The week ending 5th June 2026 was defined by a dual shock: the May non-farm payroll (NFP) print of 172,000, which was more than double the ~80,000 consensus abruptly repriced the Federal Reserve’s rate path from pause to potential hike, while Broadcom’s Q2 earnings disappointed relative to elevated analyst expectations and triggered a 10% collapse in the PHLX Semiconductor Index (SOX) on Friday alone. The S&P 500 broke its nine-week win streak (-2.6% WoW), NASDAQ registered its worst week in over a year (-4.5%), and rate hike probability moved above 70% by market close.
The Strait of Hormuz remains effectively closed at approximately 5% of pre-conflict vessel volumes; US-Iran ceasefire talks deteriorated sharply across the week (Iran halted negotiations on June 1; US forces shot down Iranian missiles targeting Gulf allies on June 5), sustaining WTI crude at $90.5/bbl (+3.6%) as the sole advancing major asset class.
Key Themes
- NFP Shock Reprices the Fed: May payroll jobs came in at 172,000 vs a ~80,000 estimate; prior two months revised up 93,000 combined. Over 500,000 US jobs created in the first five months of 2026, already nearly double all of 2025. Probability of at least one 25 bps hike by December moved from ~50% pre-NFP to >70% (CME FedWatch); markets are pricing meaningful odds of two hikes in 2026. New Fed Chair Kevin Warsh faces his debut FOMC meeting (June 16-17) having inherited a labor market that no longer justifies accommodation and an inflation backdrop shaped by a structural energy supply shock.
- Semiconductor Valuation Reset. Good Results Were Not Good Enough: Broadcom Q2 AI chip revenue hit $10.8B (+143% YoY, record), but Q3 AI guidance of $16B missed analyst estimates of ~$17.2B and Broadcom declined to raise its full-year AI chip target. The stock fell 12-15% across Thursday-Friday. The Friday’s selloff mostly indicates a valuation compression, not fundamental deterioration.
- Oil Defies Risk-Off (+3.6%): The Hormuz supply shock is structural, where strikes this week moved well above the low-level friction pattern. Iran halted negotiations, threatened full strait closure on June 1, attacked Kuwait Airport, and directed strikes at the US Navy fleet, while the Hezbollah-Israel war continues to delay US-Iran ceasefire talks. US forces shot down Iranian missiles on June 5, and further strikes followed over the weekend. WTI intraweek peaked near $96/bbl before settling at $90.5 on Friday. WTI is +58.0% YTD.
- Gold’s Safe-Haven Failure (-4.7%): Gold fell to $4,328.5, its lowest level of 2026, during a week of escalating geopolitical tension.
- Crypto Collapse Confirms High-Beta Thesis: Bitcoin -16.2% WoW, reached sub $60,000 (first time since October 2024); Bloomberg Crypto Index -20.1%. May saw $2.4B in Bitcoin spot ETP outflows, largest since November 2025.
