Daily Market Outlook, June 25, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — Micron Reignites AI As Oil Fully Retraces

‘Risk appetite is back in stereo: Micron's guidance has reignited the AI infrastructure trade, putting a fresh floor under semis and the hyperscaler capex story, while Brent below $73/bbl has fully erased the Iran-conflict premium — the oil shock is now a footnote. That combination is rocket fuel for equities, but today's PCE print is the gatekeeper: a soft core reading lets the Fed look through the energy spike and reopens the cut conversation, while a sticky one keeps the hawkish narrative alive and drags the tape back into range. In the UK, Burnham's fiscal tone is turning more market-friendly, but gilt investors won't trade rhetoric for receipts — any investment push has to be matched by credible spending discipline, or the long end stays on a short leash and the pro-growth pivot gets priced with a risk premium attached.’

Global risk appetite has turned higher again after Micron Technology delivered a stronger-than-expected sales forecast, helping revive confidence in the AI trade after the recent tech-led selloff. Nasdaq 100 futures rose around 1.8%, while S&P 500 futures gained roughly 0.5%. In Asia, the rebound was more forceful: South Korea’s KOSPI surged nearly 6%, and the MSCI Asia Pacific Index advanced about 1.7%. Micron’s shares jumped around 15% in after-hours trading after its quarterly revenue outlook beat Wall Street expectations. That matters because Micron had become the key near-term sentiment test for AI-linked semiconductors. After several sessions of profit-taking, crowded positioning and concern about leveraged exposure, investors needed confirmation that demand for AI infrastructure remains strong. Micron delivered that reassurance, at least for now. The market reaction suggests that investors are still willing to treat AI as a boom rather than a bubble. The memory cycle is closely tied to data-centre expansion, high-bandwidth memory demand and long-term supply agreements. Micron’s guidance therefore speaks directly to whether hyperscaler spending remains durable. The answer from the market overnight was clear: the AI trade still has fundamental support, even if valuations remain vulnerable to higher yields and crowded positioning. South Korea’s rebound is especially important because the KOSPI had been at the centre of the recent semiconductor unwind. The nearly 6% rally reflects both relief after forced selling and renewed confidence in the chip cycle. But it should still be treated as a recovery within a volatile trend, not a clean all-clear. Retail leverage, ETF warnings and crowded semiconductor positioning mean the sector can remain unstable even when the earnings narrative improves.

The second major support for risk is oil. Brent has fallen for a fourth straight session to below $72.50/bbl, fully erasing the gains made during the Iran conflict and returning to pre-conflict levels from late February. The real oil price is now below its longer-run average. That is a meaningful macro development because it removes a major stagflationary impulse from the market narrative. The decline reflects easing supply concerns as tanker traffic through the Strait of Hormuz normalises and the US-Iran peace process continues to make progress. The market is now pricing a much lower probability of sustained disruption to global energy flows. While inventories remain relatively low, the geopolitical risk premium has essentially been unwound. For central banks, consumers and corporate margins, that is supportive. Lower oil also reshapes the inflation debate. The Cleveland Fed nowcast puts May headline PCE inflation at 4.0% y/y, slightly below the 4.1% market consensus. More importantly, the nowcast points to a further decline in next month’s headline rate toward 3.8% y/y, consistent with the sharp fall in wholesale energy prices. If realised, that would provide evidence that the energy shock is not becoming embedded in headline inflation.

Today’s US data slate is therefore crucial. The May PCE inflation report is the highlight, but markets will also get the third estimate of Q1 GDP, previously 1.6% q/q SAAR, and preliminary May durable goods orders. The key question is whether softer energy prices can offset the Fed’s concerns about sticky services inflation and resilient underlying price pressure. That distinction remains central. Headline PCE may cool because oil has fallen, but policymakers under Chair Warsh are likely to focus heavily on whether trimmed-mean, sticky-price and services measures are also improving. If the inflation slowdown is concentrated in energy, the Fed may be reluctant to validate a broad easing in financial conditions. If core components soften as well, the market could begin to question the pricing of another hike later this year.

For now, the risk rally is being helped by the best possible combination: stronger AI earnings momentum and lower oil. That mix supports growth expectations while easing inflation anxiety. It is exactly the opposite of the stagflation setup that dominated during the height of the Middle East conflict. But the Fed remains the limiting factor. Markets are still carrying expectations that policy may need to stay restrictive, and the PCE data will either reinforce or challenge that view. Gold is stabilising around $4,000/oz after briefly falling below that level for the first time since November. A stronger Dollar and higher-for-longer rate expectations have weighed on the metal, while the easing of Middle East risks has reduced safe-haven demand. The fact that gold is only stabilising, rather than rebounding strongly, suggests that the market is less concerned about geopolitical tail risk and more focused on real yields and the Dollar.

China is also in focus. Beijing has started marketing up to €5bn of sovereign bonds, which could become its largest-ever euro-denominated debt issuance. The timing is notable. Issuing in euros allows China to diversify funding channels and take advantage of international demand, while also signalling continued integration with global capital markets at a time when domestic confidence remains fragile.Separately, the PBOC has introduced an overnight tenor to its open-market operations. This is another step toward refining short-term interest-rate management and improving monetary-policy transmission. By giving itself a more precise tool to guide overnight borrowing costs, the PBOC is moving closer to a more modern corridor-style framework. It also suggests that policymakers remain focused on liquidity stability even as broader growth concerns persist.

The UK fiscal story has turned more nuanced. The tone from Andy Burnham’s economic advisers has shifted away from an explicitly expansionary discussion about using the edges of the fiscal rules and toward a more gilt-friendly focus on addressing the “spectacular rise in public spending and debt levels.” Lord O’Neill’s comments were particularly important: he argued that markets will eventually force dramatic action unless a bold leader acts first. For gilts, that is potentially constructive. If a future Burnham government is not simply planning to borrow more for investment, but instead intends to combine infrastructure spending with a compositional shift away from current consumption spending and welfare payments, markets may view the strategy as more sustainable. In other words, higher investment could be acceptable if paired with credible restraint elsewhere. But uncertainty remains high. There is still a wide gap between reading signals from advisers and knowing actual future policy. The earlier discussion around fiscal-rule flexibility and possible “fiscal illusions” has not disappeared. A government could still remain within the existing rules while increasing gross gilt supply through investment vehicles or public financial institutions. The question is whether that is paired with credible current-spending discipline. The key point is that “within the fiscal rules” is no longer enough by itself. Investors will want to know the composition of borrowing, the likely impact on gilt supply, and whether any additional investment is accompanied by reforms that improve long-term growth and debt sustainability. The market will be more forgiving of borrowing that raises productive capacity than borrowing that funds persistent current spending.

Overnight Headlines

• Trump Asks Congress For $88B For War With Iran And Other Programs

• Trump’s Meeting With Senators Turns Fiery Over Iran War

• Fed Stress Tests Show US Banks Can Withstand $700B In Losses

• JPM Unveils $50B Buyback, Goldman Raises Dividend After Fed Test

• Fed Says Basis Trade Key Driver Of Hedge Fund Treasury Exposure

• PBoC Plans Overnight Reverse Repo In Next Stage Of Policy Shift

• Australia Hiring Rebounds In May, Pushing Down Unemployment

• Japan Govt Will Urge BoJ To Support Private Demand, Draft Blueprint Shows

• BoJ Sees AI Export Boom Cushioning Economy From Oil Price Shock

• Oil Markets Start To Signal Near-Term Oversupply As Tankers Exit Hormuz

• Iran Scrambles To Move Estimated $8.5B In Oil As US Eases Sanctions

• Insurers Slash War Premiums For Strait Of Hormuz Ships

• Lockheed Wins $35B US Deal To Boost Interceptor Output

• Micron Shares Jump As Chip Shortage Projected To Last Beyond 2027

• SK Hynix, Micron Solidify Memory Chips As Runaway Stars Of AI

• Qualcomm Reveals Meta As First Big Tech Customer For Data Centre Chips

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.1500 (EU2.52b), 1.1300 (EU1.83b), 1.1600 (EU1.78b)

• USD/JPY: 158.85 ($1.44b), 120.50 ($1.2b), 155.00 ($918.3m)

• USD/BRL: 4.9000 ($815m), 5.1500 ($538.5m), 5.2270 ($458.3m)

• AUD/USD: 0.7525 (AUD574.1m), 0.7180 (AUD543.2m), 0.7190 (AUD454.8m)

• GBP/USD: 1.3800 (GBP788.4m), 1.3100 (GBP431m), 1.2600 (GBP430.3m)

• USD/CAD: 1.3500 ($784m), 1.3200 ($565m), 1.4200 ($478.6m)

• EUR/GBP: 0.8595 (EU580m), 0.8700 (EU556.9m), 0.8650 (EU412m)

• NZD/USD: 0.5780 (NZD613.2m), 0.5770 (NZD559.4m), 0.5825 (NZD383.9m)

• USD/CNY : 6.7705 ($1.24b), 6.8800 ($312.7m), 6.9800 ($308.5m)

• USD/MXN: 17.39 ($615.1m), 17.50 ($445.1m), 16.90 ($300m)

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 shows 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 faring 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 - 7450 weekly bull/bear level

• Daily VWAP Bearish

• Weekly VWAP Bullish>Bearish

• Above 7580 Target 7700

• Below 7400 Target 7185

DXY - 100 weekly bull/bear level

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 100 Target 102.50

• Below 99.40 Target 98.40

EURUSD - 1.15 weekly bull/bear level

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 1.15 Target 1.1780

• Below 1.1450 Target 1.1270

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 Bearish

• Weekly VWAP Bearish

• Above 67.2k Target 70.5k

• Below 60.5k Target 52.2k