Daily Market Outlook, July 14, 2026

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — Hormuz Heighten Hike Heresay

Markets came in looking for CPI. They got Hormuz. Brent’s spike above $85/bbl after Trump revived the blockade on Iranian vessels has bulldozed last week’s stabilisation story and dragged the tape back into inflation-shock territory. A soft CPI may now be shrugged off as yesterday’s news; a hot one lands like petrol on the Fed-hike fire. Warsh’s testimony still matters, but the macro day starts with crude, not core.

Brent crude rose as much as 2.8% to $85.64/bbl, extending gains for a second day and leaving oil more than 20% above its early July low. Trump’s call for a 20% reimbursement fee on all cargo passing through the Strait of Hormuz adds a fresh policy premium to an already fragile energy route. The issue is no longer simply whether supply is disrupted today; it is whether the market has to price Hormuz as a recurring tax on global trade and inflation expectations. Asian equities reflected the discomfort. The MSCI Asia Pacific Index was little changed in volatile trade, while South Korea’s Kospi swung from gains of as much as 2.5% to losses near 5.3%. European futures point to a weaker open. The AI trade is still alive, but it has lost control of the narrative. When crude is surging and Fed hike odds are rising, even the highest-conviction growth trades have to answer to the discount-rate police. Treasuries and the Dollar were steadier, but the calm looks tactical rather than reassuring. Markets are pricing roughly a 50% chance of a July Fed hike, and Waller sharpened the setup yesterday by warning that another hot core inflation print would put near-term tightening back in play.

That makes today’s CPI asymmetric: a soft number is stale, a hot number is combustible. The median estimate for core CPI is 2.8% y/y, but the mean is higher, with almost as many forecasters looking for 2.9% y/y. Headline inflation may still benefit from June’s earlier energy softness, but the Fed will care more about core persistence and whether firms are still passing through costs. PPI, import prices and survey inflation expectations later this week will help determine whether the oil shock is just a headline scare or the start of another inflation impulse. Warsh’s testimony to Congress is therefore less about theatre and more about reaction function. Does the Fed treat higher oil as a credibility problem, or as a growth tax? Hiking into an energy shock may help anchor expectations, but it also risks demand destruction if consumers and margins are already weakening. That is the policy trap: crude can lift inflation today while weakening activity tomorrow.

The UK is already leaning toward the growth-damage interpretation. The BDO survey points to a sharp drop in output in June and only a contained rise in inflation pressure, supporting the BoE’s preference to look through the energy shock. The BRC retail sales monitor showed like-for-like sales up 1.7% y/y, which likely means real growth of less than 0.5% y/y. The consumer is still moving, but not with much swagger. The ECB is less likely to be so relaxed. Renewed oil strength should keep September hike expectations firm, particularly given its more activist inflation-credibility stance. Near-term policy divergence may therefore widen, even if a sustained energy shock ultimately argues for more convergent accommodation later as growth damage becomes harder to ignore. China offered the one clean upside surprise, with June exports up 27% y/y, blowing past expectations. That keeps the external-demand story alive, but it also complicates the inflation picture if robust goods demand collides with higher shipping, energy and input costs.

The UK Financial Stability Report added a domestic technical tailwind for gilts. The FPC proposed leverage framework reforms aimed at improving simplicity, competitiveness and buffer usability, including cutting the Tier 1 minimum from 3.25% to 3.00%, removing the countercyclical leverage buffer, raising the additional leverage ratio buffer from 35% to 50% of risk-weighted systemic buffers, and introducing a new 25bp releasable general buffer for CET1 capital. O-SII buffers will also become releasable in systemic stress. The estimated gilt impact is useful but not a game-changer. The proposed reforms imply around £34bn of new effective gilt demand in the central case across the D-SIB universe, with fiscal savings of roughly £1.1bn per year. That is supportive for the margin, but markets should resist turning technical capacity into a heroic outright demand story.

This morning's market message reads as if last week’s calmer energy narrative has been mugged by Hormuz. CPI can still move the front end, and Warsh can still steer the Fed debate, but the market’s bigger problem is that oil has become a live policy variable again. If crude holds above $85/bbl, soft data will need to be very soft to matter—and hot data will matter a lot.

Overnight Headlines

US June CPI Key For Fed Inflation And Policy Outlook
Fed Hike Bets Mount Ahead Of US Inflation Data, Warsh Testimony
Fed Waller: May Need To Raise Rates To Tame Core Inflation
US Completes Strikes Against Iran While Tehran Targets Gulf Neighbours
Trump Reinstates Iran Blockade, US To Charge 20% On Hormuz Cargo
Trump Gave Saudi Crown Prince His Backing For Risky Strikes On Houthis
China’s Exports And Imports Soar Faster Than Forecast On AI Demand
China’s Crude Oil Imports Plunge To Lowest In Nearly A Decade
Japan’s Katayama Says GPIF To Adjust Portfolio If Needed
SocGen Sees $76B Of JGB Buying If GPIF Rebalances Assets
Japan’s 20-Year Bond Sale Demand Stronger Than 12-Month Average
RBNZ’s Conway Warns Of Sticky Inflation, Risking More Rate Hikes
EU Weighs More Substantial Banking Reforms After Early Pushback
Nvidia Halves Asia Buyer List As Part Of China Chip Crackdown

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

USD/JPY: 164.50 ($897m), 163.00 ($699.3m), 160.50 ($665m)
GBP/USD: 1.3400 (GBP398.5m), 1.3250 (GBP356.1m)
EUR/GBP: 0.8730 (EU552.1m)
AUD/USD: 0.6900 (AUD491.5m), 0.6960 (AUD474.7m), 0.7500 (AUD320m)
USD/BRL: 5.2000 ($928.6m), 4.9500 ($635m), 5.1500 ($630m)
USD/CAD: 1.3700 ($490m), 1.3765 ($410m)
USD/CNY: 6.7500 ($525m)
USD/MXN: 17.15 ($420m), 16.90 ($328m)
USD/KRW: 1505.00 ($389.3m)

CFTC Positions as of July 10

Equity fund speculators raised their net short position in the S&P 500 CME by 4,100 contracts to 352,582, while fund managers decreased their net long position by 7,794 contracts to 971,333.
Speculators also increased their net short positions in various Treasury futures: CBOT US 5-year by 38,606 contracts to 1,359,116, CBOT US 10-year by 5,371 contracts to 814,262, and CBOT US UltraBond by 21,150 contracts to 307,819. They reduced the net short position in CBOT US 2-year futures by 26,573 contracts to 1,261,008 and increased the net short position in Treasury bonds by 52,811 contracts to 143,591.
Bitcoin's net long position stands at 3,500 contracts. The Swiss franc, British pound, euro, and Japanese yen have net short positions of -37,414, -87,903, -16,227, and -123,778 contracts, respectively.

Technical & Trade Views

SP500 - 7500 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 7500 Target 7619
Below 7490 Target 7390

DXY - 100 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 100 Target 102.50
Below 99.40 Target 98.40

EURUSD - 1.15 weekly bull/bear level

Daily VWAP Bearish
Weekly VWAP Bearish
Above 1.15 Target 1.1780
Below 1.1490 Target 1.1270

GBPUSD - 1.33 weekly bull/bear level

Daily VWAP Bearish
Weekly VWAP Bullish
Above 1.34 Target 1.35
Below 1.33 Target 1.3050

USDJPY - 160.50 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 162 Target 163.75
Below 159Target 157.95

XAUUSD - 4100 weekly bull bear level

Daily VWAP Bearish
Weekly VWAP Bearish
Above 4200 Target 4500
Below 4100 Target 3569

BTCUSD - 60.5 weekly bull bear level

Daily VWAP Bearish
Weekly VWAP Bearish>Bullish
Above 67.2k Target 70.5k
Below 60.5k Target 52.2k