTI crashing to $84.33, the 10-year easing to 4.48% despite a 4.2% CPI print, and the Dow at a record 51,202.26, the bond market is effectively betting that an Iran resolution unwinds the inflation problem before the Fed has to act. That is a bold trade. Warsh's first dot plot Wednesday will tell us whether he believes the same. A hawkish surprise (median dot showing zero cuts in 2026, or any hike) would slam the inflation hedges back into action; a dovish read (two cuts retained, language softened) likely fuels another leg higher for risk assets into July.