Daily Market Outlook, July 9, 2026
Daily Market Outlook, July 9, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute — Oil Shock Reprices The Rate Path
Renewed US-Iran strikes have punched Brent toward $79, strangled traffic through the Strait of Hormuz, and dragged back the one macro risk investors had quietly buried: an energy shock fierce enough to keep inflation sticky and central banks frozen in place. Equities are bending, not breaking. But the comfortable drift higher is over. Bonds are selling off, gold is catching a haven bid and rate markets are tearing up the soft-landing script, once again pricing the possibility that the Fed has more pain to deliver.
Brent rose 1.2% to $78.94, its third straight daily gain, after the US launched another round of strikes on Iran. That leaves crude well above the $72 area seen at the start of the week. The market is not just pricing headlines now; it is pricing the risk that energy flows through the Strait of Hormuz become materially impaired.Shipping through Hormuz has nearly ground to a halt after the second day of US strikes. That is the key macro channel. A higher oil price is manageable. A disrupted energy artery is harder to ignore. For central banks, this shifts the debate from temporary volatility to the possibility of a more persistent supply-driven inflation impulse. Equities are holding in, but momentum is fading. Asian stocks are up just 0.1%, with earlier gains pared as the semiconductor rally lost steam. The Kospi is up 0.62%, but the early enthusiasm has cooled. The message is not panic; it is hesitation. Investors are still willing to buy chip dips, but they are less willing to chase them when oil, yields and geopolitical risk are all moving the wrong way. US futures are treading water. S&P 500 and Nasdaq contracts have swung between small gains and losses, leaving the broader risk tone broadly stable. That stability is fragile. The equity market is trying to look through the Middle East shock, but the bond market is not cooperating. Government bonds sold off across Japan, Australia and New Zealand, extending the global fixed-income pressure. Treasuries were little changed in Asia, but only after the policy-sensitive 2-year yield moved close to its highest level of the year on Wednesday. The rates market is increasingly sensitive to the risk that higher energy prices force the Fed to keep tightening.
Fed pricing has shifted hawkishly. Futures now imply around 38bps of tightening this year, reflecting renewed concern that inflation risks are not fading quickly enough. The oil move has landed at an awkward moment: just as markets were starting to lean into softer energy prices and a more forgiving policy backdrop. The Fed minutes reinforced that discomfort. Warsh’s first meeting as Chair carried a hawkish tilt, though not much beyond what had already been implied by the June statement and press conference. The committee judged that upside risks to price stability remained elevated, while downside risks to employment had moderated somewhat. A few participants saw a case for raising rates. The key warning was inflation psychology. A majority noted that several years of above-target inflation could begin to affect expectations and wage- and price-setting behaviour. That line matters more after the latest rise in New York Fed inflation expectations and the renewed oil spike. The Fed can tolerate volatility. It cannot tolerate a drift in expectations. There was still a dovish undertone buried in the minutes. Compared with April, there was more reference to potential AI-led productivity gains helping restrain inflation over time. That remains the central tension of the Warsh Fed: near-term data argue for hawkishness, while the structural productivity review could eventually support a more benign inflation view.For now, oil is winning that argument. The productivity story is medium term. Hormuz is today.
The ECB repricing has been even sharper. The market-implied probability of a September ECB hike has jumped back toward 90%, after falling to roughly 50% last week. The ECB’s early June hike now looks useful from a credibility perspective. It moved before the latest energy escalation, which gives it more room to claim inflation vigilance if the shock persists. China’s inflation data offered a softer counterpoint, but not enough to change the global rates story. CPI eased to 1.0% y/y in June, while PPI rose to 4.1% y/y. Energy prices are still rising significantly in annual terms, but month-on-month momentum has turned negative. Food prices are also surprisingly weak, falling 1.6% y/y. That matters because food inflation has not yet transmitted from the energy shock in the way seen during the Russia-Ukraine episode. Similar signals appeared in euro-area PPI earlier this week. For the global inflation story, that is encouraging. For today’s market, it is secondary. The marginal driver is not China CPI. It is whether Hormuz remains functional.
In the UK, the RICS survey showed the housing market still under pressure. A net -33% of agents reported lower rather than higher selling prices over the past three months. Near-term price expectations improved to -32% from -44%, but new instructions fell sharply to -23% from -10%. RICS flagged domestic political uncertainty as a new headwind. The UK housing signal is subdued rather than disorderly. Prices remain under pressure, supply is weakening, and confidence is fragile. The market is not collapsing, but it is not recovering convincingly either.
The bigger takeaway is that markets have moved from a soft-landing trade to an oil-shock trade in less than a week. The AI rally can live with earnings volatility. It can even live with some profit-taking in semiconductors. What it struggles with is a simultaneous rise in crude, rate expectations and geopolitical risk. This is the new problem for risk assets: oil is no longer helping the disinflation story. It is challenging it. The Fed minutes were already hawkish enough to keep tightening on the table, and Hormuz now gives the hawks fresh evidence. Equities may be steady, but the macro backdrop has turned materially less forgiving.
Overnight Headlines
US Military Launches Strikes On Iran For Second Straight Day
US, Iran Exchange Fire After Trump Declares Ceasefire Over
Iraq Agrees To US Demands To Halt Dollar Flows To Iran-Backed Militias
Fed Officials Flagged Risks That Would Warrant Higher Rates
Fed Minutes Show Inflation Concerns Mounted At June Meeting
Hormuz Traffic Grinds To A Near Halt As Ceasefire Comes Under Threat
China CPI Growth Weakens In June While PPI Rises On Export Orders
BoJ May Push Policy Rate Beyond 2% This Cycle, Ex-Official Says
Japan’s Five-Year Bond Sale Demand In Line With 12-Month Average
Delaying Social Security Reform Raises Risks For Bonds, Research Finds
SK Hynix US Offering Is More Than Seven Times Oversubscribed
Meta To Build First Data Center In Canada, Expanding Global Fleet
Memory Chipmaker CXMT To Launch $4.3B China IPO Next Week
Levi Raises Outlook, Dividend After Sales Outpace Expectations
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
EUR/USD: 1.1700 (EU1.19b), 1.1805 (EU945.4m), 1.1785 (EU904.5m)
USD/JPY: 163.00 ($1.94b), 160.00 ($1.5b), 158.00 ($1.18b)
USD/BRL : 5.0000 ($1.14b), 5.1100 ($590m), 5.4500 ($538.1m)
USD/CAD: 1.4200 ($795m), 1.3400 ($660m)
USD/CNY: 6.7575 ($983.8m), 6.7100 ($440m), 6.7800 ($418.3m)
AUD/USD: 0.6875 (AUD540.7m), 0.7500 (AUD422.7m), 0.7125 (AUD366.3m)
GBP/USD: 1.3320 (GBP400m), 1.2850 (GBP365m), 1.3550 (GBP330.6m)
EUR/GBP: 0.9000 (EU501.1m), 0.8745 (EU372.8m), 0.8580 (EU323.2m)
USD/KRW: 1400.00 ($535m), 1350.00 ($470.9m)
USD/MXN: 18.60 ($451.6m)
NZD/USD: 0.5650 (NZD421.9m)
CFTC Positions as of July 6
Equity fund speculators have made some notable adjustments recently, reducing their net short position on the S&P 500 CME by 7,187 contracts, bringing the total down to 348,482. Meanwhile, equity fund managers have also trimmed their net long position in the S&P 500 CME, cutting it by 8,851 contracts to a total of 979,126.
In the Treasury futures, speculators have ramped up their net short position on CBOT US 5-year Treasury futures by 19,241 contracts, now standing at 1,320,510. They have also scaled back their net short positions in CBOT US 10-year Treasury futures by 26,375 contracts, resulting in a total of 808,891. The trend continues with CBOT US 2-year Treasury futures, where speculators have trimmed their net short position by 31,265 contracts to reach 1,287,581. Additionally, the net short position in CBOT US UltraBond Treasury futures has been reduced by 31,431 contracts, now totaling 286,669. The most significant cut comes from the CBOT US Treasury bonds futures, where speculators have decreased their net short position by a whopping 85,263 contracts, leaving it at 90,780.
Bitcoin bulls are holding a net long position of 3,770 contracts.
In the currency markets, the Swiss franc has posted a net short position of -38,958 contracts, while the British pound stands at a net short position of -102,147 contracts. The euro is faring better with a net long position of 1,099 contracts, whereas the Japanese yen finds itself in a challenging spot with a net short position of -155,092 contracts.
Technical & Trade Views
SP500 - 7400 weekly bull/bear level
Daily VWAP Bullish
Weekly VWAP Bearish>Bullish
Above 7450 Target 7575
Below 7400 Target 7285
DXY - 100 weekly bull/bear level
Daily VWAP Bullish>Bearish
Weekly VWAP Bullish
Above 100 Target 102.50
Below 99.40 Target 98.40
EURUSD - 1.15 weekly bull/bear level
Daily VWAP Bearish>Bullish
Weekly VWAP Bearish
Above 1.15 Target 1.1780
Below 1.1490 Target 1.1270
GBPUSD - 1.33 weekly bull/bear level
Daily VWAP Bullish
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>Bullish
Weekly VWAP Bearish
Above 4200 Target 4500
Below 4100 Target 3569
BTCUSD - 60.5 weekly bull bear level
Daily VWAP Bearish>Bullish
Weekly VWAP Bearish
Above 67.2k Target 70.5k
Below 60.5k Target 52.2k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!