Tuesday, July 14

The June CPI print — headline 3.5% year‑on‑year and core 2.6%, with notable easing in core services and shelter — was the single market mover. Traders immediately dialed back near‑term tightening risk: CME FedWatch showed roughly 84–85% odds the Fed will hold the 3.50–3.75% range at the July FOMC, and the 10‑year Treasury slipped to about 4.58% as the curve steepened (front end falling more than the long end). Equity indices tightened higher on the repricing (S&P +0.38–0.40%, Nasdaq +0.62–0.9%), while the dollar briefly weakened versus the euro even as safe‑haven flows tied to Middle East risk and hawkish Fed rhetoric kept it supported at other times. Fed Chair Kevin Warsh cautioned that one soft print doesn’t end the inflation fight, leaving the door open to policy action if services reaccelerate. Bottom line: markets have bought the Fed more flexibility to pause, but upcoming PPI, retail sales and the Beige Book will be treated as decisive follow‑through data.

Early earnings set a constructive tone: Goldman Sachs surged about 9% after beating expectations, and BlackRock and Morgan Stanley also posted stronger‑than‑feared results, easing recession and credit concerns for now. That helped underpin the broader risk rally, but the session was uneven. IBM plunged roughly 25% on a profit warning that underscored margin pressure and demand softness in parts of enterprise IT. Separately, PayPal jumped over 17% on reports that Stripe and Advent International lodged a joint $60.50 per‑share bid — about a 28% premium — spotlighting M&A as an active re‑pricing channel. Sector dispersion was pronounced: technology and communication services led, while semiconductors lagged and reportedly triggered outflows from U.S. equity funds as traders reassessed the durability of the AI trade. Implication: positive bank prints reduce a near‑term macro overhang, but earnings and M&A headlines are accelerating a bifurcation where AI beneficiaries outperform legacy tech and cyclical chip names remain a potential drag on indices.

Military activity and shipping disruptions in the Gulf continued to elevate energy risk. Market commentaries described U.S. strikes on Iranian coastal targets, a reinstated naval blockade and retaliatory drone and missile attacks on U.S. installations and tankers, sustaining a non‑trivial geopolitical premium. Oil remained elevated — Brent and WTI broadly in the low‑to‑mid $70s to mid‑$80s range (session checks around Brent $78–84, WTI $73–79; one market wrap cited Brent $84.78 and WTI $79.61) — even after President Trump signaled he would not apply a proposed 20% tariff on non‑Iranian cargo transiting Hormuz. Supply‑side adjustments were small but meaningful: seven OPEC+ members agreed to raise quotas by 188,000 b/d for August, while QatarEnergy kept Ras Laffan LNG output at minimum after an LNG‑carrier attack even as Qatar resumed maritime activities. The Senate’s blocking of an $87.6bn war supplemental adds a political funding complication. Implication: energy and shipping risk remain a live tail‑risk, supporting gold and select safe havens and leaving commodity and shipping markets primed for renewed volatility if hostilities escalate.