General Market News

Fed Chairman Kevin Warsh announced leaders of five task forces to advise on policy changes, including an AI task force comprising venture capitalist Marc Andreessen, economist Charles I. Jones, and Xbox CEO Asha Sharma. All three share Warsh's bullish view on AI's transformative economic potential, though recent Fed discussions have been skeptical of AI's productivity gains.

• Warsh personally selected the AI task force members, who will assess AI's economic impact to inform Fed policy judgments, with work expected to finish by year-end
• Jones, on leave from Stanford to join Anthropic Institute, has written that AI could accelerate U.S. economic growth to potentially over 5% per year from the historical 2% average
• Some FOMC members expressed 'considerable uncertainty' about the timing and magnitude of AI productivity gains, while NY Fed President Williams warned that AI-driven demand is causing price spikes in electricity and semiconductors

Mortgage rates increased slightly this week, with the 30-year fixed-rate mortgage rising to 6.49% from 6.43% the previous week, according to Freddie Mac's latest survey. Despite the modest uptick, rates have remained relatively stable in recent weeks and are below the 6.72% level from a year ago. Housing market conditions are showing some improvement for buyers as home price growth is expected to slow to 1.2% in 2026.

• The 30-year fixed mortgage rate averaged 6.49%, up from 6.43% last week but down from 6.72% a year ago, while 15-year rates rose to 5.82%
• Home price growth is forecast to slow to 1.2% in 2026, below the current inflation rate, meaning real home prices would effectively decline
• Mortgage rates are expected to hold steady at 6.3% as inflation concerns caused by the Iran war have reduced prospects for interest rate cuts

CME Group's Chief Economist Erik Norland analyzes the recent divergence and convergence between precious metals and bond yields, both influenced by inflation concerns. Gold and silver fell sharply from late January 2026 after peaking in early 2026, while Treasury yields initially declined in 2025 before rising in early 2026. The near-term direction of both markets will depend on central bank monetary policy, while longer-term trends hinge on fiscal deficits globally.

• Markets shifted in late January 2026 as Kevin Warsh's Fed nomination and rising core PCE inflation (from 2.8% to 3.3% YoY) led investors to price in 50 basis points of rate hikes instead of cuts, pressuring precious metals lower despite their traditional inflation-hedge status.
• Multiple central banks (Bank of Japan, ECB, Reserve Bank of Australia, Norges Bank) have already raised rates in 2026, while major economies continue running large fiscal deficits (U.S. 5-6% of GDP, Brazil 7.7%, China 8.2%), creating structural risks for sovereign debt sustainability.
• Equity market performance remains a wild card: a sustained bull market could keep inflation elevated and pressure both bonds and metals, while a severe correction could force central banks to cut rates and potentially restart a precious metals rally.

US stocks advanced on Thursday, with the Dow rising 139 points to 52,487 and the Nasdaq gaining 1.30%, driven by a rally in semiconductor stocks. Chip companies surged on AI-driven demand and expansion plans, while markets overlooked renewed US-Iran military strikes as oil prices declined on potential diplomatic progress.

• Micron Technology climbed 4.5% after announcing plans to invest $250 billion in US memory chip production through 2035 to meet AI demand
• Meta shares rose following Reuters reports the company will begin manufacturing its in-house AI chip in September, boosting Applied Materials and SanDisk
• S&P 500 companies are expected to report 24% average year-over-year earnings growth for Q2, with technology firms driving a significant portion of the increase

Oil prices fell sharply on July 9, 2026, with WTI crude declining 3.7% and Brent crude dropping 4.4% as traders bet that the U.S. and Iran will return to negotiations despite recent military escalations. Natural gas also declined 6.5% following an EIA storage report showing a larger-than-expected build. The pullback suggests markets believe both countries prefer to keep the Strait of Hormuz open and will avoid prolonged conflict.

• Natural gas fell after EIA reported a 61 Bcf storage build versus 49 Bcf expected, with stocks now 185 Bcf above the five-year average
• WTI crude retreated from the $74.50-$75.00 resistance level toward $70.50 support despite Iran moving 11 million barrels through the Strait of Hormuz in 24 hours during escalation
• Brent crude tested $76.00 support as traders dismissed war risks, with Qatar and Pakistan offering mediation services to restart U.S.-Iran negotiations

A trader executed a $24 million bullish options trade on the Nasdaq-100 index (QQQ), betting the index will reach all-time highs by the end of July. The three-part call spread requires QQQ to break above $750, nearly $2 above its early June high, representing a high-conviction directional bet on tech stocks. This was the third-largest options trade across all markets on Thursday.

• The main trade involved purchasing 28,000 call options at the 736 strike for $30 million while selling a 730/740 call spread for $6 million, reducing net cost to $24 million but pushing the breakeven to approximately $750
• QQQ has been trading flat since May 14 and range-bound within roughly 200 points since early May, with its last all-time high recorded on June 3 at around $748
• Total QQQ options volume reached $1.6 billion on Thursday with $944 million in calls, though roughly equal numbers of contracts were bought and sold, suggesting mixed market sentiment despite the large bullish bet

Federal Reserve Chairman Kevin Warsh announced the members of five task forces that will examine the Fed's operations, including communications, data, balance sheet management, productivity, jobs, and the inflation framework. The groups include high-profile figures such as venture capitalist Marc Andreessen, former Walmart CEO Doug McMillon, former Bank of England Governor Mervyn King, and economist Greg Mankiw. Warsh expects changes to be implemented this year.

• Five task forces will focus on Fed communications, data, balance sheet operations, productivity and jobs, and the inflation policy framework
• Notable members include Marc Andreessen (venture capitalist), Doug McMillon (former Walmart CEO), Mervyn King (former Bank of England Governor), and Greg Mankiw (former White House Council of Economic Advisers chairman)
• No specific timeline was provided for completion, though Warsh previously indicated he expects changes to come within the year

Federal Reserve Chairman Kevin Warsh has named leaders for five independent task forces to review the central bank's operations, including its balance sheet management and AI impacts. The intellectually diverse group includes economists and former central bankers from across the policy spectrum. The review aims to modernize the Fed's tools and approaches to address significant changes in the U.S. economy.

• Task force leaders include Harvard economist Raj Chetty (data panel), tech investor Marc Andreessen (productivity and jobs), and economist Greg Mankiw (inflation)
• The task forces will 'operate independently' with a mandate to follow evidence and provide candid feedback to the Federal Open Market Committee
• Warsh announced the initiative at his first policy meeting as Fed chief on June 16-17, 2026, emphasizing the need to ensure the Fed can achieve its objectives during this 'consequential time'

President Trump secured approximately $3 billion in defense deals at the NATO summit in Turkey, with U.S. defense contractors partnering with European allies to expand weapons production capacity. The agreements involve major companies like Lockheed Martin, RTX, Northrop Grumman, Boeing, and Anduril establishing joint ventures and production facilities across Europe. These deals align with Trump's push for increased NATO defense spending while benefiting American defense manufacturers.

• Lockheed Martin will establish a Patriot PAC-3 missile sustainment facility in Europe with Germany, Netherlands, Poland, and Sweden, and partner with Rheinmetall to produce ATACMS missiles in Germany starting as early as next year
• RTX plans to expand AMRAAM missile production in Europe and double Stinger missile production through partnerships with European firms including Diehl Defence
• Four NATO countries signed letters of interest for Northrop Grumman's MQ-4C Triton maritime surveillance drones, while Anduril will partner with Polish firm PGZ to produce Barracuda-500M cruise missiles in Poland

Growing concerns about insider trading on prediction markets are prompting companies like Goldman Sachs and Morgan Stanley to develop explicit policies restricting employee trading on these platforms. The issue gained prominence after the CFTC charged a Google employee with using nonpublic information to profit $1.2 million trading on Polymarket contracts. Legal experts warn companies need clear policies as regulators begin establishing enforcement precedents in this emerging area.

• Goldman Sachs has banned employees from trading on prediction market contracts related to bank-specific events, elections, financial markets, macroeconomic data, and geopolitics
• Only 3 of 50 companies contacted by CNBC confirmed having prediction market trading policies, with 2 others actively reviewing the issue, while 36 did not respond
• The CFTC's first private-sector case involved Google employee 'AlphaRaccoon' who allegedly earned $1.2 million profit using internal data to trade on Polymarket contracts about Google's 'Year in Search' lists

Federal Reserve officials are divided on interest rate policy for 2026, with June meeting minutes showing split views on whether rates should rise or fall from the current 3.5%-3.75% range. Kalshi prediction market traders reflect this uncertainty, pricing in 54% odds of a rate hike occurring in 2026. The division comes amid elevated inflation, with the PCE index hitting its highest level since April 2023 in May.

• Kalshi traders see 54% probability of a rate hike in 2026, 62% odds of a hike before July 2027, and roughly 80% chance by 2028
• Fed meeting minutes revealed 'many participants' favored rates at or below current levels by year-end, while 'many others' supported rates above the current 3.5%-3.75% range
• Separate Kalshi market shows 76% probability of zero rate cuts in 2026, with odds jumping from 68% on June 16 during new Fed Chair Kevin Warsh's first meeting

PJM, the largest U.S. electricity grid serving 67 million people, paid up to $28,000 per megawatt for balancing services during a July heat wave, over 100 times the annual average cost. The grid operator faces mounting strain from surging data center demand, transmission congestion, and insufficient new generation capacity, with first-quarter balancing costs jumping 215% year-over-year to $217 million.

• PJM set an all-time peak load record of 168 gigawatts on July 2, with reserve deficits and transmission congestion near Baltimore, Delaware, and northern Virginia's data center hub driving extreme pricing
• Capacity prices for peak demand have surged over 1,000% since 2024 as electricity demand growth from data centers, EVs, and heat pumps outpaces new generation additions
• PJM's independent market monitor says the grid's regulation market design overestimates balancing costs, with balancing costs ultimately passed to consumers through electricity bills

Kalshi traders have sharply increased their expectations for sustained higher gas prices due to escalating U.S.-Iran tensions. They now see a 75% chance gas prices will exceed $3.50 per gallon on Election Day (Nov. 3), up from 37% before the conflict intensified. National average gas prices rose to $3.84 on Thursday, compared to below $3 per gallon before hostilities began.

• Traders assign 39% odds that gas prices will top $3.75 per gallon by Nov. 3, nearly double the 22% probability before the Middle East conflict escalated
• U.S. oil prices spiked to $75 per barrel from around $68 on Monday due to tensions, though WTI crude eased back below $72 per barrel on Thursday
• Despite higher price expectations, traders give only 43% odds that gas prices will reach new 2026 highs above $4.60, suggesting limited upside from current levels

Traders are turning attention to small-cap stocks as mega-cap tech momentum slows, with the Russell 2000 up 20% year-to-date versus the Nasdaq's 18% gain. A major options trade worth nearly $20 million signals expectations for a significant move in small caps by December, either up 14% or down 11%.

• A trader spent $18 million on a strangle position in the iShares Russell 2000 ETF (IWM), betting on dramatic movement by mid-December with strike prices at 270 (put) and 335 (call)
• The Russell 2000's 21% rally in Q2 was the eighth-biggest quarterly move in history and strongest performance since 2020
• Small caps have performed well despite rising Treasury yields and regional banks gained 15% year-to-date versus only 1% for S&P 500 financials

The New York Federal Reserve's Roberto Perli stated that the Fed's Treasury bill purchases for reserve management will remain flexible and responsive to market conditions. The program, which began in December at $40 billion monthly and has since decreased to $10 billion monthly, can be adjusted up or down as needed. With significant Treasury bill issuance expected in coming months, money markets may tighten, potentially requiring increased Fed purchasing.

• Reserve management purchases (RMPs) started in December at $40 billion per month and have moderated to $10 billion per month, with the FOMC explicitly allowing for temporary pauses if money market conditions warrant
• Perli indicated that upcoming heavy Treasury bill issuance in July and August may tighten money market conditions, suggesting the Fed may need to increase future reserve management buying
• The New York Fed's market operations desk is prepared to implement any balance sheet changes under new Fed Chairman Kevin Warsh's review of the central bank's balance sheet management framework

Federal Reserve Bank of Dallas President Lorie Logan stated that implementing voluntary central clearing for the Fed's open market operations would improve efficiency and strengthen U.S. financial markets. Her remarks, delivered at a New York Fed conference on market liquidity, focused on operational improvements rather than monetary policy outlook. Central clearing could make facilities like standing repo operations more attractive to market participants.

• Logan proposed voluntary central clearing for Fed operations like standing repo facilities, which lend cash to eligible firms to maintain desired money market rate levels
• Standing repo operations have been lightly used despite Fed encouragement, with some believing streamlined clearing processes would increase their attractiveness
• Logan emphasized the need to balance leverage benefits and risks, stating that 'maintaining strong and efficient financial markets requires both market participants and the official sector to appropriately balance the benefits and risks of leverage'

The week of July 13-17, 2026 will feature critical economic data releases and the unofficial start of second-quarter earnings season. Key inflation reports include June CPI and PPI data, while major banks like Bank of America, Citigroup, Morgan Stanley, and Wells Fargo lead earnings announcements. Additional economic indicators including retail sales, jobless claims, housing data, and consumer sentiment surveys will provide insight into economic health.

• June Consumer Price Index (CPI) releases Tuesday, July 14, followed by Producer Price Index (PPI) on Wednesday, July 15, providing crucial inflation data for Fed policy decisions
• Major financial institutions including Bank of America, Citigroup, Morgan Stanley, and Wells Fargo report quarterly earnings, alongside blue-chip companies like GE Aerospace, Netflix, and Travelers
• Additional key economic data includes June retail sales, weekly jobless claims, housing starts and permits, and the preliminary University of Michigan consumer sentiment survey

Brazil's government extended its 12% crude oil export tax for another 60 days, a measure first introduced in March during rising oil prices linked to geopolitical tensions. The trade committee Gecex will review the tax in 30 days, though officials had recently considered removing it due to softer oil prices. The tax revenue funds subsidies to shield consumers from inflation caused by fuel price volatility.

• The export tax was extended despite Brent crude trading around $76/barrel, well below the $118/barrel peak reached shortly after conflict erupted in late February
• Tax revenues are being used to fund fuel subsidies including for diesel, gasoline, aviation fuel and cooking gas
• Government officials recently began a 'gradual retreat' from subsidies following lower oil prices, with a decision on removing gasoline subsidies expected next week

The Indian government has approved a joint venture between Dixon Technologies and Chinese smartphone maker Vivo Mobile to manufacture smartphones domestically. The venture will be majority-owned by Dixon (51%) with Vivo holding 49%, and required senior-level government clearance due to regulations governing investments from countries sharing a land border with India.

• Dixon Technologies will hold 51% ownership while Vivo Mobile India holds 49% in the manufacturing joint venture
• The venture will produce smartphones and electronic devices as an original equipment manufacturer, initially handling Vivo's production orders
• The JV has flexibility to manufacture electronic products for other brands beyond Vivo, expanding its potential customer base

The Federal Reserve maintains an $8 trillion balance sheet while its Core PCE inflation gauge and M2 money supply both sit at the 90th percentile of their 12-month ranges, creating a disconnect between accommodative policy and rising inflation. The 10-year Treasury yield stands at 4.48% near 12-month highs, while the yield curve has flattened sharply from 0.74% to 0.35% in five months. This combination signals asymmetric risk as equity markets remain complacent with VIX at 17 despite bond market stress indicators.

• M2 money supply jumped $0.25 trillion in one month to $23.05 trillion while Core PCE rose to 130.08, both at 90.9th percentile of 12-month range, suggesting abundant liquidity amid persistent inflation
• The 10-year minus 2-year yield spread collapsed from 0.74% to 0.35% (hitting a low of 0.27% in June), now at the 4th percentile of its 12-month range, historically a precursor to slower growth
• Federal debt grew $3.17 trillion year-over-year to $39.39 trillion as of July 1, 2026, while the Fed holds rates at 3.75% despite inflation pressures, creating vulnerability for retirement portfolios positioned for continued calm