During the week of May 18 to 22, 2026, global financial markets were heavily influenced by ongoing US-Iran diplomatic developments, with every major asset class responding to statements from Washington and Tehran. This diplomatic uncertainty overshadowed traditional macroeconomic analysis, as market participants closely tracked the latest news on negotiations between the two countries [1].
In addition to the geopolitical headlines, the US Federal Reserve played a significant role in market movements. The Fed openly discussed the possibility of interest rate hikes instead of cuts, marking a notable shift in monetary policy expectations. This was accompanied by a record-low consumer sentiment reading, highlighting concerns about the economic outlook. Furthermore, a new Fed Chair was sworn in on Friday, adding to the week's eventful backdrop [1].
Market reactions were mixed across asset classes. The US dollar ended the week nearly unchanged, while gold prices reversed earlier gains. Oil prices declined on optimism surrounding a potential US-Iran deal, and Bitcoin closed the week in negative territory. In contrast, equities extended their rally for an eighth consecutive week, and the British pound (sterling) emerged as the best-performing major currency [1].
CONCLUSION
The week was marked by heightened volatility as markets responded to US-Iran diplomatic developments and shifting Fed policy signals. While equities continued their upward momentum, other assets such as oil and gold saw reversals, and the dollar remained stable. The market's focus remains on geopolitical negotiations and central bank actions moving forward.