June 2026
Summary
Stocks finished broadly lower for the month of June while bond investors enjoyed modest returns. Progress in an accord with Iran over the Strait of Hormuz drove oil prices within range of their pre-war levels. The Kevin Warsh era kicked off at the Federal Reserve with a rate pause and unexpectedly hawkish commentary on the near-term outlook for interest rates. Small cap stocks benefitted most from these developments, outperforming their mega-cap peers. Broad commodities saw their rally come to a screeching halt as oil prices finished 20% lower for the month while gold fell 11%.
Equities
Domestic stocks continue to be swayed by AI sentiment. Concerns over the sustainability of the industry moved stocks throughout the month with high volatility and little discernable direction. Chipmaker stocks sold off early but exploded on earnings reports later in the month. Meanwhile the market-moving Magnificent 7 names suffered a 7% drawdown. Smaller companies and value stocks benefitted from de-escalation in Iran, which eased concerns over a potential economic drag due to ongoing inflationary supply chain effects. Developed non-U.S. markets, which are highly dependent on imported oil, were given a reprieve and finished flat for the month, while emerging equities, with their intermingling oil and AI-related sensitivities, underperformed.
Fixed Income
Major fixed income indexes moved higher in June as the market assessed the changing of the guard at the Fed. The early returns were not encouraging for investors hoping for lower interest rates in the near future. An inflation-heavy commentary after an unsurprising rate pause helped move market sentiment to price in a 0.25% rate hike by October. The 2-year Treasury yield ended the first quarter at 4.19%, its highest level since the latest leg of the current easing cycle began last summer. Income helped bond investors offset rate moves as core bonds returned 0.2% for the month, while credit was mixed, leading to slight outperformance in June.
1 – Russell 1000, 2 – Russell 2000, 3 – MSCI EAFE, 4 – MSCI Emerging Markets, 5 – Bloomberg US Agg, 6 – Bloomberg US Long Gov/Credit
7 – Bloomberg US Corporate High Yield, 8 – Bloomberg Gold Subindex, 9 – Bloomberg Commodity
Highland Consulting Associates, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer of solicitation for the sale or purchase of specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
Disclosure Statements
Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material or guarantee the accuracy or completeness of any information herein, nor does Bloomberg make any warranty, express or implied, as to the results to be obtained therefrom, and, to the maximum extent allowed by law, Bloomberg shall not have any liability or responsibility for injury or damages arising in connection therewith.
Source: London Stock Exchange Group plc and its group undertakings (collectively, the “ LSE Group” ). © LSE Group [year]. FTSE Russell is a trading name of certain of the LSE Group companies. “ FTSE®” “ Russell®” , “ FTSE Russell®” are trade mark(s) of the relevant LSE Group companies and are used by any other LSE Group company under license. “ TMX®” is a trade mark of TSX, Inc. and used by the LSE Group under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.
Copyright MSCI 2017. Unpublished. All Rights Reserved. This information may only be used for your Internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. This information is provided on an "as is" basis and the users of this information assumes the entire risk of any use it may make or permit to be made of this information. Neither MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating this information makes any express or implied warranties or representations with respect to such information, or the results to be obtained by the use thereof, and MSCI, its affiliates and each such other person hereby expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non- infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall MCSI, any of its affiliates or any other person involved in or related to compiling, computing or creating this information have any liability for any direct, indirect, special, incidental, punitive, consequential or any other damages. The MSCI information is the exclusive property of Morgan Stanley Capital International ("MSCI") and many not be reproduced or redisseminated in any form or used to create any financial products or indices without MSCI's express prior written permission. The information is provided "as is" without any express or implied warranties. In no event shall MSCI or any of its affiliates or information providers have any liability of any kind to any persons or entity arising from or related to this information.
