To The Moon

If there is one word to describe US market for week ending Fri, 12 Jun 2026, it would be “resilient”.

US equities rebounded from the prior week’s selloff, with small caps leading gains as investors digested (a) inflation data, (b) improving geopolitical developments, and (c) generally supportive economic releases.

Risk appetite improved throughout the week after concerns surrounding the Middle East eased and oil prices retreated.

By the time US market closed for the week: (see above)

• DJIA : +0.66% (+335.48 to 51,202.26).

• S&P 500: +0.65% (+47.72 to 7,431.46). Posted 35 new 52-week highs and 10 new 52-week lows.

• Nasdaq: +0.70% (+179.41 to 25,888.84). Posted 200 ⁠new 52-week highs ​and 112 new 52-week lows.

Interestingly, trading volume on US exchanges was marginally lower at 19.73 billion shares, compared with the 20.7 billion average ​for the full session over the last 20 trading days.

Weekly round up.

As a ritual of sort, I like to keep myself updated and review US economic reports released the week before to round up what they are telling us about the US economy and the impact they have or don’t have on US market.

Reports released last week included:

• 10 Jun 2026 - Monthly trade balance for May 2026

• 10 Jun 2026 - Consumer price index for May 2026

• 11 Jun 2026 - Jobless claims - weekly and continuing.

• 11 Jun 2026 - Producer price index for May 2026

• 12 Jun 2026 - US Consumer sentiments (Prelim) for June 2026.

US Trade Balance.

For April 2026, US trade deficit narrowed by +$0.7 billion (or +1.26%) to $55.9 billion vs market consensue of -$56.20 billion vs March’s upwards revised -$56.6 billion.

What happened was:

Total Exports

• jumped by +2.6% ($8.3 billion) to $327.1 billion. with primary drivers showing that foreign markets are leaning heavily on US energy and technology.

• With an imminent peace deal (possibly) to be inked by this week, will US export dips in the coming months as oil supply through the Straits of Hormuz slowly normalizes ?

Total Imports:

• Also rose by +2.0% ($7.6 billion) to $383.0 billion.

• Notable rise in imported capital goods (up $7.0 billion) is led by (a) computers (up $2.2 billion), (b) semiconductors (up $1.7 billion), and (c) telecommunications equipment (up $1.6 billion).

• Steady inflow of these high-value components demonstrates that domestic tech infrastructure & advanced manufacturing investments remain high.

In short, the April 2026 US trade balance report leaned slightly growth-positive and only indirectly inflationary at most.

Consumer Price Index (CPI).

US Bureau of Labor Statistics (BLS) - Consumer Price Index (CPI) report for May 2026, presents a complex, two-speed picture of American inflation.

While headline inflation rate hit a concerning 3-year high due to external energy shocks, underlying core inflation showed early signs of cooling & stabilization.

Breakdown & Analysis.

• The MoM readings for both headline CPI and core CPI came in marginally lighter than the April 2026’s readings and in lined with Wall Street’s estimates.

• The YoY readings for both headline CPI and core CPI were a tad higher than the April 2026’ readings and in lined with analysts’ estimates.

Did inflation get worse ?

The reply is Yes & No, depending on which data set is being looked at.

"Worse" (Headline Deficit):

• At 4.2% YoY, headline inflation reached its highest level since April 2023.

• This spike was driven largely by energy commodities.

• Triggered by the Middle East conflict, gasoline prices have surged +7.0% in May 2026 alone, while energy overall accounted for over +60% of the entire monthly CPI increase.

"Better" (Core Resilience):

• Less the volatile food and energy costs, the internal engine of US economy actually slowed down.

• Core CPI at 0.2% MoM came in below expectations, falling significantly from April's hot 0.4% MoM print.

• Shelter inflation moderated slightly to 0.3%, and the much-feared pass-through of shipping disruptions into core goods has not yet fully materialized.

What Else ?

• Consensus among economists is that the energy spike may have crested in late May 2026.

• This implies headline inflation numbers could drop in June 2026 (to be confirmed).

• As such, structurally, US core inflationary picture is stabilizing rather than worsening.

Jobless Claims.

US Department of Labour’s jobless claims reports showed a modest, a higher-than-expected increase in both initial filings and persistent claims.

Weekly claims.

For week ending 6 Jun 2026, weekly jobless claims rose by +4,000 to a seasonally adjusted 229,000 vs Wall Street estimates of 220,000 vs April 2026’s 225,000. (see below)

Latest reading exceeded Wall Street expectations, and marked the highest level of initial claims since early February 2026.

The 4-week moving average, that helps smooth out week-to-week volatility, also climbed by +4,250 to 219,000.

Continuing claims.

For week ending 30 May 2026, continuing claims rose by +24,000 to 1.795 million vs Wall Street’s analysts’ estimates of 1.78 million vs April 2026’s 1.7 million.

Meanwhile, the 4-week moving average edged upward to 1.780 million while insured unemployment rate held steady at 1.2%, a level it has consistently maintained since 29 Nov 2025, except for 1-week dip to 1.1% in the week of April 2025.

Collectively, the reports suggest cooling rather than collapse.

US labour market is not doomed, but the balance of risks is shifting toward (a) slower hiring, (b) a weaker re-employment rate, and (c) a gradual rise in labour-market slack if current trend persists.

Producer Price Index (PPI).

(a) Headline PPI.

Headline Producer Price Index (PPI) report revealed wholesale inflation accelerated more than expected, posting the largest annual gain in 3½ years.

Root cause was due to a surge in energy costs.

Headline PPI for final demand surged by 1.1% (MoM), driving the unadjusted annual rate up to 6.5% year-on-year (YoY). (see below)

This marks the 9th consecutive monthly increase and the highest annual reading since November 2022.

(b) Core PPI.

Core PPI, excluding volatile food & energy, increased by 0.4% MoM in May 2026. This was slightly better than the market expectation of 0.5%. Annual reading Increased by 4.9% YoY, that matched April 2026's reading and came in below the predicted 5.4% jump. (see above)

Root Causes.

Headline producer inflation marks the highest annual wholesale inflation rate since late 2022. Roughly 80% of the surge was driven by volatile items like (a) wholesale gasoline, (b) diesel, and (c) natural gas, putting temporary upward pressure on supply-chain costs.

The milder Core PPI numbers signal that “underlying or structural” inflation pressures are not accelerating wildly.

Businesses in the service sector & core goods experienced far more moderate price markups.

Overall, the better-than-expected core inflation numbers provided slight optimism to investors worried that rising energy prices would feed into long-term systemic inflation.

It is not far-fetched to assume that manufacturing inflation should see a turnaround when the July readings are out in August 2026, now that a peace deal is about to be signed, ushering a return to normalcy as soon as possible.

US Consumer Sentiments (prelim)

The preliminary US Consumer sentiments report for June 2026 revealed a notable break in recent consumer behavior.

After a stinging 4-month streak of declines, US consumer sentiment staged its first rebound since early spring. (see below)

Consumer sentiment index rises to 48.9, above economists' expectations for a 46.0 reading and May 2026’s downwards revised final reading of 44.8.

Lower-income households led the broad improvement in sentiment.

Gasoline effect & Lower income household.

The primary driver behind the 9.2% monthly jump was a welcome pullback in retail gasoline prices, which dropped nearly -10% from late-May peaks to finish the week around $4.11 per gallon.

This bolstered lower-income consumers’ strong sentiment because fuel costs constitute a larger percentage of lower-income household budgets.

The early-June energy dip provided immediate breathing room for day-to-day spending.

Diminishing inflation expectations.

A highly encouraging detail for macroeconomic stability was the cooling of forward-looking inflation expectations:

• Year-Ahead Expectations: Eased down from 4.8% (May) to 4.6% (June).

• Long-Run Expectations (5-Year): Fell back significantly from last month's hot 3.9% print to 3.4%.

While the projections show progress, they remain well above the historical baseline from early 2026 (3.4% short-run & approx2.9% long-run) before geopolitical supply disruptions in the Middle East rattled the energy markets.

Inspite a stronger June 2026 print, it is not time to rejoice or celebrate yet.

At 48.9, the overall index remains:

• 19.4% lower than it was a year ago.

• nearly 42% below its long-term historical average of 83.8.

In short, overall tone of US consumer remains downbeat.

Households continue to feel the compounding burden of high prices on core "necessity" items, signaling that while the acute panic has faded, deep financial anxiety remains.

My viewpoints : (mine only)

After going through all the economic reports, I think the US economy has been relatively successful absorbing the energy-driven inflation shock without sliding into a recession.

It is without a doubt that Trump initiated geopolitical tensions have pushed headline inflation higher, underlying core prices are structurally stabilizing.

This resilience is anchored by Corporate America's continued investment in advanced technology and a stable labour market that is cooling without mass layoffs.

Ultimately, this steady economic backdrop has eased long-term consumer fears, providing the Federal Reserve with perfect cover to hold interest rates steady this week as they convene under a new Fed chairman, Kevin Warsh.

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