All four major central banks held their policy rates steady last week, but all of them also had a hawkish bias. Earnings continued to be supportive of higher stock prices, with five of the Mag 7 companies all beating on the top and bottom lines. Yields were higher as bonds got hammered, thanks to ongoing concerns regarding higher oil-induced inflation. There is no end in sight to the Iran-U.S. conflict.

Stocks are in a severe recovery stage, boosted further by the announcement on Friday that the Strait of Hormuz was being reopened to commercial traffic. Oil prices plunged, stocks took another leg up, and yields fell across the curve. Let the good times roll.....or are things really this good?

Stocks were mixed last week, with European stocks turning in the best performance of the week, and Japanese stocks the worst. Tech stocks drove the NASDAQ higher, with the DJIA and Russell 2000 losing ground. Treasuries and gold were better bid. The catalysts were US economic data and several important central bank decisions, all of which were as expected. The coming weeks will be holiday-shortened.

The Fed finally cuts the Fed Funds rate and moves to an easing path which shockingly (sarcasm), gave equity investors another reason to send stocks higher. Treasuries though said "meh", and yields even rose at the long end of the curve.

The bottom line is that global stocks ended at or near record highs again, with US Treasury yields slightly higher. The BoE – after a struggle – managed to lower its policy rate. Fitch published an interesting article on tariffs, Apple CEO Tim Cook met with the president, and the recent Pivot podcast interview with Anthony Scaramucci is very interesting.

None of the three major central banks that had monetary policy meetings this week – including the Fed, the BoE and the BoJ – changed their monetary policy approach, although central banks in Switzerland, Sweden and Norway all eased. Markets remain slightly on edge because of the growing Middle East conflict.

All eyes have been on the 2025-26 US budget discussions in the House this week, with the "big beautiful bill" getting through (albeit barely) and heading to the Senate. Professional bond and currency investors are signalling concern, visible in higher UST yields and a weaker US Dollar.

FOREX is in the news, especially as many think the USD has reached its peak and is at an inflection point. What drives FOREX? Read on.

The bond market looks to be doing the Fed's dirty work, sending short term yields to post-pandemic highs. Is the Fed being too methodical?