Three’s Company

June 08, 2026

Elias Haddad

Fed, oil, and tech weigh on financial markets. USD firm and can break higher.

South Korean authorities stepped up efforts to stabilize KRW.

Peru’s presidential election run-off remains too close to call

Check-out our Drivers for the Week Ahead for all the key market shaping themes.

You’re Invited! Thursday, June 18

Webinar: Fed watch: Warsh takes charge - Register Here

Join BBH's Scott Clemons and Elias Haddad as they unpack the June 17 FOMC decision, the first under Chair Kevin Warsh, and the constraints that could disappoint markets expecting a more dovish Fed tilt.

Stock and bond markets are under pressure from a triple headwind: a pullback of the AI trade, rising Fed rate hike expectations, and a jump in crude oil prices triggered by escalating tensions between Iran and Israel.

USD is holding on to Friday’s solid US jobs gains. Risk off sentiment is weighing on EMFX relative to G10 FX. But KRW stands out as the clear outperformer as South Korean authorities stepped up efforts to stabilize the currency (more below). USD/JPY briefly slipped back below 160.00 after reaching 160.39, narrowly missing the April 30 high of 160.72 that prompted intervention.

USD can continue to edge higher against most major currencies as the US macro backdrop of improving labor demand and sticky inflation back a more restrictive Fed policy stance. Fed funds futures fully price in a 25bps rate hike to a target range of 3.75-4.00% by year-end and nearly 50bps of tightening in the next twelve months.

May New York Fed consumer expectations survey is due later today (4:00pm London, 11:00am New York). Long-term inflation expectations are critical to watch for confirmation that long-term inflation expectations remain anchored.

SOUTH KOREA

South Korea’s stock index underperformed across the board undermined by the unwinding of the AI trade and ongoing energy shock. The Kospi plunged as much as 8.8%, triggering a circuit breaker and a 20-minute trading halt.

USD/KRW dropped as much as 2% after reaching a 17-year high of 1562.20. On Sunday, the Finance Ministry unveiled measures targeting speculative FX trading, tighter oversight of offshore currency derivatives, and probes into potentially illegal FX transactions.

Today, South Korea’s National Pension Service (NPS) activated FX hedging on its massive amount of overseas assets. This is effectively a form of indirect support for KRW as it generates foreign currency selling and creates additional demand for KRW.

South Korean President Lee Jae Myung pointed out that the recent weakness in the won has been driven in part by foreign investors’ rebalancing of their portfolios after the Kospi’s rapid rally.

We agree. As Korean equities outperform and their weight in global portfolio rises, foreign investors need to trim positions and repatriate funds, resulting in KRW outflows. By the same token, should the Kospi begin to lag, the rebalancing headwind to KRW is likely to fade.

PERU

Peru’s presidential election run-off between conservative Keiko Fujimori and leftist Roberto Sánchez remains too close to call. With 89% of ballots counted, Fujimori held 50.6% of the vote and Sánchez 49.4%. A full official count isn’t expected until mid-July when legal challenges have been settled.

Until the runoff is decided, Peruvian financial markets will trade off polls. Fujimori gains would likely be viewed as market-friendly and support PEN, while Sánchez gains could unsettle investor confidence and undermine PEN.

Brown Brothers Harriman & Co. (“BBH”) may be used as a generic term to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries.This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners.© Brown Brothers Harriman & Co. 2024. All rights reserved.