Titan Wealth International Weekly Investment Update

Investors were forced to confront the prospect that stronger growth, a firm labour market and persistent inflation pressures may delay the policy easing that had underpinned much of this year’s equity rally.

At the same time, elevated energy prices and ongoing geopolitical uncertainty continued to cloud the inflation outlook, adding further pressure to bond and equity markets.

While the pullback interrupted a period of remarkable market strength, the underlying economic and corporate earnings backdrop remains constructive, leaving investors focused on whether upcoming inflation data and central bank guidance validate the market’s recent shift toward a more cautious stance.

Equities Retreat After Strong Jobs Report

Global equity markets suffered a sharp reversal in the week ending 7 June, snapping the S&P 500’s nine-week winning streak — its longest run since 2023 — as a blowout jobs report, renewed geopolitical tension, and a violent selloff in semiconductor stocks combined to deliver the Nasdaq’s worst weekly performance in over a year.

The Nasdaq fell 4.68%, the S&P 500 posted its first weekly loss since March, and the Russell 2000 also declined meaningfully. The Dow held up best, slipping just 0.32%.

Labour Market Strength Drives Hawkish Repricing

The week’s defining event was Friday’s May nonfarm payrolls report, which showed the US economy adding 172,000 jobs — more than double the consensus estimate of around 80,000 — while March and April were revised up by a combined 93,000.

The unemployment rate held at 4.3% and wage growth remained moderate, but in a market already sensitive to the inflation outlook the report proved toxic.

Treasury yields surged, the 10-year rising back toward 4.55%, and markets moved swiftly to price in at least one rate hike of 25 basis points before year-end and another in 2027 — a dramatic turnaround from the multiple cuts priced at the start of the year.

In what has become a recurring dynamic, good economic news was interpreted as bad news for equities, as investors concluded the strong labour market leaves the Fed with little justification for easing.

Broader Labour Trends Remain Supportive

The broader labour market picture, however, is more nuanced than Friday’s single print suggests. The US economy has now created more than half a million jobs in the first five months of 2026 — nearly double the total for all of 2025 — with hiring broadening meaningfully across goods and services sectors.

Disposable income has been squeezed by the energy price spike, falling 4% in annualised terms over the past three months, but an accelerating labour market provides a more sustainable underpinning for consumer spending over time.

Edward Jones’ view is that the bar for actual rate hikes remains high, and that incoming Fed Chair Kevin Warsh is likely to strike a balanced tone at his debut FOMC meeting this month — holding rates steady while acknowledging that hikes are possible should inflation prove more persistent than expected.

Geopolitical Risks Keep Energy Pressure Elevated

Geopolitics added a further headwind. Hopes of a US-Iran peace agreement were dashed again late in the week, with Iranian leadership striking a more pessimistic tone than President Trump’s signals of imminent progress.

Regional skirmishes continued, and the Strait of Hormuz remained closed — sustaining the energy shock that underpins the entire inflation and rates debate. Oil prices climbed sharply, compounding the pressure on bond markets.

Europe Weakens While Japan Holds Slightly Positive

In Europe, the STOXX 600 fell 0.53%, with Germany’s DAX down 1.38%, as eurozone Q1 GDP was revised to a contraction of 0.2% and retail sales declined more than expected.

The ECB’s June rate hike is now fully priced by markets. In Japan, the Nikkei eked out a marginal gain of 0.39%, though Asian semiconductor stocks suffered heavily on Friday in sympathy with the US selloff, with South Korea’s KOSPI falling 5.54%.

CPI and FOMC Take Centre Stage

With Q1 earnings season concluding on a strong note — S&P 500 blended earnings growth of 28.6% marked the highest rate since Q4 2021 — the fundamental backdrop for equities remains supportive.

Attention now turns to the June FOMC meeting and the May CPI print, which together will determine whether the recent hawkish repricing of rate expectations is sustained or proves overdone.

Looking ahead, the May CPI print will be the dominant market event of the coming week, likely to determine whether the recent re-pricing of rate expectations proves durable or overdone.