The Cut That Vanished

The Big Story: The Cut That Vanished - And What Comes Next

If you have a mortgage back home, savings in dollars, or a pension you have been told will look better “once rates come down” - this week matters.

On Friday, the US economy added 172,000 jobs in May, against an expectation of around 80,000. Unemployment held at 4.3%. The previous two months were revised up by a combined 93,000. A strong economy. The problem: a strong economy gives the US central bank no reason to make borrowing cheaper. And markets spent the first half of 2026 betting that cheaper money was coming.

When those bets unwound on Friday afternoon, it happened fast. The S&P 500 fell 2.64%. The Nasdaq dropped 4.2%, its worst single session since April 2025. Around $1 trillion in equity value was erased. Tech and AI companies led the selloff - many of them are priced for a future that needs cheap credit to arrive on schedule. Friday’s jobs number said it would not.

The bigger shift is in what this means for interest rates going forward. A tool that tracks market bets on US rate decisions now prices a 70% chance of a rate hike before the end of 2026, compared to near-zero odds two weeks ago. The 10-year US government bond rate - which sets the floor for most dollar mortgages, car loans, and business borrowing - jumped to 4.54%.

The next definitive read comes June 16 and 17, when the new Federal Reserve chair Kevin Warsh holds his first rate meeting. After the meeting, the Fed publishes its own forecast for where rates go next - each committee member’s projection, mapped out for the next two years. Markets will read that document for whether this is a prolonged hold, or the start of a genuine hike cycle. That is the moment that resets the second half of the year.

For expats with variable-rate mortgages back home, savings earning dollar yields, or equity allocations built for a rate-cut world: the assumption that drove those positions just changed. Wednesday brings US inflation data, Thursday producer prices. If either surprises hot, the hike case strengthens further.

What Else Is Moving

Gold fell below $4,500 for the first time in 2026. Gold dropped to $4,328 on Thursday, down 4.65% on the week, its weakest level this year. Three forces hit at once: the chance of a US rate cut vanished (gold tends to do better when cash earns less), the dollar strengthened, and the Iran geopolitical risk premium kept unwinding as ceasefire talks progressed. At the current EUR/USD rate of 1.153, that is around EUR 3,756 per troy ounce for European holders. Gold is still up roughly 15% for the year. (Sources: GoldPrice.org, TradingEconomics)

The dollar gained, and every SE Asian currency felt it. The Malaysian ringgit moved from around MYR 3.96 to 4.03 against the dollar. The pound fell to 1.334. EUR/USD dropped to 1.153. GBP/SGD sits near 1.71, GBP/THB near 44.0. This is broad dollar strength from the rate repricing, not anything specific to SE Asian economies. Malaysia’s fundamentals are intact - the World Bank holds its 4.4% GDP forecast and Bank Negara held its rate at 2.75% in May. For expats converting savings, sending money home, or managing regular remittances, the dollar is meaningfully stronger than it was two weeks ago. (Sources: BNM, TradingEconomics, CME)

The Bank of England is moving in the opposite direction from the Fed. The UK base rate is confirmed at 4.00%, but markets now price around two further hikes in 2026, with the first expected around September. The 10-year UK government borrowing rate sits near 4.85%. For expats with sterling obligations - UK mortgages, school fees, pension income - UK rates are rising at the same time the US may hike. A dual-tightening environment for anyone managing commitments in both currencies. (Sources: Bank of England, CNBC)

SpaceX begins its IPO this week at $135 per share, valuing the company at around $1.77 trillion. The timing is striking: the largest public debut in history is launching in a week where markets just repriced borrowing costs sharply higher. A company raising $75 billion in new capital in this environment is a data point on risk appetite, not a call to action. (Source: Reuters)

The Expat Takeaway

Friday’s jobs number was a data point. The market turned it into a verdict: rates stay high, possibly go higher, and everything priced for the opposite needs revisiting.

Three questions worth sitting with before the dot plot lands on June 17.

Is your cash actually earning something? Dollar deposits at 3.65% were already generating a real return above many currencies’ inflation rates. If the Fed hikes rather than holds, that yield edge widens. Cash earning above inflation is one of the few clean wins in a higher-for-longer environment, and a window that did not exist three years ago.

Do your equity holdings assume cheap money? Friday’s Nasdaq selloff was heaviest in companies priced for low rates well into the future. A globally diversified portfolio weathers a repricing without needing to call the outcome. A concentrated tech or growth position requires a harder look.

Is your currency buffer sized for a stronger dollar? USD/MYR at 4.03 versus 3.96 two weeks ago. GBP/THB at 44.0. EUR/MYR near 4.64. These are real moves in a short window. If you are converting regular savings or managing remittances, recent direction rewards planning over reaction.

The dot plot on June 17 will either confirm the rate cut is dead, or leave a narrow window open. If your structure already accounts for a range of outcomes rather than a single expected cut, it is information. If it was built for the cut that did not come, this week is the time to review it - before the market prices the answer first.