US inflation remains split, as high energy costs keep headline inflation elevated while core inflation stays contained. This keeps the Fed on alert.

Eurozone inflation accelerated to 3.2% in May, its highest level in over two and a half years, driven by Middle East conflict-linked energy costs filtering into the broader economy. Crucially, price pressures have broadened beyond energy, as core inflation rose to 2.5% and services inflation climbed to 3.5%.

A new Fed chair, a surge in AI-related listings, and renewed energy market concerns are driving market sentiment.

This week, US equities remain near record highs, but market breadth is weakening. The S&P 500 continues to rise, while fewer stocks are joining the rally, keeping the focus on mega-cap technology names.

US inflation accelerated to 3.8%, its highest level since 2023, driven largely by the Iran conflict and surging energy costs, reopening discussions around additional Fed tightening.

This week’s analysis highlights a global economy struggling with an "energy shock" caused by the ongoing US–Iran conflict and the partial closure of the Strait of Hormuz. This disruption has redrawn the OPEC supply map; while Iran’s output has only fallen 11%, neighbors like Kuwait and Iraq have seen production plunge by 69% and 63%, respectively, due to a lack of export routes. Also, global food prices have hit a three-year high, and the US headline CPI is forecast to surge to 3.4% annually as energy costs leak into broader production chains.

Jerome Powell will remain on the Fed Board after his term as Chair ends, reinforcing institutional independence from political pressure. While the Board remains divided on the timing of rate cuts, Powell emphasized that data, not politics, will guide future moves.

The latest weekly developments highlight a turning point across policy, technology, and market structure.