1. Fed Holds at 3.50%–3.75%; Dot Plot Shifts Hawkish Under New Chair Warsh

At its 17 June meeting — the first under incoming Chair Kevin Warsh — the FOMC voted 12–0 to hold the federal funds rate unchanged at 3.50%–3.75% for the fourth consecutive meeting. The decision was widely anticipated, but the updated Summary of Economic Projections (SEP) carried the market-moving weight: nine officials now project at least one rate hike in 2026, PCE inflation was revised sharply higher to 3.6% (from 2.7% in the March SEP), and 2026 GDP growth was nudged down to 2.2%. Markets currently price in one 25-basis-point hike by October, a marked reversal from the one-to-two cuts expected at the start of the year. Warsh did not submit his own dot-plot projection and used the press conference to signal a preference for less explicit forward guidance going forward.

Sources: Federal Reserve FOMC Statement, 17 June 2026; U.S. Bank Asset Management / Bloomberg, 17 June 2026; Trading Economics / Advisor Perspectives, 17–18 June 2026

2. Global AI Chip Selloff Rattles Semiconductor Markets

A broad selloff in AI-related semiconductor stocks cascaded across global markets in the week of 23–26 June. Asian markets sold off sharply, led by South Korea's Kospi — which plunged 10%, its largest single-day drop in recent memory — as a selloff in SK Hynix and Samsung Electronics triggered a global AI chip rout. Index heavyweights Samsung and SK Hynix dropped over 8% and 9% respectively, while Japan's SoftBank Group plunged more than 12% and Advantest declined over 9%. The weakness extended to Europe, where key chip stocks also lost ground — ASML fell 2%, Infineon dropped 4%, and ASM International declined 4%. The proximate catalyst included reports that OpenAI is weighing a delay of its IPO and mounting concerns over rising AI infrastructure costs, with megacap tech stocks each down at least 8% in June; Apple climbed 3% on Friday after its worst single-day slide in over a year, following announced price increases on MacBook and iPad products citing higher component costs.

Sources: Saxo Hong Kong Asia Market Quick Take, 24 June 2026; CNBC Markets Live Updates, 25–26 June 2026

3. Nasdaq Posts Fifth Consecutive Losing Session; Rotation to Defensives

The Nasdaq Composite posted its fifth consecutive losing session on Friday 26 June as investors rotated out of key technology stocks and into more defensive areas of the market; the index dropped 0.24% to close at 25,297.62, while the S&P 500 ticked down 0.05% to 7,354.02 and the Dow Jones Industrial Average shed 44.51 points. The S&P 500 slid nearly 2% on the week while the Nasdaq fell 4.6%; the Dow outperformed, rising 0.6% week-to-date. The rotation was notable even against a broadly positive Micron Technology earnings print. Interest rate cut expectations had declined substantially by midyear from what had been broadly anticipated at the start of 2026.

Source: CNBC Markets Live Updates, 25–26 June 2026; Charles Schwab Sector Outlook, 26 June 2026

4. Private Credit Faces Elevated Redemption Pressure and Rising PIK Usage

Private credit markets are navigating a period of heightened scrutiny. Investors have already requested more than $10 billion in redemptions from private credit funds in the first quarter of 2026, a figure expected to rise, as signs of trouble emerged months earlier with bankruptcies of two private credit-backed businesses. Goldman Sachs has projected that private credit funds could see assets reduced by $45 billion to $70 billion over the next two years if retail investors continue to shy away from the asset class. At the portfolio level, for direct private credit borrowers, default rates remained low through March, but payment-in-kind (PIK) continued to be used to defer interest payments in Q4 2025, particularly in the software industry — a dynamic flagged in the Fed's own April FOMC minutes. Meanwhile, elevated redemptions in retail-oriented vehicles have led some large private credit lenders to moderate investment activity, contributing to more attractive supply and demand dynamics for well-capitalised lenders backed by institutional capital.

Sources: ACG Middle Market Growth / FBT Gibbons, March 2026; Federal Reserve FOMC Minutes, April 2026; Northleaf Capital Private Credit Market Update Q1-2026, May 2026

5. AI Semiconductor Demand Underpins Record Industry Forecasts Despite Near-Term Volatility

Beneath this week's price correction, structural demand for AI chips remains historically elevated. Micron Technology posted record-breaking fiscal third-quarter results and a strong fourth-quarter forecast, driving its market valuation past Meta and fuelling a rally across global semiconductor stocks earlier in the period. Samsung Electronics reached a $1 billion revenue milestone for its sixth-generation high-bandwidth memory (HBM4) and is reportedly planning a 90 trillion won ($647 billion) investment over the next decade. Nvidia expanded its supercomputing footprint with 35 new systems in Europe and projected $1 trillion in AI infrastructure demand by 2027. At the structural level, the global semiconductor industry is expected to reach US$975 billion in annual sales in 2026, a historic peak, with growth reaching 22% in 2025 and projected to accelerate to 26% in 2026. However, chips account for more than 95% of a leading AI server rack's content value, underscoring how concentrated value-chain risk remains within a small number of advanced node producers.

Sources: Distill Intelligence Semiconductors & AI Chips Weekly Briefing, 26 June 2026; Semiconductor Industry Association / Deloitte "Powering AI" Report, 1 June 2026; Deloitte 2026 Semiconductor Industry Outlook

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