Dollar and U.S. Equities in Fine Shape at Midyear
June 30, 2026
Many data have been released on this final day of June and the second quarter of 2026. In other developments, U.S. and Iranian peace negotiators are in Qatar to enter a new and delicate stage of talks, with each side interpreting the results of prior talks differently and military skirmishes still happening, and the other war between Russia and Ukraine seems to be escalating. Yesterday’s Supreme Court rulings secures the Fed’s uniquely independent status for now at least, but of course Trump plans to appeal. Plus, other rulings greatly enhanced the executive branch’s power over other agencies that had been created as non-political institutions.
Dollar appreciation was extended around 0.3%, and equities are completing a very strong quarter. Stock markets rose 2.5% in Taiwan, 1.0% in South Korea, 0.9% in Japan and 0.5% in China, Australia and New Zealand. European share prices are flashing green, and U.S. equities prior to the open have largely maintained the record levels touched yesterday.
Reported price data for the most part have been below expectations, but recent hawkish remarks by central bank officials are holding sway over expectations regarding future changes in monetary policies. Ten-year sovereign debt yields overnight rose five basis points in Italy, four bps in Japan, and two bps in the United States and Great Britain.
The price of West Texas Intermediate crude oil firmed another 0.5% but is slight more than 35% cheaper now than at the peak in April. As a dollar alternative, crypto has suffered through a difficult stretch, losing 2.2% overnight. Although steady overnight, gold is 28% below its January peak.
German consumer price inflation unexpectedly receded for a second straight month, dropping to a 4-month low of 2.3% in June from 2.6% in May and a 27-month high in April of 2.9%. Core CPI held steady at 2.5%, while the year-on-year increase in energy costs halved.
Despite further acceleration of producer price pressure in May, French consumer price inflation dropped to a 3-month low of 1.8% this month from a 21-month high of 2.4% in May.
Italian total and core consumer price inflation in June of 3.0% and 1.6% were each below May readings. A 7.3% year-on-year rise of producer prices in May constituted a 39-month high, however.
Portuguese consumer price inflation edged down a tick to 3.2% this month. Bulgarian consumer prices posted a 3-month low of 5.6%, and Poland’s 2.5% was 0.6 percentage points less than in May and at a 4-month low.
Examples of increased producer price inflation were reported in Belgium (9.7%), Greece (13.5%), Brazil (2.0%), the Philippines (a 38-month high of 2.9%) and Austria (2.8%).
Quarterly British GDP in 1Q 2026 of 0.6% was unrevised, but the associated year-on-year growth comparison was sliced slightly to 0.9%. The U.K. current account deficit that quarter equaled 2.8% of GDP, somewhat larger than the 2.4% ratio in full-2025.
The Chinese official government-compiled composite and non-manufacturing purchasing manager indices in June of 50.6 and 50.2 reached six-month highs but indicated only tepid activity with readings barely above the neutral 50 level. Manufacturing (50.3) was at a 2-month high.
Japanese industrial production growth of 0.5% in May matched April’s monthly advance but disappointed analysts, who generally looked for a considerably better result. The 1.7% year-on-year drop was the weakest comparison in a half year. Japan’s jobless rate held steady at 2.5% as expected. An outsized 33.9% jump in year-on-year growth in Japanese housing starts reflected a depressed May 2025 level that was 34.4% lower than in May 2024. A 6.7% drop in construction orders is a more representative figure.
U.S. house price inflation accelerated in April to 1.1% according to the Case Shiller survey and 2.0% in the FHFA index but remained low compared to indices of inflation in services and other goods.
Canadian monthly GDP for April rose 0.5% on month and 1.7% on year but appear to have lost steam in May.
South Korean industrial production and retail sales respectively slumped 3.0% and rose just 0.2% in May.
Other German data releases on this final day of the quarter include 1) a 41-month high rate of import price inflation of 6.8%; 2) an as expected 6.4% unemployment rate; and 3) stronger-than-forecast retail sales in May that rose 1.1% versus April and 1.8% on year.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: CPI and PPI results, Japanese industrial production, U.S. house price inflation
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