Market story: Monetary policy, not rockets

We’re going to the moon and Mars!

Markets entered last week with eyes fixed on the SpaceX initial public offering (IPO), but the feared “market disruption” never materialized. It was always an overstated fear to me. SpaceX floated only 4%–7% of its equity, raising roughly $75 billion against a valuation of nearly $1.8 trillion.¹ In a US stock market that typically trades between $500–$700 billion per day,² that’s more than a rounding error but not a market-disrupting event. Most SpaceX shares remain locked up with early investors, and the float is simply too small to meaningfully distort liquidity or sentiment.

Whether the valuation is justified is a debate for stock pickers and futurists. On current revenue, it seems aggressive. If the company succeeds in building low‑orbit data centers delivered by reusable rockets, perhaps it won’t look so stretched. But that’s a specific stock story, and not a macro signal. The SpaceX IPO is likely best understood as an idiosyncratic event, not evidence of broad market excess.

The real story: Policy, not rockets

The more consequential driver of markets remains policy. Markets are less likely to fear ambitious space companies, in my view, than central banks making the wrong move.

Three principles I still hold:

• Don’t fight the Fed
• Volatility is often driven by policy uncertainty
• The first rule of central banking is “do no harm”

Against that backdrop, I don’t see the Federal Reserve (Fed) raising rates. The recent inflation uptick³ was predictable once gasoline prices jumped.⁴ What matters more are inflation expectations, and 3‑ and 5‑year breakevens declining to 2.40%,⁵ which signal that markets don’t anticipate runaway inflation.

Oil prices have been easing with the hopes of a Strait of Hormuz reopening.⁶ Even though we’ve been disappointed with negotiations with Iran before, that may be beside the point. With consumers already strained by elevated fuel costs, tightening policy into that pressure could be counterproductive.

The European Central Bank (ECB), however, faces a different challenge. A single‑mandate central bank may be forced to respond to inflation even when it’s driven by supply shocks that simultaneously weaken growth. Those dynamic risks can turn a temporary price spike into a policy error. I suspect the ECB will ultimately need to reverse course.

2026 is echoing 2025

The parallels between this year and last are increasingly hard to ignore.

• 2025: A fundamentally healthy backdrop disrupted by Liberation Day.
• 2026: A fundamentally healthy backdrop disrupted by a war in Iran.

In both cases, three things are the same. The underlying economic and earnings environment remained sound.⁷ A geopolitical or policy shock temporarily interrupted a broadening market.⁸ Once uncertainty eased, the advance resumed,⁹ accompanied by improved breadth within US indexes¹⁰ and sound global stock performance.¹¹

It feels like we may be following the same playbook.

Bottom line

I won’t say markets are “going to the moon” — that would be promissory. But I’ll say that I believe the conditions that matter the most still point toward a continuation of market performance rather than a reversal. The SpaceX IPO wasn’t the hurdle it was made out to be, in my view. I don’t see this as a market levitating on speculative fumes. The bigger story is central banking, inflation expectations, and the gradual easing of geopolitical uncertainty.

And on those fronts, the path of least resistance could still look upward.

Important information

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All investing involves risk, including the risk of loss.

Past performance does not guarantee future results.

Investments cannot be made directly in an index.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

The Bloomberg Cumulative Advanced minus Decline Line is a technical market breadth indicator that tracks the daily difference between the number of advancing stocks and declining stocks, maintaining a running cumulative total over time.

The Conference Board Leading Economic Index (LEI) is an economic indicator used for forecasting changes in the business cycle based on a composite of 10 underlying components.

The Consumer Price Index (CPI) measures the change in consumer prices and is a commonly cited measure.

Earnings per share (EPS) refers to a company’s total earnings divided by the number of outstanding shares.

Idiosyncratic developments refer to unique events that do not affect an entire market or portfolio.

Inflation is the rate at which the general price level for goods and services is increasing.

The MSCI All Country World (ACWI) ex USA Index is an unmanaged index considered representative of large- and mid-cap stocks across developed and emerging markets, excluding the US. The index is computed using the net return, which withholds applicable taxes for nonresident investors.

Option-adjusted spread (OAS) is the yield spread that must be added to a benchmark yield curve to discount a security’s payments to match its market price, using a dynamic pricing model that accounts for embedded options.

Purchasing Managers’ Indexes (PMI) are based on monthly surveys of companies worldwide and gauge business conditions within the manufacturing and services sectors.

The S&P 500® Equal Weight Index is the equally weighted version of the S&P 500® Index.

The S&P 500® Index is an unmanaged index considered representative of the US stock market.

A spot price is the current market price at which an asset is bought or sold for immediate payment and delivery.

A stock's float is the number of shares available for the general public to buy and sell on the open market. It excludes locked-in, restricted shares held by company insiders, executives, or major institutional investors.

Tightening monetary policy includes actions by a central bank to curb inflation.

Treasury Inflation-Protected Securities (TIPS) are US Treasury securities that are indexed to inflation.

West Texas Intermediate (WTI) is a type of light, sweet crude oil that comes from the US.

In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic, and political conditions.

The opinions referenced above are those of the author as of June 12, 2026. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.

Securities mentioned is for illustrative purpose only. It does not represent a recommendation to buy/hold/sell the securities.