The National Bank of Serbia published its overview of global financial market developments for June 15-19, showing that sentiment was shaped mainly by a more hawkish U.S. Federal Reserve, firmer U.S. short-end yields and lower commodity prices. The Fed kept its policy rate unchanged at 3.50% to 3.75% at its first meeting under Chair Kevin Warsh, but the report says markets read the communication as reopening the possibility of further rate increases. Against that backdrop, the euro weakened 0.92% against the dollar over the week and ended the period at USD 1.1469 per EUR. In the United States, the two-year Treasury yield rose about 10 basis points to 4.18% while the 10-year yield fell about 3 basis points to 4.46%, a move the report links to expectations of near-term tightening alongside greater confidence that inflation can be contained over the longer term. The Fed's updated projections lowered 2026 gross domestic product growth to 2.2% from 2.4% and raised personal consumption expenditures inflation to 3.6% for 2026 from 2.7% and to 2.3% for 2027 from 2.2%. In the euro area, European Central Bank officials maintained a restrictive tone and highlighted persistent inflation risks, while German two-year yields rose about 3 basis points and 10-year yields fell 1 basis point. The review also notes selected emerging market developments, including the Czech National Bank's 25 basis point rate increase to 3.75%, the Bank of Russia's 25 basis point cut to 14.25%, and remarks from the People's Bank of China that it is considering shifting toward an overnight policy rate and introducing FIMA RMB Repo operations for foreign central banks and sovereign funds. Commodity markets moved lower during the week. Brent crude fell 8.52% to USD 80.57 per barrel, mainly on the provisional U.S.-Iran agreement and expectations of restored supply, while gold fell 1.44% to USD 4,155.86 per ounce as a stronger dollar, higher U.S. yields and ETF outflows outweighed support from lingering geopolitical risks.
National Bank of Serbia2026-06-24
National Bank of Serbia publishes market review highlighting hawkish Federal Reserve signals and falling oil and gold prices
The National Bank of Serbia's weekly market review says a hawkish Federal Reserve was the main driver of global markets in June 15-19, with the Fed holding rates at 3.50% to 3.75% but signaling that further tightening remains possible. The euro fell 0.92% against the dollar, U.S. two-year Treasury yields rose while 10-year yields slipped, and ECB officials also maintained a restrictive tone. Brent crude dropped 8.52% to USD 80.57 per barrel and gold fell 1.44% to USD 4,155.86 per ounce.