Risk-on tone returned in the final full week of June

The S&P 500 (+2.8 %), Nasdaq (+3.6 %) and Dow (+3.4 %) all posted their best weekly gains in more than a month and the broad indexes finished at or near all-time highs, helped by heavy tech leadership and renewed AI enthusiasm after Micron’s beat and Nvidia’s fresh record high.

Why it happened:

• Geopolitics & oil – A U.S-brokered cease-fire between Israel and Iran defused the Middle-East risk premium; WTI tumbled ~13 % to $65.5, the sharpest weekly drop since 2023, while energy equities lagged.
• Volatility & systematic flows – The VIX slid to a four-month low near 16, opening the door for volatility-control and CTA buying into quarter-end.
• Policy & rates – Dovish hints from Fed Governors Bowman and Waller, softer consumer-spending and inflation prints, and growing political pressure pushed the market-implied path for 2025 cuts up by ~15 bp. The 2-yr yield fell roughly 17 bp to 3.73 % and the 10-yr dropped about 9 bp to 4.29 %.
• Trade & fiscal headlines – Washington and Beijing said they had formalised a “Geneva consensus”, officials played down the 9 July tariff deadline, and talk of scrapping Section 899 and a possible SALT compromise helped sentiment.

Pushback for the bears remained

Weak housing data (new-home sales -13.7 % m/m), a drop in consumer confidence, hotter core PCE, cautious guidance from FedEx, Paychex and KB Home, and speculation over a new “shadow Fed chair” all tempered the rally and kept policy-credibility worries alive.

Bottom line

Easing geopolitical risk, lower energy prices, falling volatility and a modest dovish shift in Fed expectations outweighed pockets of softer macro data, driving equities higher and credit tighter. With quarter-end rebalancing and a heavy data calendar ahead (ISM, June payrolls, FOMC minutes), whether the rally extends will hinge on confirmation that inflation keeps cooling and the labour market soft-lands.