Is Europe’s macro playbook being rewritten?

S&P 500 +0.93% last week to 7,500.58

US 10-year yield -2.9 basis points last week to 4.460%

Spot gold -1.52% last week to $4,154.76 an ounce

DXY +0.95% last week to 100.76

Key data to move markets today

CHINA: PBoC Interest Rate Decision

EU: Eurozone Consumer Confidence and a speech by ECB President Christine Lagarde

USA: A speech by Fed Governor Christopher Waller

Global Macro Updates

Europe’s fragile policy balance. Europe’s macroeconomic backdrop last week was shaped by increasingly constrained policy choices, persistent inflation pressures and rising political uncertainty. In the eurozone, the ECB maintained a hawkish tone, with officials, including Austria’s Central Bank Governor Martin Kocher, signalling that further rate increases remain possible as inflation risks persist despite the easing of US-Iran tensions. Energy-related risks remain embedded in the outlook, even as wage growth shows signs of moderation.

Growth concerns also deepened. The Bank of France cut its 2026 growth forecast to 0.5%, reinforcing the German Bundesbank’s warnings about continued stagnation in Germany, where industrial hiring has fallen to its lowest level in a decade. Eurozone industrial production disappointed relative to expectations, although German investor sentiment improved on hopes that Middle East peace efforts could reduce geopolitical risk.

Policy discussions in the EU continued to shift toward economic security. Press reports suggested that the European Commission is seeking to remove barriers within the banking sector, while EU leaders are weighing tougher trade measures against China in response to widening industrial imbalances. At the same time, last this week’s G7 summit highlighted divisions among major economies, particularly policy towards Russia, where limited new communication channels were considered alongside sanctions, and over the delayed response to China-related concerns.

Transatlantic relations were also in focus as recent US signals reinforced expectations that NATO allies will need to increase burden-sharing commitments, raising the likelihood of higher fiscal outlays. In parallel, attention turned to a US investigation into German pharmaceutical pricing. This has increased concerns about the potential for new tariffs.

Outside the eurozone, central bank decisions in the UK, Switzerland, Sweden, and Norway drew close attention. The SNB kept rates at zero and maintained guidance around foreign-exchange intervention, while Norges Bank held rates steady but signalled that another increase remains possible. The Riksbank also paused, while retaining a tightening bias amid ongoing geopolitical inflation risks.

In the UK, the BoE kept the Bank Rate at 3.75%. BoE Governor Andrew Bailey’s comments suggested that previously foregone rate cuts amounted to roughly 75 bps of tightening, effectively ruling out near-term easing. Although UK CPI surprised to the downside at 2.8%, activity indicators continued to point to fragility in retail and labour markets, while debt-interest costs remained elevated and consumer confidence stayed subdued.

The week’s main UK political development was Andy Burnham’s decisive victory in the Makerfield by-election, a result that positions him for a leadership challenge against Prime Minister Keir Starmer.

US Stock Indices

US Markets were closed on Friday in observance of Juneteenth.

European Stock Indices

CAC 40 -0.55%
DAX -0.16%
FTSE 100 -0.35%

Commodities

Gold spot -1.28% to $4,154.76 an ounce
Silver spot -1.31% to $64.90 an ounce
West Texas Intermediate +1.28% to $77.54 a barrel
Brent crude +1.22% to $80.38 a barrel

Gold prices declined on Friday, extending the metal’s weekly losses for a third consecutive week as a stronger US dollar weighed on demand. 

Spot gold fell -1.28% to $4,154.76 per ounce, after earlier touching its lowest level since 11 June at $4,119.78. The metal has traded below its 200-day moving average since 5 June and ended the week down -1.52%.

The dollar’s weekly gain of +0.95% made greenback-denominated metals less affordable for holders of other currencies, adding further pressure to precious metals prices.

Silver also weakened, with the spot price falling -1.31% to $64.90 per ounce and posting a weekly decline of -4.52%.

Crude oil prices edged higher on Friday, supported by renewed concerns over shipping conditions in the Strait of Hormuz, despite a broader weekly decline driven by easing supply risks.

Brent crude futures rose 97 cents, or +1.22%, to $80.38 per barrel, while US West Texas Intermediate crude advanced 98 cents, or +1.28%, to $77.54 per barrel. Trading volumes were subdued because of Juneteenth, the US federal holiday.

Gulf producers were preparing to increase exports after Israel and Hezbollah agreed to a ceasefire that began at 16:00 local time, or 13:00 GMT, on Friday. MarineTraffic data showed that at least four tankers carrying crude, oil products, and liquefied petroleum gas entered the Strait of Hormuz on Friday en route to Iraqi Gulf ports.

Nevertheless, Iran signalled tighter control over shipping activity, with state television reporting that vessels would be required to coordinate transit with the Revolutionary Guards’ navy.

In an undated advisory circulated to the maritime industry within the previous 24 hours and seen by Reuters, Iran’s Persian Gulf Strait Authority stated that no vessel would be permitted to pass through the Strait of Hormuz without a valid passage permit issued by the authority.

These conditions helped lift oil prices on Friday. However, the gains were not enough to offset sharp weekly losses: Brent fell -7.35% w/o/w, while US WTI declined -8.01%, reflecting a significant easing of supply concerns following the US-Iran ceasefire extension agreement.

Analysts expect the agreement to release more than 85 million barrels of oil stranded in the Middle East Gulf into global markets. The deal also includes the lifting of US sanctions on Iranian oil, which would add further supply.

Iraq’s oilfields are also prepared to resume production, with output expected to gradually return to normal and restore previous rates, according to Oil Minister Basim Mohammed.

Note: As of 4 pm EDT 19 June 2026

Currencies

EUR +0.06% to $1.1468
GBP +0.22% to $1.323203
Bitcoin +0.42% to $63,160.82
Ethereum -0.11% to $1,704.54

The US dollar remained firm against most major peers on Friday, keeping the yen near a two-year low and close to levels that would mark its weakest point in four decades.

The dollar rose as high as ¥161.80 yen late on Thursday, approaching the July 2024 level of ¥161.96. A further move higher would take the dollar to its strongest level against the yen since 1986. It was unchanged on Friday at ¥161.28, while the yen declined -0.67% over the week.

The US dollar index rose +0.95% during the week to a 13-month high, supported in part by the Fed’s latest meeting. Policymakers’ quarterly projections showed that nine of 19 officials now expect a rate increase by year-end.

The yen continued to face pressure from Japan’s comparatively low interest rates, even after the BoJ raised rates to a 31-year high. Concerns over the spending plans of Japanese Prime Minister Sanae Takaichi also weighed on investor confidence and fuelled speculation that further intervention could follow.

The dollar’s earlier gains against European currencies began to fade by mid-morning in Europe. The euro touched a three-month low of $1.1418 before recovering to trade +0.06% higher at $1.1468, although it still declined -0.92% for the week.

Sterling also rebounded from earlier weakness, after reaching a more than two-month low of $1.3164. The pound ended Friday +0.22% higher at $1.3232, but depreciated -1.27% over the week.

Sterling traders assessed a range of developments, including stronger-than-expected UK retail sales for May, a larger-than-anticipated budget deficit and former Manchester mayor Andy Burnham’s decisive parliamentary victory in Makerfield, northern England, which places him in a position to challenge Prime Minister Keir Starmer.

Fixed Income

US Fixed Income markets were closed in observance of Juneteenth

German 10-year Bund +6.0 basis points to 2.992%

UK 10-year Gilt +7.8 basis points to 4.846%

Eurozone government bond yields rose on Friday as investors assessed the prospect of further monetary tightening by the ECB.

Germany’s 10-year bond yield increased +6.0 bps to 2.992%, after falling on Wednesday to a more than two-month low of 2.915%. For the week, the yield declined -0.8 bps. 

ECB policymaker Pierre Wunsch told Reuters that the central bank could raise interest rates once more, and as soon as next month, if it sees further evidence that eurozone inflation is spreading beyond energy, even with the interim US-Iran ceasefire deal in place.

His remarks followed comments from ECB chief economist Philip Lane, who said the eurozone economy may now be able to withstand slightly higher interest rates without losing momentum.

The comments added upward pressure to yields. The German yield curve bear-flattened over the period, as short-term yields rose while longer-term yields moved lower.

Germany’s 2-year bond yield rose +4.9 bps to 2.665%, bringing its weekly increase to +2.7 bps. At the long end, the 30-year Bund yield advanced +6.9 bps on Friday to 3.536%, although it registered a weekly decline of -1.4 bps.

Traders continued to fully price in another 23 bps of ECB tightening this year, following last Thursday’s 25 basis-point increase to 2.25%.

Italy’s 10-year BTP yield rose +6.8 bps to 3.697% on Friday, but declined -3.8 bps over the week. The spread over German Bunds narrowed to 70.5 bps from 73.5 bps the previous week.

Note: As of 4 pm EDT 19 June 2026

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