Oil and Rates Retreat on Iran Deal Optimism
June 15, 2026
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The S&P 500 Index endured a volatile week, dropping as low as 7,267 on Wednesday before rallying sharply to close Friday at 7,431.1 Small cap stocks led the recovery, with the Russell 2000 Index gaining nearly 4%.2 Market sentiment shifted from inflation concerns to geopolitical optimism as oil prices dropped on expectations of a U.S.-Iran agreement.3
The May Consumer Price Index (CPI) rose 4.2% year-over-year—the highest since April 2023—driven primarily by a 23.5% surge in energy prices.4 However, core CPI rose just 0.2% month-over-month and 2.9% year-over-year.5 The May Producer Price Index (PPI) was less encouraging, jumping 1.1% month-over-month and 6.5% year-over-year, the highest annual reading since November 2022.6 Core PPI excluding food, energy and trade services rose 0.8%, the largest monthly advance since March 2022, suggesting pipeline inflation pressures remain elevated.7
From a fixed-income perspective, Treasury yields reversed course during the week. The 10-year U.S. Treasury declined to close near 4.48%, while the 30-year fell to 4.97%.8 The rally in rates was driven by falling oil prices and optimism around a potential Iran deal, with West Texas Intermediate (WTI) crude settling at $84.88 on Friday—down roughly 6% for the week.9 Investment-grade corporate credit spreads remain historically tight at approximately 72 basis points.10
SpaceX made its market debut on Friday, pricing its record $75 billion initial public offering (IPO) at $135 per share and closing at $161, giving it a $2.1 trillion market capitalization—the largest IPO in history.11 University of Michigan preliminary June consumer sentiment rose to 48.9 from May's record-low 44.8, aided by easing gasoline prices.12 Existing home sales rose 3.2% to 4.17 million units in May.13
In the week ahead, the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday will be the key event, marking Chair Kevin Warsh’s first meeting and including updated projections and the dot plot.14 Markets expect rates to remain at 3.50%–3.75%, with focus on forward guidance.15 Warsh’s inaugural press conference on Wednesday will help set the tone for the second half of 2026. May retail sales will be released Wednesday morning, providing the latest read on consumer spending ahead of the rate decision.16 A U.S.-Iran agreement could be signed as soon as Friday.17 Any agreement to reopen the Strait of Hormuz would have significant implications for energy prices, inflation expectations and the rate outlook. Markets will be closed Friday in observance of Juneteenth.
Sources:
1,2,10Bloomberg
3,9CNBC – U.S. crude oil falls below $85 as U.S. and Iran near a deal to reopen Hormuz; 6/12/26
4,5CNBC – Consumer prices rose 4.2% annually in May, highest in three years; 6/10/26
6,7CNBC – Wholesale prices rose 1.1% in May, more than expected, on surge in energy; 6/11/26
8Yield Finder – Treasury Rates; as of June 12, 2026
11Forbes – SpaceX Opens At $150—Surging 20% After Largest IPO Ever; 6/12/26
12University of Michigan – Surveys of Consumers, Preliminary Results for June 2026; 6/12/26
13National Association of Realtors – Existing-Home Sales Report, May 2026; 6/9/26
14,15Finance Calendar – FOMC Rate Decision June 2026
16MarketWatch – Economic Calendar; as of June 15, 2026
17MSN – US and Iran reach deal to end the Mideast war, with agreement set to be signed Friday; 6/15/26
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