Market Eyes Next Week’s CPI Report and Warsh on Capitol Hill

• Despite the resumption, or at least increase, in hostilities in and around Iran, the markets are treating the news with less concern/volatility than would have been the case a few months ago. Sure, oil prices have moved up some but the degree to which they’ve moved has been a fraction of what we saw in early March. It seems markets are taking the bellicose announcement with a grain of salt and watering down the reaction. In any event, next week does bring some first-tier non-war news which will be welcomed by all. First, June CPI will be released on Tuesday, then Fed Chair Warsh will make his debut on Capitol Hill with his two-day Humphrey-Hawkins testimony to House and Senate banking committees. So, some real economic news awaits us next week. Currently, the 10yr is yielding 4.54%, unchanged on the day, while the 2yr is yielding 4.17%, up 1bp on the day.

 

• While there was plenty of speculation over whether the FOMC minutes would be as truncated as the statement, they were not too different from prior minutes. The June minutes were 5,255 words vs. 6,605 in April and 6,008 in March. There was also the continued inclusion of slightly vague number descriptions like, “several”, “most”, “a few”, and “majority”. That familiar phrasing suggests communications haven’t been completely revamped, at least not yet.

 

• All officials supported leaving rates unchanged in June, thus the unanimous vote. There was a slightly confusing section where “most” noted the possibility that inflation could remain elevated based on AI buildout influences with a few seeing a case for raising rates, although not at this meeting given the uncertainties from the Middle East, etc.. The minutes, however, also mentioned there were other scenarios that included receding inflationary pressures where “most” participants, agreed it would eventually require rate cuts. In essence, the minutes were describing a committee that sees policy in a good place at present, but with scenarios that could easily and quickly arise that require either a rate hike or rate cut. Thus, diligence is key, at the present time. Of course, when is diligence not a good thing?

 

• Given the somewhat traditional format of the minutes and the balanced tone in the comments that spoke to comfort with the current state of policy, yet alert to conditions that could require a rate hike, the markets moved little on the release and turns now to next week’s Capitol Hill appearance by Fed Chair Warsh for the next bit of Fed speak.

 

• In addition to Warsh’s testimony and Q&A next week, the other highlight will be Tuesday’s release of June CPI. Expectations are for the overall to print negative -0.1% MoM given the retreat in energy prices with the YoY pace slowing from 4.2% to 3.9%. The core rate is expected to remain in its recent range with a 0.3% MoM print vs. 0.2% in May. The YoY rate is expected to be unchanged at 2.9%. Core services ex-housing (Super Core) will come under some scrutiny after running somewhat hot for most of 2026. Does that higher trend in prices away from the energy complex continue, undermining the belief that the war-inspired energy increase will be short-lived? We shall see.

 

• If it seems like jobless claims are a broken record, mostly the same week after week, that’s because the low-fire environment that we’ve been in for over a year appears to be continuing. In the week ending July 4, initial jobless claims totaled 215,000, a decrease of 2,000 from the previous week’s revised 217,000 level. The previous week’s level was revised up by 2,000. The 4-week moving average was 218,750, a decrease of 3,750 from the previous week’s average. Continuing jobless claims for the week ending June 27 were 1,814,000, an increase of 8,000 from the previous week’s revised level of 1,806,000 but still well within recent ranges.

 

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Strait of Hormuz Daily Crossings and Brent Crude Prices – Seems Oil Prices are Anticipating More CrossingsSource: Bloomberg

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Core Services Ex-Housing (Super Core) Has Been Elevated in 2026Source: BLS

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Oil Moves Back Over $70/BBL but just barely on Latest Iran War Developments

Source: CNBC

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Latest 2Q26 GDP Estimate: 1.3% Annualized