June 29 2026

Market Movement Last week, the S&P 500 fell 1.95%, closing at 7354 points. It has accumulated a 7.43% gain YTD. The market consensus sets an average price target of 7743 for the end of 2026 (+5.3%). US 10-year long-term rates fell 8 bps, trading at 4.38%, remaining elevated. The DXY appreciated by 0.6%, trading at 101.4, its highest level since April 2025. The VIX rose 5% and traded around 18, which is above the average of recent years. From these levels, we expect volatility to increase in the short term. The market decline was driven by the Communication Services (-6.2%), Technology (-5.4%), and Consumer Discretionary (-2.7%) sectors. Meanwhile, the market maintained a positive outlook on the progress of negotiations between the US and Iran, causing oil prices to fall 7% over the week to trade around $73 per barrel, returning to pre-war levels. The most relevant data point this week will be the release of the June employment report on Thursday, July 2, where the market expects 110,000 jobs created and an unemployment rate of 4.3%.

Analysis & Outlook Regarding the bond market, the spread of Investment Grade bonds over Treasury bonds increased. This trend is expected to continue in the short term. Therefore, it is better to position in interest rate instruments rather than credit. In this scenario, the market has been readjusting the interest rate path it expects from the Fed for 2026. It now expects a 25 bps hike in September, ending the year at 4%. This adjustment in expectations was reflected in the rise of long-term interest rates, while the stock market showed a correction from its highs. At the same time, the SPX valuation is at 18.5x, below its 5-year P/E average of 19x. Thus, with a lower risk of an economic slowdown and potential recession, a context of greater uncertainty and interest rate volatility opens up. However, following last week’s correction, valuations remain reasonable, presenting a medium-term opportunity. We therefore recommend looking for quality sectors with solid balance sheets to navigate this environment. In this regard, we highlight sectors such as semiconductors, technology, banks, and industrials.