US equities finished the week modestly higher, but the headline move disguised a volatile and event-heavy few trading days. The S&P 500 recovered from a sharp mid-week drawdown, having fallen as much as 2.3% on Tuesday, as markets were forced to deal with a mix of geopolitical risk and concerns about central bank tightening.
The defining event was SpaceX’s Nasdaq debut on Friday, the largest IPO on record, with shares closing 19% above the offer price and valuing the company at roughly $2.2 trillion. The strong first trading day helped to lift broader risk sentiment to close out the week.
On the macro side, things remain more complicated. The European Central Bank (ECB) delivered its first rate hike since 2023 and raised the deposit rate by 25bps to 2.25%. Officials warned that the Iran war was broadening inflation risks beyond energy.
Yet geopolitical pressure actually eased into Friday as the US and Iran moved closer to an interim agreement to reopen the Strait of Hormuz, helping WTI fall nearly 4% on the week. In the US, a softer core CPI print offered temporary relief for traders, but the broader inflation narrative remains hot.
The week ahead brings us the first US Federal Reserve meeting with Kevin Warsh as chair, more central bank action (and political risk) from the UK, along with notable economic data.
SpaceX Becomes The Barometer
SpaceX’s public listing was the major market event of the week and, by extension, will carry implications forward for the week ahead.
By most measures, the first day of trading delivered exactly what the IPO market needed. The company priced its $75 billion offering at $135 per share, opened 11% higher at $150, and closed Friday at $160.95. Demand was exceptional, with the book reportedly multiple times oversubscribed and several institutional orders reaching $10 billion or more. Gulf sovereign wealth funds were also prominent buyers, reinforcing the sense that this was not just a retail liquidity event, but a global capital allocation moment.
Should the stock continue to trade well this week, it’ll likely further boost overall market sentiment, with the broader AI/space infrastructure trade outperforming. If the excitement (and stock price) fades, the speculative bid could cool quickly and act to pull stocks lower whilst boosting the likes of gold and US Treasuries. Either way, the IPO now becomes a live risk-sentiment barometer.
The Warsh Era Starts
Wednesday sees Kevin Warsh take the spotlight as he delivers his first press conference as US Fed Chair. A lot of focus will be made on how he decides to position himself and the committee’s stance on the current monetary policy stance. Markets have already tightened for him, with rates now pricing around 20bp of hikes by year-end and roughly 30bp by mid-2027. That repricing reflects the backdrop of resilient inflation alongside a robust labour market. Atlanta Fed GDPNow is tracking Q2 growth at 3.3% annualised, which would leave first-half growth around 2.5%, while payroll gains have averaged 114k per month year-to-date versus just 30k over the same period last year.
The inflation side is still the bigger problem. Core PCE has risen to 3.4% y/y from 3.0% at the start of the year, while 1y1y ex-energy CPI swaps are implying core inflation around 2.7%. That is likely too high for Chair Warsh and Co. to tolerate, so there’s the potential for the statement and press conference to shift toward the need to manage upside inflation risks, although it’s unlikely there will be any firm commitment to hiking at the moment. But even a non-disruptive meeting could be enough to see traders start to factor in more hikes for 2026.
Two Key UK Votes In One Day
On Thursday we get two notable events from the UK. The first is the Bank of England’s June meeting. The broad consensus is for the committee to hold rates at 3.75%, but the vote split and guidance will matter more than the decision itself. Markets have already moved a long way from the February easing narrative, and the question is whether the MPC validates that repricing or tries to slow it down.
The timing is awkward as May inflation (CPI) lands the day before the meeting, which is likely to show that the energy pass-through is still working its way through the data, and April GDP already showed a small contraction. Put together, it could act to force the BoE to leave the door open to hike later this summer, which wouldn’t be a surprise given the ECB hiked last week.
On the same day, the market also gets a political risk event in Makerfield. Labour’s Andy Burnham enters the final stretch with a narrow lead over Reform UK’s Robert Kenyon, but the race is close enough to matter well beyond one local election.
For markets, the focus is on GBP and gilts. A Burnham win would likely intensify speculation about Labour leadership, fiscal policy and the risk of a more expansionary stance. A Reform upset would be politically explosive. Either way, the vote on Thursday could turn into a much bigger story that traders need to pay attention to.
