Warsh's Debut and a Hormuz Reopening
June 22, 2026
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The S&P 500 Index advanced approximately 1.5% last week to close at 7,500, with the Nasdaq Composite Index up 2.7% and the Dow Jones Industrial Average up 1.4%, as leadership concentrated in semiconductors and artificial intelligence (AI) beneficiaries while energy declined nearly 6%.1 The week was defined by two major events. First, the Federal Open Market Committee (FOMC) held rates at 3.50%–3.75% in a unanimous vote, but Kevin Warsh's debut meeting delivered a hawkish shift: the projections showed nine of 18 participants expect at least one rate hike this year, the year-end Personal Consumption Expenditures (PCE) forecast rose to 3.6% from 2.7% and the statement was stripped of language signaling a bias toward cuts.2 Warsh did not submit a dot, announced five operational task forces and reiterated his long-held conviction that "inflation is a choice."3 Markets repriced quickly, with the CME FedWatch showing a 60.7% probability of an October hike, versus December previously.4
Second, President Trump signed an initial Memorandum of Understanding with Iran to end hostilities, initiate a 60-day nuclear negotiation window and reopen the Strait of Hormuz.5 West Texas Intermediate (WTI) crude tumbled to the mid-$70s in response.6 The Treasury curve flattened, with the 2-year yield rising roughly 10 basis points (bps) to 4.18%, while the 10-year fell to 4.46% and the 30-year declined to 4.90%.7 Investment-grade corporate credit spreads continued to grind tighter, with the ICE BofA U.S. Corporate Index option-adjusted spread closing at 74 bps.8 May retail sales rose a stronger-than-expected 0.9% month-over-month,9 while preliminary June University of Michigan consumer sentiment improved to 48.9 from 44.8 with 1-year inflation expectations falling to 4.6% from 4.8%.10
In the week ahead, the May PCE report on Thursday is the key release, marking the first major inflation print to incorporate the recent decline in oil prices and frame Warsh’s near-term outlook.11 Thursday also brings the third estimate of first quarter gross domestic product (GDP), durable goods orders and personal income and spending.12 S&P Global flash Purchasing Managers’ Index (PMI) data for June will be released Tuesday, followed by new home sales on Wednesday and final June University of Michigan sentiment on Friday.13 Treasury auctions (2-, 5- and 7-year notes) will test post-Warsh demand,14 while Fed speakers and progress on the Iran deal implementation remain in focus.
Sources:
1J.P.Morgan Asset Management – Weekly Market Recap; as of 6/22/26
2Fox Business – Federal Reserve leaves interest rates unchanged as Warsh era begins; 6/17/26
3Federal Reserve Board of Governors – Transcript of Chairman Warsh's Press Conference; 6/17/26
4Crypto Times – Live: FOMC June 2026 – Kevin Warsh Debut, Fed Holds Rates at 3.5%-3.75%, Bitcoin Slides; 6/18/26
5AP News – US and Iran sign initial deal to end war, ease sanctions and open Strait; 6/18/26
6CNBC – Oil prices fall after Vance says U.S. and Iran made progress in peace talks; 6/21/26
7Bloomberg
8FRED — ICE BofA US Corporate Index Option-Adjusted Spread (BAMLC0A0CM); 6/18/26
9U.S. Census Bureau – Advance Monthly Sales for Retail and Food Services, May 2026; 6/17/26
10University of Michigan – Surveys of Consumers, Preliminary Results for June 2026; as of 6/22/26
11-13MarketWatch – Economic Calendar; as of June 22, 2026
14Treasury Direct – Treasury Auctions; as of 6/22/26
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