The Daily Steep ☕ - Friday, July 24
Brent at $100 and 187,000 jobless claims put a Fed hike back on the table
The Quick Shot
Brent surged past $100 for the first time since May after Houthi strikes on two Saudi tankers, and the bond market answered: 2y 4.37%, 10y around 4.70%, 30y touching 5.19%, just shy of its highest since 2007.
Initial claims fell 22,000 to 187,000, the lowest since 1969, against a 210,000 consensus. The labor market is not going to rescue duration.
Alphabet lifted 2026 capex guidance to $195–205 billion from $180–190 billion and the Nasdaq lost 2.15%. AI spending has become a rates story.
The Macro Brew
The energy shock did the damage. Houthi militants claimed drone and missile attacks on two Saudi tankers for violating their maritime blockade, hours after Trump warned the US would hit an Iranian bridge or power plant for every vessel struck in the Strait of Hormuz. Kazakhstan suspending crude exports through the Caspian Pipeline Consortium terminal after drone attacks tightened the supply picture further. Brent futures are up more than 13% on the week with WTI near $91.
The ECB gave Europe no cover. Lagarde held all three policy rates on July 23, leaving the deposit rate at 2.25% after June’s 25bp hike, the first since 2023. The decision was unanimous, though some governors openly asked whether more tightening was warranted, and markets now expect a hike at the September 10 meeting. The 10-year Bund closed at 3.20%, the highest in more than fifteen years, with money markets pricing at least two more hikes by year-end. The DAX fell 1.56%.
Washington added a second inflation input overnight. The administration imposed new tariffs of 10% and 12.5% on goods from roughly 60 countries, effective this morning, with Switzerland already rejecting the allegations behind them.
Rates & Credit
The 10-year has now risen for four consecutive sessions to its highest level since January 2025, and the whole move is being driven by the front end reassessing policy rather than by term premium alone. Kalshi odds on a September quarter-point increase hit 48% midday Thursday, up from around 30% a week ago, while other measures put the September probability far higher, above 78%, and next week’s meeting near a third. The funds target sits at 3.50–3.75%, with the June SEP median already implying room for one more increase this year.
Two things worth watching under the surface. TLT is roughly 3% from the lowest price in its history, per Barchart. And Japan’s 2-year yield hit its highest level in more than thirty years, which matters because André Dragosch made the mechanical point: a higher oil import bill can force large foreign holders like Japan to sell Treasuries to fund it. That is a flow story layered on top of a policy story.
The Onchain Pour
Crypto sat out the drama. Bitcoin traded around $65,800, down 0.4% on the day, with ETH near $1,900. Flows split: BTC spot ETFs saw $225 million of net outflows on July 23 while ETH spot ETFs took in $26 million. River data circulating shows businesses added 115,000 BTC in Q2 while individuals sold 78,000, which is the clearest picture yet of who is absorbing supply in a drawdown.
On the policy side, Senate Republicans released an updated CLARITY Act and Democrats immediately dismissed the ethics provisions, so the pre-recess timeline looks strained. More consequential: Ondo Finance’s broker-dealer subsidiary Oasis Pro Markets secured SEC and FINRA authorization to offer tokenized equities and funds to US investors. Prediction markets, meanwhile, put only 25% odds on 2026 inflation topping 4.5%, which sits oddly against a bond market pricing hikes.
Number of the Day
187,000. Initial claims for the week of July 12–18, the lowest since the week ending September 6, 1969, when the count was 182,000. Continuing claims were little changed at 1.8 million. Every hawkish repricing this week rests on that number: with layoffs this muted, the Fed has no employment argument for absorbing an oil shock, and last month’s labor force exits mean the print may flatter the underlying picture.
Last Drop
Flash PMIs run all morning: France 09:15 CET, Germany 09:30, eurozone 10:00, UK 10:30, US 15:45. June left a three-way split at US 51.9, eurozone 50.0 and UK 49.3. US new home sales at 16:00 CET. Already out: UK retail sales volumes rose 1.0% in June, German consumer sentiment set to dip into August, and Japanese manufacturing output rising at its fastest rate in the July flash.
Today marks six days to the FOMC. A hawkish surprise next Wednesday would be the first real stress test of a Treasury structure that has to roll roughly a third of its marketable debt inside twelve months.