The week began with investors juggling another round of geopolitical whiplash. The NATO summit delivered shifting headlines on the U.S.-Iran conflict, including renewed doubts over the durability of the ceasefire and subsequent reports of technical talks. Oil prices moved with each headline, but the broader equity market held up well. The S&P 500 remained near its early-June record and is up roughly 10% this year, while the Nasdaq was buoyed by renewed enthusiasm around AI-linked chip demand (Chart 1). In short, markets are still willing to look through geopolitical uncertainty so long as energy prices stay contained and the tech earnings story remains intact.

The week’s data offered some support for that resilience narrative. The ISM Services Index slipped to 54.0 in June from 54.5 in May but remained comfortably in expansionary territory for the 24th consecutive month. The details were mixed, but not alarming. Business activity and new orders cooled, while the employment index moved back above 50 for the first time in four months. Price pressures also eased, with the prices-paid index falling to 67.7 from 71.3, though that still leaves service-sector inflation running hot (Chart 2). The takeaway is that demand is moderating, but the services economy is not rolling over.

Housing sent a less encouraging signal. Existing home sales fell 2.4% in June to a 4.09 million annualized pace, missing expectations, while the median resale price rose to a record $440,600. Inventory remains too thin to generate meaningful price relief, and elevated mortgage rates continue to keep both buyers and sellers on the sidelines. Meanwhile, the FOMC minutes showed a Committee still wrestling with the inflation outlook. Officials appeared split between scenarios where lower energy prices and fading tariff effects allow inflation to cool, and scenarios where persistent price pressures driven by AI-related investment demand require tighter policy. New York Fed President John Williams later argued that the minutes effectively captured the Committee’s ‘collective reaction function,’ emphasizing that policymakers are weighing a range of inflation scenarios rather than signaling a predetermined rate path.

Taken together, the week’s data point to an economy that is cooling at the margin, but still posting moderate growth. Services activity remains expansionary and hiring has stabilized, while housing remains constrained by affordability rather than excess weakness in demand. The FOMC minutes confirm that the Fed is not on a preset course, but they also do not offer much comfort to markets looking for imminent easing, or even an anchor for their expectations. The bar for another hike likely depends on whether inflation proves broader and more persistent. That makes next week critical: CPI will test whether price pressures are easing, while Chair Warsh’s testimony to Congress should clarify how the Fed is weighing inflation risks against a still-resilient growth backdrop.