# Peace, rates and a SpaceX frenzy

_From a signed Iran-US peace deal and a tumbling oil price to a $3trn debut for SpaceX, Neil argues the consensus has misread almost all of it, and sets out where he thinks oil, rates, and the AI trade go from here._

Neil Woodford · 19 June 2026 · 5 min read

![The President of Iran, Masoud Pezeshkian, shows the signed peace deal between the USA and Iran.](https://cdn.sanity.io/images/v3acfbvo/production/83336118a0786f2aa8260c4e9332052efb8fd40d-1600x1067.jpg?w=1600&fit=max&auto=format)

_The President of Iran, Masoud Pezeshkian, shows the signed peace deal between the USA and Iran._

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## Peace at last?

The most important development was the peace deal between Iran and the US, which is now signed, and the soon-to-start negotiations to resolve the key outstanding issues, including Iran's nuclear ambitions. Clearly, there is nervousness about whether the two sides can reach a lasting settlement, but there is palpable relief reflected in the significant fall in oil prices, which are now back to $80 a barrel. Normal traffic through the Strait of Hormuz may take a few weeks to achieve, but it appears that shipping is already flowing at volume. _(Neil in the margin: The narrow chokepoint between Iran and Oman through which roughly a fifth of global oil passes. It's the bit of geography that risked turning a regional conflict into a worldwide price spike — hence the relief when tankers move freely again.)_

Whilst the consensus view is that the oil and gas markets may take years to return to normal (I disagree), there appears to be a credible argument gathering some support that the huge volume of shipping and oil supply that will be released from the Gulf could in the short term lead to a mini-glut of oil globally, which could lead to a significantly weaker price in the short term than many might have expected. It will be interesting to see how this plays out, but once again, I suspect that the majority view has got this wrong.

## Interest rates

Naturally, oil prices were a significant factor influencing central bankers in the US and the UK this week. In both cases, rates were held at 3.75%, which, for me, looks like the right decision. The very significant fall in oil prices has yet to work its way into the economy, so a wait-and-see approach looks appropriate, albeit that US inflation (CPI) at 4.2% is now considerably above the 2.8% rate in the UK. Two members of the UK rate-setting committee voted for an increase in rates, whilst nine of the eighteen members who participate in the FOMC’s rate-setting process projected at least one rate increase in the US during the remainder of 2026. _(Neil in the margin: The FOMC is the Federal Reserve's Open Market Committee, which sets US rates. The 'dot plot' is each member's anonymous projection of where rates will go — a forecast, not a vote, so worth less than it looks.)_

For me, the two MPC members' decision is the more inexplicable. Against a backdrop of significantly lower inflation than the MPC was forecasting just eight weeks ago, a weaker growth environment, wage settlements at a five-year low of 2.9%, lower employment and falling vacancies, one might have thought that a neutral stance was sufficiently hawkish. Looking ahead to the next few months, it is likely that inflation will pick up slightly, driven by slightly higher food inflation and the 13% increase in the July/October energy price cap, which has already been announced. Offsetting this will be the increasing impact of much lower oil prices on pump prices. Overall, I see inflation peaking in the early autumn at about 3%, below the Bank of England's 3.25% forecast, which itself is down from their previous expectation of 3.6%, and expect it to be back at the 2% target relatively early next year. Although this may seem unrealistic right now, my guess is that we could see a rate cut before the end of the year and further cuts in 2027 as inflation falls even further. _(Neil in the margin: The Monetary Policy Committee is the Bank of England's nine-strong rate-setting body, the UK analogue to the Fed's FOMC.)_ _(Neil in the margin: Ofgem's quarterly ceiling on the unit rate a typical household pays — not a cap on your total bill. Because it feeds straight into the CPI basket, a known rise is effectively baked-in inflation.)_

## SpaceX

Whilst financial markets were factoring in the peace deal and the significant fall in the oil price, they were also contending with SpaceX's IPO and the continued enthusiasm for the AI trade. The sheer excitement surrounding this extraordinary event was interesting to behold and reflected extreme optimism about what this business concept can achieve in the future. Within a few days, the share price had climbed to a 60% premium to the float price, valuing the business at close to $3trn and placing it above Microsoft in the league table of the biggest global companies. For a loss-making business, this is one hell of an achievement, and by way of comparison, Microsoft is forecast to make $160bn in pre-tax profit this year. _(Neil in the margin: The float (or offer) price is what institutions paid in the IPO; a 60% first-week premium means retail buyers are paying far more than the bankers judged the thing worth days earlier. A classic sign of a frothy listing.)_

By Friday's opening, the share price had eased off a bit, falling about 15% from the intraday peak, giving the business a market value of just $2.4trn. In some respects, my personal caution about this IPO looks misplaced, certainly by the end of week one, and I should confess that I did not see this happening. However, in these situations, at best, the call on whether the price is up or down is a guess. It certainly isn't a valuation-based judgement, and consequently, I'm as well placed as a coin toss on these calls. My sense is that the same goes for large parts of the AI trade, which, in some quarters, has reached levels I struggle to comprehend. Interestingly, I did think that the SpaceX IPO would suck investor enthusiasm away from some of the other leading tech plays in the US, and that appears to have played out, with Nvidia, Alphabet, Amazon, Microsoft and Broadcom all having fallen this month.

## UK Politics

Finally, I should finish by covering the outcome of the Makerfield by-election, which Andy Burnham has won pretty decisively. He now looks set to challenge Keir Starmer and win that contest, and will most likely become the seventh UK prime minister in ten years by September. _(Neil in the margin: A by-election is a single-seat contest triggered mid-Parliament, usually by a death or resignation. Burnham, currently Greater Manchester's mayor, needed a Commons seat before mounting any leadership challenge — hence the manoeuvre.)_

I suspect that those anticipating major policy changes from those pursued under Keir Starmer will be disappointed, given the constraints imposed by the fiscal rules and the existing levels of public debt here in the UK. The clarity of those constraints will calm financial markets, but the Labour Party backbenches won't. There is always some scope to increase taxes, but given the existing burden of taxation and the need to see the economy grow, even this would not be a risk-free bet for the leader-in-waiting.

My summary here is that there may well be a warm welcome for the new boss, but my guess is that aside from the voice and the emotional intelligence quotient, he may well be much the same as the old one.

## What to look out for next week

After a busy week for important macro data, next week is a little quieter. There is very little news coming from the UK, but Thursday is important for US data on the labour market, inflation and GDP. Given this week's cautious hold decision on rates, next week's inflation outcome has even greater significance than usual for obvious reasons. The corporate calendar on both sides of the Atlantic is once again pretty quiet, thank goodness. I suspect that next week the investment focus will once again be on oil prices, the negotiations between the US and Iran, and SpaceX's share price.