Summary for the Week of July 25, 2026

  • July hike odds roughly tripled to 38%; September reached ~82% (CNBC, CBS News, CME FedWatch). No inflation data was released all week.
  • Brent closed above $100 Thursday; WTI ended at $89.78, +8.8% on top of last week’s 14% (CNBC, CNN).
  • Initial claims 187,000 — lowest since September 1969 (DOL, Bloomberg).
  • The 10-year TIPS auction cleared at a 2.438% real yield, highest since 2008 (Treasury, Tipswatch); ten-year yields hit their highest since January 2025 (CNBC).
  • The S&P 500 fell 0.6%; the Magnificent Seven shed ~$800 billion Thursday after Alphabet raised its capex guide and fell 7% (Yahoo Finance, CNBC).

Two weeks ago a negative CPI killed the case for a July hike; this week $100 oil and 1969-level jobless claims rebuilt it without a single inflation report. Investors repriced the committee, not inflation: five-year breakevens actually fell to 2.24% (FRED T5YIE) while hike odds tripled. They are pricing a Fed that responds to an oil shock it can no longer call transitory — with claims at a 1969 low leaving the employment mandate no counterargument. Wednesday’s meeting is the first of the Warsh era that starts genuinely undecided.

Hike odds tripled with no inflation data at all

The path ran through the Fed’s named drivers, not a price index: crude’s June collapse — the reason the last CPI was negative — has fully reversed and kept going; claims sit at a level last seen in Richard Nixon’s first year; and Alphabet raised its capital-spending guide to $195–205 billion, exactly the “strong AI-related demand” the June minutes listed as an inflation risk. Vice Chair Philip Jefferson said before the blackout that if inflation “does not start to cool down soon… it could be appropriate to reconsider our current policy stance” (Fed, Jul 16). The ECB signaled a possible September hike of its own (Central Banking) — the question has gone global.

Oil is rallying without the crowd that capped March

This disruption is larger than June’s: Hormuz transits are down to roughly 3–5 ships a day against ~138 before the war, and the Houthis have extended the blockade to Saudi tankers in the Red Sea (Axios on the widening war). Speculative positioning in crude is far lighter than during the March spike — the traders burned buying that rally have declined to buy this one, so this rally lacks the crowded long that limited March’s upside (Crowded Market Report, Jul 23). Friday’s 2.6% pullback came on a report of renewed talks — one de-escalation headline still outweighs a week of escalation. For the Fed, a June-style spike-and-reversal is noise; $90-plus crude that holds through August forces the question the negative CPI had closed.

Investors now punish the spending the Fed counts as inflationary

Alphabet beat on revenue, grew Cloud 82% year over year, raised quarterly capital spending to $44.9 billion, twice a year earlier, raised the full-year guide — and fell 7%, reporting its first negative free-cash-flow quarter since at least its 2004 IPO. Tesla fell 14% on capital spending up 142% year over year; Intel beat its own guidance for a seventh straight quarter and fell anyway (CNBC). Roughly 88% of early S&P reporters beat estimates (FactSet), and as Lance Roberts (RIA Advisors) put it on Thoughtful Money’s roundup: “companies that beat revenue are being sold off… and that’s normally the opposite of what happens” (Jul 25). The same capital spending now works against the spender twice — investors sell it as a cash-flow drain while the Fed lists it as an inflation driver. Bond investors are drawing a finer line than the equity selling: Oracle’s borrowing spreads have widened sharply while Alphabet’s barely moved — the funding stress is name-by-name, not sector-wide.

Real yields hit a 2008 high while breakevens fell

A 2.438% real yield at auction — the highest since 2008 — with breakevens flat is the signature of a market repricing policy, not inflation. It fits the framework shift Hoisington’s Q2 letter made this month — the firm that defended the long Treasury bull for more than four decades now expects equilibrium inflation of 3.5–4.5% and rising long-maturity yields absent a sustained recession, a favorable supply shock, or prolonged monetary restraint (Q2 letter, archived) — and it gained a second framework this week: Russell Clark, the former Horseman Capital manager, argues the fundamental buyers of Treasuries are politically disappearing, with Japanese government bonds as the lead indicator (Other People’s Money). Capital scarcity and politics are different arguments converging on the same trade: short-maturity yields follow the Fed; long-maturity yields have stopped coming back down between scares.

The committee decides Wednesday; second-quarter GDP and June PCE land Thursday morning — one day after the decision they would have informed. At 38%, either outcome moves markets: a hold surprises the two-fifths positioned for a hike, and a hike would be the Warsh Fed’s first unsignaled move. The June dots penciled this hike, the July inflation data undercut it, and a week at $100 oil rebuilt it. Wednesday shows which argument this committee weighs.

Snapshot

Summary for the week of July 25, 2026: S&P 7,412 down 0.6%; Nasdaq −2.1% with Mag-7 shedding $800B Thursday; July hike odds 38%, September 82%; 2Y 4.33 and 10Y 4.69 with the TIPS real yield at a 2008 high; WTI $89.78 up 8.8% with Brent over $100 Thursday; gold ~$4,055 up 2%; Bitcoin ~$64,300; claims 187K, lowest since 1969Summary for the week of July 25, 2026: S&P 7,412 down 0.6%; Nasdaq −2.1% with Mag-7 shedding $800B Thursday; July hike odds 38%, September 82%; 2Y 4.33 and 10Y 4.69 with the TIPS real yield at a 2008 high; WTI $89.78 up 8.8% with Brent over $100 Thursday; gold ~$4,055 up 2%; Bitcoin ~$64,300; claims 187K, lowest since 1969

Watching

  • Mon Jul 27 — June durable goods (advance), 8:30 ET. Consensus +1.6% after May’s −4.5%; whether core capital-goods orders keep carrying the no-growth-crack read.
  • Wed Jul 29 — FOMC decision, 2pm ET. ~38% hike priced. The statement’s treatment of energy is the tell either way.
  • Thu Jul 30 — Q2 GDP (advance) + June PCE, 8:30 ET. Both land the morning after the decision. GDPNow tracks 1.7%; core PCE at 3.4% is the hawks’ standing exhibit.
  • Thu–Fri Jul 30–31 — Bank of Japan. Ten-year JGBs at 2.77% and rising; a hike into this global repricing is the carry-trade trigger to watch.
  • Aug 2 — OPEC+. Expected to add ~188,000 barrels/day for September — small against a Hormuz running at 3–5 transits a day.
  • Oil. The standing test from last week sharpened: $90-plus crude that holds through August forces the Fed question; a June-style spike-and-reversal re-closes it.

Sources

Data: Treasury daily yield curve, 2026 · DOL claims, Jul 23 · CME FedWatch via CNBC, Jul 23 and CBS News, Jul 24 · 10Y TIPS auction (Tipswatch) · Alphabet Q2 (CNBC) · oil path: CNBC Jul 23, CNN Business Jul 24 · ECB decision · market closes: Yahoo Finance, Jul 24. Voices: Thoughtful Money roundup with Lance Roberts · Joseph Wang, Markets Weekly Jul 25 · Crowded Market Report, Jul 23 · Russell Clark on Other People’s Money (Max Wiethe). Builds on the June CPI note and the July 11 weekly. Figures for this piece are archived in the GeoMean data files.