Fed Holds at 3.50–3.75%; Hike Risk Rises on Sticky Inflation

At its 17 June meeting — the first under new Chair Kevin Warsh — the FOMC held the federal funds rate unchanged at 3.50–3.75% for a fourth consecutive session. The Committee maintained the target range in support of its dual mandate, noting that economic activity is expanding at a solid pace but that inflation remains elevated relative to the 2% goal, in part reflecting supply shocks in energy. The June Summary of Economic Projections revised PCE inflation sharply higher, to 3.6% for 2026. Nine officials now see at least one rate hike this year, with six anticipating at least two. The hawkish tilt was compounded on 2 July, when the June payrolls report showed nonfarm employment rose by only 57,000 — below expectations for more than 100,000 — while the unemployment rate ticked down to 4.2%. Futures markets, as of 2 July, price the effective fed funds rate at 3.63% and a path rising toward approximately 3.8% by October, approaching 4% around year-end.

Sources: Federal Reserve FOMC Statement, 17 June 2026; Edward Jones Daily Market Recap, 2 July 2026; StreetStats Fed Funds Forecast, 2 July 2026.

US Equities Post Strong H1; Tech Rotation Intensifies at Start of Q3

US major indices closed the first half of 2026 with broad-based gains. The Dow climbed 8.9% in H1, marking its best first-half performance since 2021, while the S&P 500 rose 9.6% and the Nasdaq climbed 12.8%. The quarter itself was particularly strong: the Dow gained 12.9% in Q2 — its best quarter since Q4 2022 — while the S&P 500 and Nasdaq rose 14.9% and 21.4% respectively, their best quarter since Q2 2020. As Q3 opened, however, a rotation was evident. "The 'Great Rotation' trade persists into Q3 as the blue boring names of the Dow Jones continue to attract inflows directly from recent profit-taking money from tech stocks," according to KKM Financial's Jeff Kilburg, speaking to CNBC. Growth sectors such as technology and communication services were among the laggards on 2 July, weighing on the Nasdaq, which declined 0.8%.

Sources: CNBC Stock Market Live, 1 July 2026; Yahoo Finance / Zacks, 1 July 2026; Edward Jones Daily Market Recap, 2 July 2026.

Meta's AI Cloud Pivot Rattles Neocloud Providers; Semiconductor Stocks Face Valuation Scrutiny

The most significant single-stock event of the week came on 1 July, when Meta Platforms reportedly plans to rent its AI infrastructure to other companies, with sources telling Bloomberg and CNBC that it will sell excess capacity not used by its internal workloads. The news sent Meta shares 8.8% higher, while AI cloud provider CoreWeave closed 13.9% lower and Nebius Group dropped 17%. Meta expects to spend up to $145 billion on capital expenses in its current fiscal year, on top of the $70 billion invested in 2025. The episode accelerated selling in chipmakers more broadly: chipmakers fell for a second day as investors questioned whether AI optimism had pushed valuations beyond reasonable levels. The Philadelphia Semiconductor Index has nonetheless surged over 47% year-to-date, against a backdrop of global semiconductor sales projected to reach $975 billion in 2026, fuelled by an intensifying AI infrastructure boom with 26% growth expected this year. Structural supply constraints remain a key watchpoint: the five largest hyperscalers have collectively committed more than $660 billion in 2026 capital expenditures, but AI-optimised data-centre facilities now require 100–500 megawatts, and grid capacity cannot keep pace.

Sources: SiliconAngle, 1 July 2026; Trading Economics, 2 July 2026; Deloitte Semiconductor Industry Outlook, 2026; Manufacturing Dive / Omdia, April 2026.

APAC Capital Market Confidence at Highest Point Since Survey Inception

The ASIFMA 2026 Asia-Pacific Capital Markets Survey, released 30 June, found that confidence in Asia-Pacific capital markets has reached its highest point since the survey was first published, with two-thirds of financial firms planning regional expansion over the next three years. Singapore and Hong Kong were ranked the top two markets for ease of doing business across the region's 13 surveyed markets. Trade policy uncertainty and geopolitical tensions had a visible impact on Asian financial markets in 2025 and the first half of 2026, with global trade policy uncertainty reaching its highest recorded level in 2025 — contributing to periods of heightened market volatility, wider bond spreads, and tighter financing conditions. In equity markets, the Hang Seng closed at 23,358 and the Nikkei 225 at 69,614 as of the latest available data, while Korea's KOSPI fell sharply: markets in Asia were mostly lower overnight on 2 July, with Korea's KOSPI falling nearly 8% amid weakness in semiconductor shares.

Sources: ASIFMA / KPMG 2026 Asia-Pacific Capital Markets Survey, 30 June 2026; OECD Asia Capital Markets Report 2026; Investing.com; Edward Jones Daily Market Recap, 2 July 2026.

Private Credit's Mid-Year Reset: Spreads Wider, Terms Tighter, Deal Flow Improving

Lord Abbett's mid-year private credit review, published in early June, noted a meaningful market reset in lenders' favour. Spreads have widened by roughly 50 to 100 basis points since late 2025, but the more important change is that new loans are increasingly coming with better credit structures: less leverage, more covenants, fewer PIK requests, and tighter documentation. The second half of 2026 is likely to be defined by dispersion — investors should focus less on broad asset-class headlines and more on where managers are lending, how loans are structured, and how much free cash flow borrowers generate. At the same time, stress indicators bear watching: KBRA's Q4 2025 Middle Market Borrower Surveillance Compendium reported a default rate of 3.4% by count and 2.0% by value, with KBRA's 2026 outlook projecting a 2.0% default rate by volume versus 1.5% in 2025. In Asia, private credit is gaining traction as a financing alternative: private credit has made significant headway into Asian markets in recent years, as corporate borrowers in the region generally lack access to broadly syndicated loans or high-yield bond markets and have historically had to rely on traditional bank loans — a dynamic that is now shifting as more borrowers welcome private credit.

Sources: Lord Abbett Mid-Year Investment Outlook, June 2026; CT Acquisitions / KBRA BDC Performance Report, July 2026; Ares Management Private Credit Outlook 2026.

This news roundup is produced by 1Oak Research for general informational and educational purposes only. Nothing in it constitutes investment advice, a solicitation, or a recommendation to buy, sell, or hold any security or financial instrument. All investments carry risk, including the possible total loss of capital. 1Oak Research is not a licensed or regulated financial entity.