Rate Bets Split on Fed Day, With US Futures Stable – Europe Market Wrap
US equity futures were steady ahead of the Fed’s first policy decision under Warsh, with investors reluctant to take large positions before the meeting. S&P 500 futures were little changed, while Nasdaq 100 futures rose 0.6% after a semiconductor-led selloff dragged US stocks lower on Tuesday. Treasury yields held near one-month lows and the Dollar was broadly unchanged.
Oil stabilized after a sharp four-day decline, with Brent crude holding near $79/bbl. The recent selloff has been driven by expectations that a US-Iran agreement to reopen the Strait of Hormuz could restore supply flows and reduce inflationary pressure, prompting markets to reassess the global interest-rate outlook.
Attention remains firmly on the Fed, where investors are split on the path of policy over the next year. Although the most aggressive tightening expectations have moderated, money markets still imply roughly one 25 bps rate increase by the end of Q1 2027. The meeting will be closely watched for any guidance on how Warsh views the balance between inflation risks and slowing growth.
On the geopolitical front, the US and Iran are preparing to formally sign a memorandum of understanding in Switzerland on June 19th. However, governments, shipping firms and energy markets remain cautious about how quickly normal traffic can resume through the Strait of Hormuz, suggesting some geopolitical risk premium could linger despite the agreement.
