U.S. markets staged an aggressive relief rally by June 12, 2026, with major indexes closing the week +0.5% to +0.7% after earlier volatility. The S&P 500 rebounded 1.8% in a single day, while the Nasdaq surged 2.5%, driven by news of a potential U.S.-Iran peace deal that eased Middle East tensions and overshadowed earlier rate-hike concerns triggered by robust jobs report from the week before. Another important highlight was SpaceX's IPO on Friday, sending the company valuation to above USD 2 trillion, after shares jumped 19% on their first day of trading.
Fixed income markets experienced turbulence as investors digested conflicting signals. The 10-year Treasury yield fluctuated between 4.45% and 4.65%, declining 5-10bps in the week as Middle East tensions eased. Corporate credit spreads 3-10bps on peace deal optimism. Markets have then reduced rate hikes expectations, now pricing in one hike of 25bps over the next 12 months.
During the weekend, we had the official confirmation of the peace agreement, ending the almost four-month Middle East conflict. Key terms include Iran reopening the Strait of Hormuz and the U.S. ending its naval blockade, with the formal treaty signing scheduled for Friday. For the new week, markets will also focus on the Federal Reserve's June 16-17 policy meeting—the first under Chairman Kevin Warsh—which will release updated economic projections and the "dot plot" rate expectations.
