Weekly Macro Report, July 12 2026

The S&P 500 gained 11.4% year-to-date through July 10, signaling strong market momentum. US Real GDP expanded 2.1% annually in Q1 2026, while the Fed Funds Effective Rate sits at 3.62%. Federal funds futures imply the rate will rise about 30 basis points to 4% by year-end 2026, suggesting the Fed views inflation as sticky despite solid growth, potentially capping near-term employment gains and price stability.

The U.S. labor market weakened significantly in June 2026, with nonfarm payrolls up only 57,000 and prior months revised down by 74,000 jobs, while the unemployment rate held at 4.2% amid falling labor force participation. These indicators of stalled hiring and rising long-term unemployment point to a cooling economy that elevates the likelihood of a Federal Reserve rate cut at the September meeting. Futures traders now see a 75% probability of a cut from the current 4.25%-4.50% range as policymakers respond to the slowdown.

As of July 10, 2026, the 10-year Treasury yield rose to 4.56%, while BBB corporate yields ticked down slightly to 5.45% and 30-year mortgage rates climbed to 6.57%. These movements sustain elevated borrowing costs for businesses and homebuyers, dampening affordability while offering bond investors higher nominal returns. Households face tighter budget constraints as mortgage payments on a $400,000 loan reach $2,547 monthly, reinforcing pressure on housing demand despite recent supply gains.

As of July 10, 2026, the 10-Year to 2-Year US Yield Curve spread is positive at 0.47%, while the 10-Year TIPS Real Yield sits at 2.31%, signaling solid economic growth expectations. US Credit Spreads remain tight near 0.74%, confirming strong investor risk appetite and reinforcing confidence in the current economic outlook.

As of May 2026, U.S. headline CPI hit 4.2% annually, driven by energy prices surging 23.5% year-over-year, while core CPI rose 2.9%. The Producer Price Index, which often leads CPI, accelerated to 6.5% year-over-year in May, signaling elevated upstream costs. The 10-year breakeven rate, signifying expected inflation priced into TIPS bonds, stood at 2.24% as of July 10, 2026, indicating anchored long-term expectations despite recent price spikes.

US M2 money supply grew 5.58% year-over-year in May 2026, while CPI inflation rose 4.2% over the same period. This liquidity growth exceeds the 2.1% real GDP forecast, signaling inflationary conditions driven by a less restrictive Fed stance and sharp 23.5% energy price increases. Broad bank credit remains the primary M2 driver as the money supply hit $23.05 trillion.

June 2026 University of Michigan Consumer Sentiment rebounded to 49.5 from May’s record low of 44.8, while the Expectations gauge rose to 50.7, creating a positive 1.2-point spread. This unexpected positive gap contrasts with the typical negative spread, yet both household and bond market signals currently reflect cautious optimism amid moderating gas prices. The US Yield Curve (10-2 year) remains positive at 0.35% as of July 10, 2026, aligning with the improved sentiment spread and signaling tempered confidence in near-term growth.

In June 2026, median existing-home prices rose 1.8% to $440,600 while sales fell 2.4% month-over-month yet climbed 2.8% year-over-year. Inventory dipped 0.6% from May to 1.56 million units, representing a 4.6-month supply, as mortgage rates averaged 6.43%. This mix of rising prices, slightly contracting sales, and modest inventory signals a still-tight supply-demand balance that continues to strain affordability despite marginal gains for first-time buyers.

No recent weekly performance data for the 11 GICS US sector ETFs is available in the provided search results to identify current leaders or laggards as of July 2026. The only recent directional data shows Health Care leading at +3.16% while Industrials lagged at -1.53% on the day reported, driven by AI infrastructure spending and defense demand for Industrials [7][10]. Without specific dates or weekly percentage changes for all sectors, a complete leading/lagging analysis with driving stocks cannot be constructed.

US equity valuations remain historically elevated as of July 2026, with the S&P 500 PE at 32.6 and the Shiller PE at 42.2. The Buffett Indicator sits at 219%, signaling a market 2.1 standard deviations above its trend. This premium to global peers, who trade at roughly a 36% discount on forward P/E, stems primarily from mega-cap technology dominance and AI-driven earnings optimism that have outpaced GDP growth.

As of July 9, 2026, the VIX closed at 15.84, declining 5.1% from the prior week’s higher levels. Momentum and Growth factors led Q1 2026 returns, while Value and Small Cap remain attractively positioned for potential rotation. These moves suggest a market environment of reduced fear, renewed confidence in growth stocks, and emerging opportunities in defensive and smaller-cap segments.

Global equities diverged sharply in Q2 2025, with US stocks surging 10.9% while China’s CSI 300 remained near 3,335 points by late March, reflecting a 1-year gain of 30.3% as of June 2026. Germany’s DAX reached a record 24,340 in early June 2025, then climbed to 25,067 by July 2026, underscoring sustained European strength amid US trade volatility. The rotation favors large-cap tech and industrials outside China, signaling a shift toward resilience in developed markets.

Silver surged 149% year-to-date in 2025, reaching $84.3 per ounce by December, driven by a fifth consecutive year of supply deficits and soaring demand from solar panel and AI infrastructure manufacturers[9][11]. Gold gained 65% over the same period, hitting $4,538.35 per ounce as investors flocked to safe-haven assets amid Trump’s fresh tariff declarations and rising U.S.–Iran tensions[8][11].

Bitcoin trades near $64,000 on July 11, 2026, while Ethereum holds around $1,790, reflecting a total crypto market cap of $2.3 trillion down 47% from the October 2025 peak[1][4]. Bitcoin dominance sits at 55.5% as the market stabilizes after its worst half-year, pinned between $58,000 support and $63,800 resistance pending the July 28–29 Fed meeting[1][4]. Fundamental trends show a shift from hype to utility, with AI integration in operations and stablecoins becoming business payment infrastructure driving the 2026 landscape[22].

The US dollar strengthened during the week ending July 10, with EUR/USD slipping to 1.13 and USD/JPY rising to 161.54, driven by hawkish Fed expectations and AI-driven equity inflows [3][4][11]. The Euro weakened to 0.608 AUD, the Pound to 0.518 AUD, and the Yen to 112.3 AUD per unit, while the Yuan held stable at 4.71 AUD, reflecting policy support [1]. This shift redirected capital flows toward US assets, pressured commodity currencies like the AUD and NZD, and complicated global trade dynamics as markets await Q2 GDP data.

As of Q1 2026, U.S. federal debt stands at 123% of GDP, while household debt is 60.3%, with corporate debt data unavailable for direct current U.S. comparison. This sovereign level exceeds the Euro Area’s 80% and China’s 88% but remains below Japan’s 237%. The primary risk is escalating interest costs, projected to average 12% of revenues by 2030, forcing policymakers toward fiscal consolidation and signaling higher volatility for investors adjusting long-term rate expectations.

In the month ahead, the August 12 CPI release is critical; a reading above 2.9% year-over-year could force the Fed to hold the federal funds rate at 3.5%-3.75% instead of cutting. The August 7 Employment Report will test labor market strength, with weakness potentially supporting a quarter-point cut to 3.25%-3.50% in September. Finally, the September 16 FOMC decision will weigh these data points to determine if inflation remains elevated relative to the 2% target.