On Monday, 22 June 2026, the U.S. dollar index climbed 0.2 percent to 101.02 at 16:55 ET (20:55 GMT), marking its highest level since mid‑May 2025. The surge was driven by a more hawkish Summary of Economic Projections (SEP) from the Federal Reserve, which surprised markets by indicating that at least half of the Federal Open Market Committee participants now anticipate interest‑rate hikes this year to counter inflationary pressure from surging oil prices linked to the Iran conflict. The updated dot plot shifted the outlook from an expectation of at least two quarter‑point cuts to an expectation of at least one quarter‑point hike in 2026. Fed Chair Kevin Warsh also announced the creation of five task forces to examine core monetary‑policy operations.
The heightened rate‑hike expectations lifted U.S. Treasury yields: the 2‑year yield rose five basis points to 4.232 percent, while the benchmark 10‑year yield increased six basis points to 4.512 percent. José Torres, senior economist at Interactive Brokers, noted that the 2‑year yield reached a 16‑month high, but the longer end rose more slowly, producing the flattest spread in over a year, which he interpreted as market belief that the economy cannot absorb many further hikes.
In the energy market, crude oil prices continued their multi‑week decline. Brent (LCO) rose 0.31 percent and crude oil (CL) 0.42 percent on the day, but overall the slide persisted after the United States highlighted progress in peace talks with Iran and confirmed that the Strait of Hormuz was open. President Donald Trump had previously signed a memorandum of understanding with Iran during a G7 visit to France, stipulating an immediate cease‑fire, a 60‑day negotiation window, free passage through the Strait without charges, and Iran’s commitment not to develop nuclear weapons while disposing of enriched material under a mutually agreed mechanism. However, renewed fighting between Israel and Iran‑backed Hezbollah in Lebanon prompted Tehran to close the strait again, and Trump warned that Iran must stop its proxies in Lebanon or face a harsher U.S. response.
Subsequent talks in Switzerland at Lake Lucerne, mediated by Qatar and Pakistan, produced a four‑point agreement, the chief element being a mechanism to keep the Strait of Hormuz open. U.S. Vice President JD Vance highlighted these accomplishments after the summit.
In the United Kingdom, Labour leader Keir Starmer announced his resignation, creating speculation that rival Andy Burnham could become the country’s seventh prime minister since the 2016 Brexit vote. The sterling recovered from session lows, gaining 0.1 percent to $1.3249, while UK gilts showed a muted reaction. Danni Hewson, head of financial analysis at AJ Bell, said markets had taken Starmer’s resignation in stride but noted that sterling’s resilience depended on continued fiscal stability. She added that since the May local‑election setback, markets have been pricing in the probability of a new prime minister, with Burnham already engaging economic heavyweights to prepare for the role.
Contributors to the article were Roushni Nair, Pranav Kashyap, and Jaiveer Shekhawat.