BNPP STRATEGY ALERT : The Rate Hike Returns: Navigating H2

Research evidence excerpt

BNPP STRATEGY ALERT : The Rate Hike Returns: Navigating H2

STRATEGY

BNPP STRATEGY ALERT

FLASH NOTE

The Rate Hike Returns: Navigating H2

22 JUNE 2026 Macro Research Report Production time: 05:42* (London time)

Research Analyst & Publishing Entities

Dennis Jose BNP Paribas London Branch (+44) 203 430 8479 dennis.jose@uk.bnpparibas.com

Summer is here. Hormuz is open. Oil is back below $80. Sentiment should be bullish, with leadership broadening out.

However, a hawkish FOMC has now led to markets debating a new risk, a Fed hike by September.

Having been fearful of an H2 26 resurgence in inflationary concerns for a while, we think for now, the pricing of hikes

might have moved too fast, too soon. We think a cooling down of pre-midterm rate hike expectations, a bounce in PMIs

post Hormuz and resilient earnings should allow for a grind higher in equities over the summer. Beyond that though,

similar to late 2018, we also see risks building up for a significant pullback in Autumn that we detail in this report.

Turning to leadership, breadth is now the narrowest it has been since the TMT bubble. Are markets irrational like in

2000? Not entirely. The dominant driver of outperformance remains earnings revisions, we believe.

Nevertheless, tactically we think a selective broadening out is likely, with Europe, Banks and Middle/High Income

consumer stocks our preferred plays amongst the laggards. Lastly, with Iran seemingly still retaining influence over

Hormuz, we think most countries will try to aggressively replace Oil dependence from the Gulf, and reiterate our call for

a global alternative energy CAPEX supercycle and our Overweight on Energy Transition winners.

We evaluate all of this, in this week’s Alert. Here is the link to our high frequency datapack: BNPP STRATEGY ALERT: