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We see “benign” rate hikes, which are likely to be short-lived, given that inflation is caused by Middle East conflicts and, therefore, transitory. Inflation is expected to taper off in 2027, aided by correction in prices of crude oil.
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The task force on the size of the Fed’s balance sheet could recommend re starting quantitative tightening in 2027. This would lead to higher bond yields, which is a favourable outcome for banks.
US economy firing on many cylinders.
- - Read this at SGinvestors.io -
- - Read this at SGinvestors.io -
US labour market a key pillar of strength.
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The unemployment rate was 4.3% in May 26, remaining close its historical low. Non-farm payrolls have continued to expand, with monthly gains of 172,000 jobs in May 26, which exceeded expectations. Wage growth was moderate at 3.5% y-o-y. Relatively limited layoffs reflect a “low-hire, low-fire” dynamic.
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By industry sector, job creation was concentrated in healthcare, leisure and hospitality, and government. More broadly, strong corporate profitability and resilient demand gave firms the capacity to continue hiring.
The war with Iran is essentially over.
- Read more at SGinvestors.io.
Above is an excerpt from a report by UOB Kay Hian Research.
Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2026-06-26
