MTS Insights

The New York Fed Staff Nowcast for 2026 Q2 is 2.7%, with the 50% probability interval at [1.6, 3.9]% and the 80% interval at [0.5, 4.9]%. The Staff Nowcast for 2026 Q3 is 2.5%.

• News from this week's data releases left the estimates for 2026 Q2 and 2026 Q3 largely unchanged.
• For both quarters, negative surprises from housing starts data were offset by positive surprises from retail sales data.

The Drewry World Container Index (WCI), the benchmark widely referenced by procurement teams, increased 12% to $3,969 per 40ft container, driven by growth in rates on the Transpacific and Asia to Europe trade routes. The composite index is at its highest level in 18 months.

• On the Transpacific trade route, spot rates increased again this week, with those on Shanghai to New York rising 15% to $6,769 per 40ft container and Shanghai to Los Angeles jumping 10% to $5,142 per 40ft container. According to Drewry’s Container Capacity Insight, six blank sailings have been announced on the Transpacific trade route for the next week, reflecting capacity management by carriers. Carriers are increasing rates by implementing surcharges to manage rising demand driven by cargo frontloading ahead of US tariff changes expected in July. Drewry expects rates to increase further in the coming weeks. 
• On the Asia–Europe trade route, spot rates expanded this week. Freight rates from Shanghai to Rotterdam rose 15% to $4,342 per 40ft container, and those from Shanghai to Genoa increased 12% to $5,756 per 40ft container. According to Drewry’s Container Capacity Insight, only three blank sailings have been announced on the Asia to Europe trade route for the next week, reflecting tight capacity. Strong peak season demand due to frontloading of cargo ahead of the expected 1 July bunker fuel adjustment, enabling carriers to successfully implement surcharges. Carriers have announced further PSS and higher FAK rates from July. Hence, Drewry expects rates to rise further in the coming weeks. 
• The recent US–Iran interim agreement has improved sentiment across global shipping markets by reducing the risk of disruptions in the Strait of Hormuz, a key corridor for global energy exports. However, uncertainty remains regarding its implementation and the implications for global shipping. The easing of geopolitical tensions is expected to stabilise oil and bunker fuel prices, potentially reducing cost pressures on ocean carriers. Meanwhile, strong peak-season demand and the continued implementation of carrier surcharges are keeping upward pressure on spot rates.

The Bank of England voted 7–2 to maintain Bank Rate at 3.75%, with two members favoring a +25 bps hike to 4.00%, indicating a majority preference to hold while acknowledging upside inflation risks.

• CPI inflation was 2.8% YoY in May (unchanged MoM, down from 3.3% YoY in March), coming in -0.4 ppts below the April Report forecast, showing some near-term disinflation across food, goods, and services.
• Energy prices declined from earlier peaks (Brent ~$100 to ~$79; gas 116p to ~100p per therm) but remained above pre-conflict levels, indicating reduced but still elevated cost pressures.
• Near-term inflation is expected to rise again to just under 3% in Q3 and slightly above 3.25% in Q4, though this path is lower than previously expected due to softer energy and non-energy price developments.
• UK GDP increased +0.6% QoQ in Q1 2026 (+0.1 ppts vs prior estimate), but underlying growth was assessed at ~+0.2% QoQ, with April GDP falling -0.1% MoM, indicating subdued underlying momentum despite strong headline data.
• Labor market indicators showed mixed conditions, with unemployment at 4.9% (slightly below expectations), employment up +0.3%, and vacancies declining -2.6%, pointing to gradual loosening in labor demand.
• Wage growth remained near target-consistent levels, with private sector regular pay at +2.9% YoY and expected settlements around 3.5%, suggesting continued but moderating wage pressures.
• Financial conditions tightened materially, with UK two-year OIS rates ~+70 bps and mortgage rates ~+80 bps above pre-conflict levels, indicating significant transmission of higher rates to households and businesses.