US equities posted gains last week, with the S&P 500 up 0.9%, the Dow Jones +0.7%, and the Nasdaq surging 2.4%, led by AI and semiconductor stocks. The highlight was the easing of tensions in the Middle East, bringing more confidence in risk-taking, while the first Fed meeting under Kevin Warsh brought more hawkish expectations, leading markets to price in two rate hikes of 25bps through 2027.
On the fixed income side, the 10-year Treasury yield hovered near 4.45% while the 2-year widened 10 bps, settling at 4.18%. The FOMC voted to hold rates steady at 3.50%–3.75%, as expected. The Fed released a notably shortened policy statement and upgraded its projections ("dot plot"), raising expectations for inflation and rates levels. Futures markets reflected this, pricing future rates this year near 3.8%–4.0% and actively pricing out rate cuts for 2026.
On the geopolitical front, the peace agreement between the US and Iran brought relief to concerns regarding the flow of oil through the Strait of Hormuz, driving oil prices down 10% for the week, while gold and silver retreated 2–5% following higher rate expectations. In the week ahead, markets will closely monitor Middle East developments and key economic data, including manufacturing surveys and the first quarter 2026 US GDP new reading.
