Weekly Market Roundup — June 26, 2026

Headline and core Personal Consumption Expenditures (PCE) inflation rose 4.1% year-over-year and 3.4% year-over-year, respectively, consistent with expectations. The increase's composition was stronger than the headline suggested, largely due to elevated services prices. Core services excluding housing, a proxy for domestic demand, remained high, with momentum increasing to 4%. While core inflation is anticipated to be persistent, the recent decline in oil prices suggests a potential moderation in headline PCE.

Consumer spending in May increased by 0.7% month-over-month, or 0.3% in real terms, with nominal income matching this growth. However, strength in recent spending figures followed downward revisions to real spending in previous months. Labor market health remains a key determinant for continued spending momentum. Initial jobless claims decreased by 12,000 to 215,000, while continued claims rose by 21,000 to 1.82 million, though prior weeks often saw downward revisions.

Headline durable goods orders fell 4.5% month-over-month in May, primarily due to a 14% decline in transportation equipment orders, a volatile component. More economically significant core goods orders (nondefense capital goods excluding aircraft) rebounded by 1.6% after a previous month's decline.

The Euro Area consumer confidence index improved from -19 to -17.7, but still lags pre-conflict levels (-12.4) and its long-run average (-9.5). While the correlation between confidence and consumption has weakened since the pandemic, the current level suggests a gradual and unlikely near-term pick-up in spending.

The Euro Area composite Purchasing Managers' Index (PMI)¹ increased from 48.5 to 49.5, surpassing consensus estimates. This reading, though still indicating a fragile economy, alongside recent sentiment data, suggests a higher probability that the economic trough may have passed, albeit with persistent vulnerability to shocks. Notably, both input and output prices declined, hinting at an easing of upward price pressures.

The UK's flash PMI for June decreased from 49.7 to 49.4, falling below consensus. This decline was driven by a drop in the services activity PMI from 49.3 to 48.7, reportedly due to rising costs and political uncertainty impacting consumer confidence.

Japan’s preliminary PMIs for June showed a strong recovery, with the composite PMI rising to 52.5 from 51.1 in May. Improvements were seen in manufacturing and a more significant recovery in the services PMI, which reached 51.8 from 50.0. Tokyo metro area inflation in June was slightly higher than anticipated, increasing the likelihood of another Bank of Japan rate hike beyond what is currently priced in, as second-round effects seem stronger than forecasters expected. Further economic growth could be supported by the government's announcement of a new USD 2.3 trillion spending program over 14 years to boost national competitiveness.

Australia’s preliminary PMIs for June also recovered somewhat, driven by firm manufacturing (remaining above 50) and a pick-up in the services PMI to 49.9 from 48.5. However, the inflation picture was mixed; the trimmed mean rate continued to rise, while the headline rate decelerated slightly. Both rates remain above target, limiting the Reserve Bank of Australia's scope for imminent easing.

South Korean equity markets experienced significant volatility due to concerns regarding the sustainability of AI-driven chip demand. Despite this, June exports (first 20 days) demonstrated strong growth, increasing by 60% year-over-year.

Upcoming economic data releases include Japan's unemployment rate, US Job Openings and Labor Turnover Survey (JOLTS)² job openings, and Japan's Tankan survey. The Euro Area will release its Consumer Price Index (CPI)³, and the US will report Non-Farm Payrolls (NFP) and the Euro Area unemployment rate.

Global central bank rates have repriced lower over the week. In the US, activity data has been resilient, with value stocks performing in line with an expansionary market regime. The US dollar has continued to serve as a stronger diversification play compared to precious metals. Consumer confidence and PMI data indicate tentative but vulnerable economic recoveries in Europe and robust improvements in Asia, while inflation concerns remain a focal point for monetary policy decisions.