Hikes on the horizon?

US equities declined last week as expectations that the Federal Reserve may raise interest rates later this year weighed on investor sentiment. S&P Global’s manufacturing & services PMIs both came in stronger than forecast. Meanwhile, the Fed’s preferred inflation measure, Core PCE, came in at 3.4%, in line with expectations. Despite persistently high inflation, consumer spending for the month was stronger than anticipated.

In Europe, S&P Global’s flash Eurozone composite PMI increased to 49.5 in June from 48.5 in May, although private sector activity in the region still contracted for a third consecutive month. In the UK, Prime Minister Keir Starmer stepped down, with Andy Burnham now aiming to succeed where others have struggled, by delivering meaningful pro-growth reforms. Elsewhere, the People’s Bank of China left its benchmark interest rates unchanged, as widely anticipated. Solid economic growth in early 2026 has reduced the immediate need for additional stimulus measures.

Last week's highlights

	S&P Global Manufacturing & Services PMI (23/06) - Manufacturing PMI 55.7 vs 54.8 expected. Services PMI 51.3 vs 51.0 expected.  Core PCE Price Index – May (25/06) - Came in at 3.4%, in line with forecasts. Consumer spending for the month came in stronger than expected.
	S&P Global Flash Eurozone Composite PMI (23/06) - Rose to 49.5 from 48.5 ​in May, as Eurozone private sector activity shrank for a third ‌straight month in June.
	S&P Global Manufacturing & Services PMI (23/06) - UK composite PMI fell from 49.7 to 49.4 in June, showing a second consecutive month of contraction in UK business activity.
	People’s Bank of China Meeting (22/06) - Left benchmark rates unchanged as expected. Resilient economic growth at the start of 2026 reduced the urgency for new stimulus measures.

Looking ahead to this week, investors in the US will receive several key labour market updates, including JOLTS job openings and ADP nonfarm employment data. In the Eurozone, a preliminary reading of June CPI is due, while in China, the official manufacturing PMI will be released. Advanced manufacturing in China has shown resilience, supported by strong global investment in AI-related capital expenditure.

What's on the radar

	JOLTS job openings (30/06) ADP nonfarm employment change (01/07)  Nonfarm payrolls & US unemployment rate (02/07)
	German CPI (30/06) Eurozone CPI – June Preliminary (01/07)
	UK Q1 GDP (30/06)
	China Manufacturing PMI (30/06)

Chart of the moment - Take a hike, doves

Source: WIRP Bloomberg as of 23/06/2026.

Note: The chart shows how many interest rate cuts or increases futures markets anticipate from the Federal Reserve by December 2026.

• Line chart showing market expectations for US rate changes by December 2026 from January to June, moving from around −2.5 (strong cut expectations) to about +1.5 (expected hikes).
• At the start of 2026, markets were expecting at least two interest rate cuts in the US as inflation was easing and the labour market showed signs of weakness. 
• Now, markets are expecting one or two rate hikes before year end as inflation has moved higher due to the Middle East energy crisis, and the labour market has proven more resilient than expected.