July 10th, 2026
The week’s marquee economic data releases showed inflation cooling more than expected in June. Headline Consumer Price Index (CPI) declined 0.4% on the month and eased to 3.5% year-over-year from 4.2%, while core CPI, excluding food and energy, was essentially flat on the month and slowed to 2.6% year-over-year, both below consensus. The Producer Price Index (PPI) for final demand fell 0.3% on the month and rose 5.5% year-over-year, with core PPI up 0.2% and 4.7%. It is important to note that because the June reference period precedes the mid-July escalation, it does not capture the renewed rise in energy costs. Activity data was firmer, as June housing starts rose 19% to a 1.427 million unit annualized pace and initial jobless claims fell to 208,000.
A sharp escalation in the conflict between the United States and Iran as well as the release of the latest data on inflation also impacted markets this week. U.S. forces conducted fresh strikes on Iranian targets, including missile and drone facilities, naval assets, and an oil tanker near Iran’s main export terminal, and Washington reinstated its naval blockade of Iranian ports near the Strait of Hormuz. Tehran responded with attacks on U.S. bases in Kuwait and Jordan and signaled it could move to close the Red Sea shipping route should its energy infrastructure be targeted. President Trump warned of further action against Iranian infrastructure absent a diplomatic breakthrough, and shipping traffic through the Strait of Hormuz declined as the standoff intensified.
Despite the energy shock, Treasury yields eased on the week as cooler core inflation readings tempered rate concerns. The 2-year US Treasury yield is currently 4.13%, and the 10-year Treasury is down only marginally to 4.52%, leaving the 2-year to 10-year spread slightly steeper near 39 basis points at the time of this writing. West Texas Intermediate (WTI) crude oil is trading near $82 per barrel, up roughly 15% on the week and reaching a one-month high, while Brent is currently near $87.
The Chandler team continues to expect the Federal Reserve to hold the federal funds rate at 3.50% to 3.75% through the remainder of 2026, even as the federal funds futures market prices in at least one quarter-point increase this year. The central question is whether the renewed energy pressure from the Middle East escalation feeds through to core inflation, or whether June’s cooler core readings signal moderation. Irrespective, Chandler managed portfolios remain positioned with an emphasis on safety, liquidity, and disciplined credit risk management.
Next Week: Leading Index, ADP Weekly Employment Change, Chicago Fed National Activity Index, Philadelphia Fed Non-Manufacturing Activity, Initial Jobless Claims, Continuing Claims, S&P Global U.S. Manufacturing PMI, S&P Global U.S. Services PMI, New Home Sales, Building Permits.
Written by Scott Prickett, CTP, Co-Chief Investment Officer