Fixed Income Update
U.S. Treasury yields moved modestly higher this week as investors balanced renewed tension in the Gulf with a still cautious view of the economic and policy outlook.
The move was led by headlines around the U.S. and Iran. President Trump expressed diminishing confidence in negotiations, saying that the ceasefire was “over” as far as he was concerned and adding that, even if a deal were reached, he was not sure it would hold. Later reports suggested Iran had contacted the administration seeking a deal, but markets remained focused on the risk that rhetoric could turn into a more durable disruption to energy supply. By mid-day Tuesday WTI crude rose to roughly $76 per barrel, and the 2-year U.S. Treasury yield reached 4.23%, its highest level since June 22.
The bond market response was notable because it was measured. A more severe and sustained rise in energy prices would normally raise concerns about headline inflation, complicate the Fed’s path, and place upward pressure on front-end yields. For now, investors appear reluctant to fully price that outcome. Since the conflict began, public comments and actual negotiating progress have often moved in different directions, and traders have been hesitant to treat any single headline as decisive. That helps explain why this week’s rise in yields and crude prices, while important, did not look disorderly. The next several weeks will be important. If energy prices continue to rise or shipping through the Strait of Hormuz becomes more uncertain, the market may need to reprice inflation risk and the expected path of policy along with it. If negotiations regain momentum, this week’s move could prove to be more of a risk premium adjustment than the start of a broader rates selloff.
The other notable development came from the Federal Reserve, which released the leadership teams for five task forces focused on communications, balance sheet policy, data, productivity and jobs, and inflation. The announcement matters because these areas sit at the center of how monetary policy is formed, explained, and transmitted to markets. The task force membership appears serious and credible, with participants drawn from academia, policy, and the business community. That mix should give the effort both technical depth and practical perspective. While the near-term direction of rates will still be driven by inflation, growth, labor market data, and geopolitical risk, the staffing announcement reinforces the view that Chairman Warsh is pursuing meaningful institutional reform. Over time, changes to the Fed’s communication framework, balance sheet approach, or inflation analysis could have material implications for the way fixed income markets interpret policy signals.
As of July 10, 2026
|
Index |
Current |
Last Week |
Wk Chg |
Last Year |
Yr Chg |
|
Tax-exempt MMF |
1.70% |
2.37% |
-.67% |
1.95% |
-.25% |
|
Taxable MMF |
3.65% |
3.67% |
-.02% |
4.28% |
-.63% |
|
|
|
|
|
|
|
|
2-Year Treasury |
4.20% |
4.14% |
.07% |
3.87% |
.33% |
|
5-Year Treasury |
4.30% |
4.23% |
.07% |
3.94% |
.37% |
|
10-Year Treasury |
4.56% |
4.49% |
.08% |
4.35% |
.21% |
|
30-Year Treasury |
5.06% |
4.99% |
.08% |
4.87% |
.19% |
|
5-Year Exp. Inflation |
2.29% |
2.25% |
.04% |
2.41% |
-.12% |
|
|
|
|
|
|
|
|
2-Year Municipal** |
2.44% |
2.48% |
-.04% |
2.46% |
-.01% |
|
5-Year Municipal** |
2.71% |
2.68% |
.02% |
2.64% |
.06% |
|
10-Year Municipal** |
3.11% |
3.06% |
.05% |
3.33% |
-.22% |
|
30-Year Municipal** |
4.44% |
4.38% |
.06% |
4.85% |
-.41% |
|
|
|
|
|
|
|
|
Fed Funds |
3.75% |
3.75% |
.00% |
4.50% |
-.75% |
|
Prime Rate |
6.75% |
6.75% |
.00% |
7.50% |
-.75% |
|
Dollar*** |
$100.78 |
$100.86 |
-$0.08 |
$97.65 |
$3.13 |
|
CRB |
$368.51 |
$353.03 |
$15.48 |
$300.37 |
$68.14 |
|
Gold |
$4,117.80 |
$4,125.70 |
-$7.90 |
$3,325.70 |
$792.10 |
|
Crude Oil |
$71.05 |
$68.69 |
$2.36 |
$66.57 |
$4.48 |
|
Unleaded Gasoline**** |
$2.97 |
$2.92 |
$0.05 |
$2.01 |
$0.95 |
* Composite A
** General Obligation AA+
*** Int'l value of the U.S. dollar (Avg. exchange rate between the dollar and 6 major world currencies).
**** Futures price per gallon
Stock Market Update
US equities were on track for a mixed week as of Friday morning, with the momentum trade helping to lift the S&P 500 and Nasdaq. Despite renewed US-Iran hostilities, and a corresponding uptick in both oil prices and bond yields, market moves were relatively composed. After early third quarter selling pressure last week, semiconductors regained some traction, pushing the Nasdaq Composite to lead major US indices with a gain of nearly 1.5% through Thursday’s close.
Tensions between the US and Iran flared up early this week after Iran struck multiple ships in the Strait of Hormuz. The US responded with strikes on Iranian targets and President Trump noted he may no longer be interested in negotiations. Later in the week Trump stated the two sides had agreed to continue negotiations; Trump also declared the ceasefire was over. This week provided a reminder that the conflict may ultimately be far from resolved. Despite renewed geopolitical uncertainty, US equities responded in a relatively calm fashion, with major US indices trading moderately mixed on the week in the face of both higher oil prices and bond yields. While the US market appeared skeptical of any meaningful re-escalation in the conflict, any further uptick in geopolitical risk may prompt some market reassessment, particularly if it results in a sustained rise in energy prices.
Following recent weakness, the momentum trade rebounded as investors returned to semiconductor stocks after a difficult start to the quarter. The iShares Semiconductor ETF (SOXX) rose 2.7% for the week through Thursday’s close after falling 11.6% over the first two trading days of the third quarter last week, when investors rotated away from semiconductor names following some robust second-quarter gains. With oil prices higher and semiconductors rebounding, Energy and Information Technology led S&P 500 sector index performance this week. Whether semiconductors can continue to drive second half market gains remains an open question. Some second quarter moves for semiconductors may have left valuations stretched, and with expectations for the group elevated, quarterly results and forward guidance are likely to face close scrutiny. Preliminary results from South Korean memory chip maker Samsung Electronics earlier this week were not well received by the market, underscoring how high the bar may be going into second quarter earnings season.
Beyond the latest geopolitical flare up, investors have also been focused on the upcoming second-quarter earnings season. Quarterly reports begin to ramp up next week, led by major US banks. S&P 500 earnings are expected to grow more than 20%. Earnings growth has been an important driver of year-to-date equity gains as investors continue to navigate a range of macro and geopolitical headwinds, making forward guidance and margin commentary focal points. Next week, investors will also receive updated inflation data, with June readings for both the Consumer Price Index and Producer Price Index on the calendar.
In the wake of a strong first half for US equities, earnings growth, inflation, monetary policy, geopolitics, and midterm elections stand out as potential directional drivers for markets in the second half of the year. For now, resilient earnings growth and improved market breadth continue to support the US equity market.
As of July 9, 2026
|
Index |
Current Week |
Month of Jul. |
YTD |
|
Dow Jones Industrial Avg. |
-0.76% |
0.35% |
10.14% |
|
S&P 500 |
0.82% |
0.61% |
10.88% |
|
Nasdaq |
1.45% |
-0.02% |
13.11% |
|
MSCI EAFE |
-0.81% |
0.08% |
9.93% |
|
Russell Mid Cap |
-0.33% |
-0.32% |
14.93% |
|
Russell 2000 |
-0.11% |
-1.03% |
21.30% |
