Market Snapshot is a weekly view from our portfolio managers, offering sharp, thematic insights into the trends shaping markets right now.
Fast reading
- New Fed chair Kevin Warsh held US interest rates steady at 3.50%–3.75% but the committee signalled a more hawkish stance, marking a notable shift from earlier expectations of further easing.
- Economic data present a mixed backdrop, with resilient labour market conditions alongside persistent inflation.
- Market expectations have adjusted towards potential rate hikes before year-end, triggering a risk-off reaction in equities
Federal Reserve (Fed) chair Kevin Warsh presided over his first policy meeting since taking office last month, marking a closely watched leadership transition at the US central bank. The outcome offered few immediate surprises but signalled a potentially more hawkish direction of travel for US monetary policy.
The Federal Open Market Committee (FOMC) concluded its latest meeting on Wednesday by leaving the federal funds rate unchanged at 3.50%–3.75%. This is the fourth consecutive meeting without adjustment, following a sequence of rate cuts in the latter part of 2025.
Recent US economic data presents a mixed picture. The labour market has shown signs of resilience, as US employers added 172,000 jobs in May1 and the jobs numbers for April and March were revised upwards. However, inflation remains a persistent concern. Headline consumer price inflation rose to 4.2% year-on-year in May, up from 3.8% in April2.
According to Sue Hill, Head of the Government Liquidity Group at Federated Hermes, commentary surrounding the latest FOMC meeting suggests a shift in tone. Noting that Warsh made an immediate impression through a streamlined communication approach, Hill highlights “a shortened statement, no forward guidance, an abundance of task forces,” adding that the new chair signalled “the promise of more to come”.
However, Hill also noted a more substantive development – a hawkish turn within the FOMC itself. The committee’s updated ‘dot plot’ revealed that nine of the 18 participants now expect at least one rate increase in 2026, a marked change from the previous median expectation for easing reflected in the March projections (Figure 1).
Figure 1: June vs March Fed projections
Markets reacted negatively in the immediate aftermath of the announcement. Phil Orlando, Chief Market Strategist at Federated Hermes, notes the two-year US treasury yield climbed sharply to 4.20% following the announcement, its highest level since February 2025. The move in short-dated yields triggered a broader risk-off response. The S&P 500 fell 1.2%, the tech-focused Nasdaq was down 1% and the blue-chip Dow Jones Industrial Average also fell 1%3.
1 The Employment Situation – May 2026
2 Consumer Price Index – May 2026
BD017843
Previous Market Snapshot
5 June 2026 – IPO season heats up
What three mega capital raises announced this week tell us about the allure of tech.
29 May 2026 – Equities rally despite concentration risk fears
Global indices have hit new highs this week on the back of strong earnings and optimism around AI.
15 May 2026 – Oil shock weighs on India outlook
As global oil inventories deplete amid the supply crunch, leading energy importers such as India face significant economic challenges.
8 May 2026 – South Korean chip stocks shine amid tech rally
South Korean semiconductor groups surge as investors remain bullish on AI-driven memory demand.
Share:
