The first full week of trading in the second half of 2026 reminded investors that many of the headwinds from earlier this year have yet to disappear. A re-escalation of tensions in the Middle East sent crude oil prices roughly 4% higher, reviving concerns that energy-driven inflation could complicate the Federal Reserve's path toward lower interest rates. At the same time, traditional safe-haven assets sent mixed signals as gold fell 1.7%, while the yield on the benchmark 10-Year Treasury climbed back above 4.5%, reflecting renewed concerns that borrowing costs may remain higher for longer.
The bond market, as measured by the FedWatch Tool, is now pricing in more than 80% probability of at least one rate hike by the end of the year. Despite these developments, equity markets demonstrated notable resilience.
|
Source: CME Group, FedWatch Tool, 7/10/2026 |
