Daily Market Outlook, June 23, 2026

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — Tech Rally Runs Into Rates Reality

“The relief rally is being tested. Oil below $78/bbl shows that Middle East risk premia are still unwinding, but equities are now more focused on tech profit-taking and higher bond yields. The Fed’s inflation persistence concerns mean lower energy prices are not enough to revive a dovish rates story. In the UK, Burnham’s fiscal positioning will matter for gilts because staying within the rules does not necessarily mean a lower funding burden. Markets have moved from trading the peace headline to asking what comes next — and the answers are less straightforward."

Global equities are under pressure as investors take profit in technology shares and reduce risk while waiting for more clarity on the US-Iran peace process. The MSCI All Country World Index fell around 0.5%, while Asian equities dropped more than 2% after recently reaching record highs. Tech took the brunt of the damage. An Asian technology index ended an eight-day winning streak, and South Korea’s KOSPI slumped more than 6% as investors questioned whether the recent surge in semiconductor names had run too far. US futures point to further weakness after Monday’s selloff in megacap technology stocks. S&P 500 futures are down around 0.8%, while Nasdaq 100 futures are lower by roughly 1.3%. This is not a collapse in the AI theme, but it is a reminder that valuation support becomes more fragile when bond yields rise and investors have already crowded into the same winners. The recent rally was driven by AI enthusiasm, lower oil prices and geopolitical relief. Today, the balance has shifted toward profit-taking, higher yields and uncertainty over the next catalyst. Oil continues to move in the opposite direction. Brent has fallen below $78/bbl, close to $77/bbl, after dropping more than 3% in the previous session. Washington and Tehran both reported progress in early talks toward a lasting peace agreement, helping further compress the Middle East risk premium. That is good news for headline inflation and consumers, but it is no longer enough to lift equities on its own. The market has already priced in much of the easy relief from lower oil; what matters next is whether peace negotiations actually translate into durable shipping normalisation and a final settlement. Gold is also lower, reflecting reduced demand for traditional geopolitical hedges. But the Dollar is stronger against most major currencies, which shows that investors are not simply moving into a broad risk-on posture. Instead, the market is becoming more selective: fewer energy-shock fears, but more concern about rates, tech positioning and policy uncertainty.

The Yen remains a major pressure point. It is hovering near its weakest level since 1986, keeping traders alert to possible intervention. Japanese Finance Minister Katayama’s discussions with US Treasury Secretary Bessent underline that authorities are increasingly uncomfortable with the pace of depreciation. The BoJ’s recent rate hike has not provided much support because US yields and Dollar strength are doing more work. If USDJPY remains disorderly, the probability of intervention will rise, particularly if officials judge that currency weakness is feeding imported inflation. The rates backdrop is the main macro headwind for equities. The Fed’s hawkish shift continues to echo through markets, and comments from Goolsbee added to that pressure. Although he is a non-voter, his concern about inflation persistence matters because it aligns with the broader Committee’s more cautious stance. His point was that services inflation remains too high and cannot be dismissed as a simple consequence of the energy shock. Goods prices may respond more directly to fuel costs, but services inflation tends to be stickier and more persistent.That argument is supported by the Atlanta Fed’s sticky-price index, which shows that the lower-frequency components of the PCE basket have recently been running at a higher inflation rate. This matters because it challenges the idea that falling oil will be enough to restore a dovish Fed narrative. Lower energy prices help, but if sticky services inflation remains elevated, the Fed can still justify keeping policy restrictive — or even hiking again.Markets now price a full 25bp Fed hike by the October FOMC meeting. That is a meaningful shift from the earlier expectation that the US-Iran agreement and lower oil would give the Fed room to wait. Warsh’s first Congressional testimony on monetary policy is scheduled for 14 July, but it will probably still be too early for markets to know whether any dovish structural ideas from his five task forces will outweigh the Committee’s current hawkish cyclical leanings. For now, the Goolsbee-style argument about inflation persistence is the one markets are trading. That is why tech is vulnerable. AI remains a powerful medium-term story, but higher front-end yields and sticky inflation concerns raise the discount rate on long-duration growth assets. Semiconductor stocks in Korea and broader Asian tech had also rallied aggressively, leaving them exposed to a positioning reset. A correction after an eight-day winning streak is not necessarily a signal of fundamental deterioration, but it does show that the market needs fresh evidence to extend the move.

UK politics is becoming more important for gilts. The Times reports that Andy Burnham will give an economic speech early next week, promising to reduce national debt and borrowing costs while setting out a credible growth plan within the current fiscal rules. On the surface, that language is designed to reassure markets. The difficulty is that Burnham’s advisory circle includes Lord O’Neill, who has previously argued that the government should be bolder on borrowing and described the fiscal rules as petty and arbitrary. Changing the fiscal rules without a general election would likely be politically challenging, so the more relevant market question is how much room a Burnham-led government could find within the existing rules. The answer is: potentially more than markets might initially assume. The current fiscal framework creates space around the distinction between current spending, investment spending and the specific debt metric used in the second rule.The primary fiscal rule is to balance the current budget, and investment spending sits outside that boundary. The second rule requires debt as a share of GDP to fall over time, but the referenced metric is Public Sector Net Financial Liabilities, or PSNFL. That creates the possibility that some investment spending could be structured as the purchase of financial assets rather than direct physical capital investment. If structured that way, it may be netted off in PSNFL terms, even though the financing would still need to be raised in the gilt market.This is the key market nuance. A government can remain formally committed to the existing fiscal rules while still pursuing a more activist investment strategy that increases gross funding needs. That does not mean Burnham will take this route, nor is there any explicit suggestion that such a strategy is imminent. However, the existence of these fiscal-rule edges means gilt investors cannot simply relax, even if a politician claims the rules will remain in place. The institutions to watch are the British Business Bank and the National Wealth Fund. Referring to these bodies as designated public financial institutions could indicate an effort to increase investment using structures that are more favourable under PSNFL accounting. Former OBR Chair Richard Hughes advising Burnham means that the technical expertise exists to think carefully about these possibilities. For gilts, the relevant issue is not just the deficit rule; it is the actual funding requirement.

The broader market setup is therefore less benign than the oil price alone suggests. Lower Brent reduces inflation pressure, supports real incomes and helps central banks look through part of the earlier energy shock. But rising global yields, sticky services inflation, Fed hike pricing and crowded tech positioning are offsetting that benefit. At the same time, China’s demand weakness and UK fiscal uncertainty add regional risks.

Overnight Headlines

Israel Fears Trump Is Strengthening Iran’s Hand In Lebanon
Vance Claims ‘Successful Foundation’ Laid In US-Iran Talks
US Allows Iran To Sell Oil In Dollars For First Time In Decades
Japan’s FinMin, After Bessent Talks: US-Japan More Aligned On FX
BoJ Normalisation On Course For December Increase, FT Says
Fed’s Goolsbee Says Too-High Inflation Is ‘Going The Wrong Way’
Lagarde Says China Should Be Part Of Any Talks On FX Imbalances
China Links Offshore And Onshore Yuan In Push Toward Broader Use
Goldman Sachs Cuts China Q2 GDP Growth Forecast To 4.5%
Trump Orders US To Speed Quantum Adoption, Boost Cyber Defences
Qualcomm Nears Deal For AI Chip Startup Modular
OpenAI Rolls Out More Capable Version Of Cyber Model
SpaceX Turns To Bond Market To Raise Capital, Reports $100.8B Cash
Oracle Workforce Shrinks By About 21,000 Employees Amid AI Adoption
Andy Burnham Poised To Succeed Starmer As UK Prime Minister

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD: 1.1650 (EU1.07b), 1.1500 (EU720m), 1.1530 (EU599m)
USD/JPY: 160.00 ($900m), 161.25 ($773.8m), 159.70 ($725m)
AUD/USD: 0.7000 (AUD663.3m), 0.5800 (AUD585.3m), 0.7200 (AUD511.1m)
USD/BRL: 5.1000 ($837.8m), 5.0850 ($395.8m)
NZD/USD: 0.5590 (NZD330m)
EUR/GBP: 0.8800 (EU319.7m)
USD/CAD: 1.4100 ($593.6m), 1.2900 ($359m)

CFTC Positions as of June 22

Speculators have ramped up their net short positions in various Treasury futures, with the CBOT US 5-year Treasury futures seeing an increase of 30,015 contracts, bringing the total to 1,350,177. Meanwhile, the CBOT US 10-year Treasury futures net short position rose by 47,275 contracts, reaching 911,082. The CBOT US 2-year Treasury futures also experienced a significant uptick, with a net short position climbing by 50,669 contracts to hit 1,270,507. Additionally, the CBOT US UltraBond Treasury futures saw a rise of 3,096 contracts in their net short position, totaling 321,827. On the other hand, there's been a slight reduction in the net short position for CBOT US Treasury bonds futures, which decreased by 3,754 contracts to 159,551.
In the cryptocurrency realm, Bitcoin's net long position stands at 3,475 contracts. The Swiss franc is currently facing a net short position of -40,058 contracts, while the British pound has a larger net short position of -71,585 contracts. On a more positive note, the Euro boasts a net long position of 34,353 contracts. The Japanese yen is not performing as well, with a net short position of -150,132 contracts.
In the equity markets, speculators have increased their net short position in S&P 500 CME by 64,644 contracts, bringing the total to 501,690. Conversely, equity fund managers have raised their net long position in S&P 500 CME by 3,319 contracts, now totaling 983,431.

Technical & Trade Views

SP500 - Below 7450 Reversal Risk

Daily VWAP Bearish
Weekly VWAP Bullish>Bearish
Above 7580 Target 7700
Below 7400 Target 7185

DXY - 100 weekly line in the sand

Daily VWAP Bullish
Weekly VWAP Bullish
Above 100 Target 102.50
Below 99.40 Target 98.40

EURUSD - 1.15 weekly line in the sand

Daily VWAP Bearish
Weekly VWAP Bearish
Above 1.15 Target 1.1780
Below 1.15 Target 1.1350

GBPUSD - 1.33 weekly line in the sand

Daily VWAP Bearish
Weekly VWAP Bearish
Above 1.35 Target 1.3580
Below 1.33 Target 1.3050

USDJPY - 160.50 weekly line in the sand

Daily VWAP Bullish
Weekly VWAP Bullish
Above 160.50 Target 162.20
Below 159Target 157.95

XAUUSD - 4100 weekly line in the sand

Daily VWAP Bearish
Weekly VWAP Bearish
Above 4200 Target 4500
Below 4150 Target 3569

BTCUSD - 60.5 weekly line in the sand

Daily VWAP Bullish
Weekly VWAP Bearish
Above 67.2k Target 70.5k
Below 60.5k Target 52.2k