Per your weekly macro roundup below, markets are pricing up the odds of a Fed response to the latest upward pressures on inflation.
Fed funds futures are currently discounting a 100% chance of a hike at the September meeting, and a 76% chance of yet another one by year-end:
US bombing in Iran paused because Omani officials visited Tehran Friday for talks - CBS News reports citing sources
Iran will stop attacks if US keeps recent pause - Senior Iranian source
US ambassador to UN Mike Waltz: Donald Trump is giving Iran negotiations 'some space'
And oil is responding accordingly:
Next week will be interesting/telling, as it'll be robust with data, central bank commentary, and corporate earnings announcements.
In the meantime, here's the summary of our latest PWA Index scoring, followed by last week's macro rundown*:
When the Scoreboard Doesn't Move, Look at the Scorers*
Week of July 20, 2026
For the fifth consecutive week, our internal conditions gauge finished essentially unchanged, sitting right at its neutral line. If you only watched the headline number, you would conclude that very little happened over the past month.
Quite a lot happened.
A reading of zero can mean two very different things. It can mean the economy is genuinely settled — few forces pulling in either direction, conditions broadly stable. Or it can mean two powerful and opposing forces have fought to a draw, with the number telling you nothing about how hard either one is pushing. The past five weeks have been firmly the second kind, and this week the two sides moved further apart than at any point in the stretch.
What the strong side looks like
The labor market delivered the single most striking data point of the year. New claims for unemployment insurance fell to their lowest level since September of 1969 — not a typo, and not a figure that appears in an economy under stress. Continuing claims remain historically low, and the trend across the survey period used for the monthly employment report points toward a firmer July than June.
Business activity surveys told a similar story. A closely watched composite measure of manufacturing and services activity reached an eight-month high, led by a notable jump in the services side. A national index measuring economic activity against its long-run trend returned to essentially neutral for the first time in months. And economic data releases continued to come in ahead of forecasts more often than behind them.
Housing offered a modest positive as well: new home sales rose in June and beat expectations, though builders continue to move inventory largely through price reductions and incentives, which tempers how much to read into it.
What the weak side looks like
Energy is where the pressure sits. The conflict affecting Middle East shipping widened this week from one disrupted corridor to three, as attacks extended to a second waterway and a separate pipeline route suspended loadings. Crude prices rose sharply, briefly trading above a level not seen in this cycle. A broad commodity index has now advanced for three consecutive weeks, cumulatively by a meaningful margin — and the strength is not confined to energy, with industrial metals and agricultural products both contributing.
Interest rates responded accordingly. Yields on both short- and long-dated government bonds rose, with the ten-year touching an eighteen-month high midweek. Market-implied odds of the Federal Reserve raising rates rather than cutting them climbed substantially for the autumn.
An unusual divergence
Here is the week's genuine curiosity. Given everything above, you would reasonably expect the market's own forecast of future inflation to be climbing. It did the opposite. The instruments investors use to price expected inflation over the next several years moved lower this week, with the shortest-dated measure posting its largest weekly decline of the year. Longer-dated measures sat perfectly still.
So the market simultaneously priced more central bank tightening and less future inflation. That combination is unusual enough to be worth sitting with, and thoughtful investors are reading it in more than one way. Marty takes up the question directly in his introduction above, and we would point you there rather than duplicate it.
What we will say is that these are live prices rather than survey responses — they mark events as they happen, with no collection lag, which is why they carry real weight in our framework. We would also note that measures like this can be volatile from week to week, and that a single week's move is information rather than conclusion.
Our own expectation has not changed: we think inflation runs structurally higher in the years ahead than it did in the last cycle, and we do not see the economic slowdown that would be required to bring it down. More on that below.
The consumer is thinning
Separate from any of the above, and not dependent on how you read it, something is happening to the household.
Consumer discretionary companies — retailers, restaurants, travel, the businesses households patronize when they feel comfortable — suffered their sharpest relative decline of the year against the broad market. The gap between defensive consumer staples and discretionary widened to a new extreme for the year, and notably, it widened because discretionary fell rather than because staples rallied. That distinction matters. The first is investors rotating toward safety. The second is the underlying business softening.
A weekly measure of same-store retail sales confirmed it independently, decelerating for a third straight week. And because that figure is measured in dollars rather than units, rising fuel prices are flattering it — meaning the real underlying decline is steeper than it appears.
Three separate measures, none of them survey-based, none subject to the timing problems we describe next, arriving at the same conclusion. Set against a savings rate near historic lows and debt service at elevated levels, it describes a household with a thin cushion heading into higher energy costs.
We would stop short of calling this the beginning of a broad slowdown. Claims at a fifty-seven-year low is not a labor market rolling over, and the household has absorbed more than one shock in this cycle that looked, in the moment, like the one that would break it.
A note on survey timing
We have spent several weeks cautioning that much of the encouraging inflation data described a world that predated the July resumption of hostilities. That caution remains warranted and, if anything, has grown more pressing.
The consumer sentiment survey showing improving inflation expectations was conducted with the large majority of its interviews completed before the escalation. A separate survey of business cost expectations was fielded in early July, capturing the very beginning of the disruption and none of the subsequent move in energy prices. Both are measuring conditions that no longer exist. The final sentiment reading at month-end will be the first to absorb what actually happened, and we would not be surprised to see it reverse.
This is worth holding onto as the next several weeks of data arrive. A good deal of what will be reported as current still describes a period before energy prices moved.
Positioning
We have made no changes to portfolio construction this week.
Our strategy reflects our view that government deficits will remain large enough to keep fiscal policy stimulative regardless of the economic cycle, a central bank we expect to lean accommodative when tested, and inflation that consequently settles at a structurally higher level than investors grew accustomed to in the decade before the pandemic. That view leads us to hold real assets and energy-linked exposures as durable allocations rather than tactical trades, to maintain meaningful exposure outside the United States, and to treat the household balance sheet as thinner than headline spending figures suggest.
We would offer one observation for context. Precious metals rose this week despite rising real interest rates — a combination that has not held in recent months, and one that historically signals investors beginning to focus on government borrowing and debt service rather than on inflation or geopolitics alone. One week is not a trend. But it is the kind of development we watch closely, because it speaks to the durability of themes that sit at the center of how these portfolios are built.
Looking ahead
The coming week is the most consequential of the quarter. A Federal Reserve decision, a Bank of Japan decision, the first estimate of second-quarter economic growth, the monthly inflation measure the Fed watches most closely, employment cost data, and the final consumer sentiment reading all land within four days of each other. Any one of them could resolve the tension described above. Together, they will tell us a great deal.
The views expressed are those of Private Wealth Advisors as of the date indicated and are subject to change without notice. This material is provided for informational purposes only and does not constitute investment, tax, or legal advice, nor a recommendation to buy or sell any security. Market conditions referenced reflect information available at the time of writing. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal. Diversification does not ensure a profit or protect against loss in declining markets.
*The section titled "When the Scoreboard Doesn't Move, Look at the Scorers" was prepared with the assistance of artificial intelligence tools and was reviewed, edited, and approved prior to publication by Marty Mazorra, Chief Investment Officer of Private Wealth Advisors.
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