Daily Market Outlook, July 15, 2026

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — CPI Cools, Chips Catch Fire

Markets were braced for Hormuz to hijack sentiment and got handed a CPI lifeline. A softer-than-expected US inflation print has taken some of the heat out of Fed hike pricing, revived the AI dip-buying machine and sent Asian tech ripping higher. But this is not a clean “all-clear” rally: Brent is still sitting above $85/bbl, the Strait of Hormuz blockade is live, and pump-price inflation risk remains the spoiler lurking behind yesterday’s benign data.

The immediate equity reaction was emphatic. The MSCI Asia Pacific Index rose 2%, its best day in a month, while South Korea’s Kospi surged 7%, reclaiming its spot as the top-performing major equity index globally this year. The rebound was led by the part of the market that has become both the growth engine and the volatility amplifier: semiconductors. SK Hynix jumped 11% in Seoul, with its US-listed ADRs continuing to command extraordinary investor attention after their debut. The ADRs now trade at a premium of more than 50% to the Seoul line, a striking signal of how aggressively global investors are trying to access AI-linked chip exposure. The premium is not just enthusiasm; it is scarcity pricing for the AI hardware trade. Still, the rally needs context. Even after today’s near 7% bounce, the Kospi remains more than 20% below its June peak. That makes this a powerful relief rally, not yet a full repair job. The AI bid is alive, but it is recovering from a heavy drawdown and still depends on a friendlier rates backdrop staying intact.The CPI print delivered that friendlier backdrop. US headline CPI fell 0.4% m/m, a downside surprise of 0.3ppts and the largest miss of that scale since March 2013. Annual headline inflation slowed to 3.5% y/y from 4.2%. Core inflation also undershot, easing to 2.6% y/y, a 0.3ppt decline after a 0.2ppt miss versus consensus. That was enough to take roughly half a 25bp hike out of market-implied Fed pricing by year-end. But the market has not abandoned the tightening story. Just over 30bps of tightening is still priced by December, which says investors are relieved, not convinced. The Fed hike debate has cooled; it has not been cancelled. The reason is oil. Brent is little changed from yesterday morning at just over $85/bbl, despite Trump dropping Monday’s proposed 20% levy on non-Iranian cargo moving through the Strait of Hormuz. The blockade on Iranian ships has started, and US strikes on Iran continue. That leaves markets with a softer backward-looking CPI print sitting uncomfortably beside a forward-looking energy shock.

Absent the renewed Middle East escalation, yesterday’s CPI would likely have triggered a more aggressive rates rally and a cleaner removal of Fed hike risk. Instead, investors have to ask whether May marked the inflation peak or whether the latest oil spike will rebuild pressure through gasoline, diesel and inflation expectations. That pump-price channel matters. Inflation expectations are closely tied to visible fuel costs, and refined product markets are tight. Gasoline and diesel markets in both the US and Europe are flashing record tightness, raising the risk that consumers face another squeeze at the pump even if crude itself stops rising. For central banks, that is the awkward part: expectations can move on retail fuel prices faster than policy can do anything useful about supply. The Dollar softened against most G10 currencies as rate-hike expectations were trimmed. Gold slipped 0.6% to around $4,030/oz, giving back some of Tuesday’s gains as risk appetite improved and real-rate fears eased. The move in bullion is telling: this is not a classic haven tape today. It is a relief rally built on lower inflation and renewed appetite for duration-sensitive growth.

China offered a mixed macro read. June retail sales unexpectedly rose 1.0% y/y, compared with expectations for a small decline, while industrial production rose 5.3% y/y, also ahead of forecasts. The urban unemployment rate eased to 5.0% from 5.1%. On the surface, that is constructive. The GDP detail was less flattering. Q2 growth disappointed at 4.3% y/y, missing expectations by 0.2ppts and sitting below the official 4.5%–5.0% annual growth target range. The weak spot was investment, where a steeper-than-expected contraction dragged on the headline. A shift away from excess capital formation toward consumption would be healthier in the long run, but the near-term optics are poor enough to keep stimulus expectations alive. That China mix is important for global markets. Stronger retail sales and production suggest the economy is not rolling over, but weaker GDP and investment keep Beijing under pressure to do more. For commodity markets, that combination is ambiguous: softer investment weighs on industrial demand, while policy stimulus hopes can quickly revive cyclical appetite.

In the UK, the Mansion House speeches were more notable for what they avoided than what they revealed. With a change of prime minister expected next week, Chancellor Reeves largely reflected on her tenure and reiterated familiar themes, including devolution and closer cooperation with the EU. The speech was more political handover than fresh fiscal signal. Governor Bailey also stayed away from near-term monetary policy guidance. His focus was on the Bank of England’s role in getting regulation right to support growth, with references to technology, bank capital and payments innovation. That fits the broader UK policy mood: improve market plumbing, support competitiveness and avoid overreading every energy shock as a reason to tighten.

Warsh’s testimony was similarly light on near-term policy commitments. That should not surprise anyone. With CPI soft but oil high, the Fed Chair had every incentive to preserve optionality. Attempts to extract a precise July signal were always likely to be overengineered. The more important Warsh story remains structural. The productivity taskforce is likely to deliver a more constructive view of the supply side, particularly around AI and general-purpose technology. If that framework gains traction, it gives the Fed intellectual room to argue that stronger investment and output need not translate one-for-one into inflation. In other words, AI may not just be an equity story; it may become part of the Fed’s inflation story. That is why today’s rally has broader significance. The market is not only buying a softer CPI print. It is buying the idea that AI-led growth can coexist with a less punitive Fed. That is the sweet spot for tech: strong earnings expectations, lower implied tightening, and a central bank increasingly willing to examine productivity upside. But the margin for error remains thin. Oil above $85/bbl keeps headline inflation risk alive. Hormuz keeps geopolitical risk live. Tight refined product markets keep the pump-price channel active. And more than 30bps of Fed tightening is still priced by year-end, even after the CPI miss.

The market message: yesterday’s CPI gave risk assets oxygen, and Asia used it to reignite the AI trade. But this is a rally with a fuel warning light still blinking. If crude oil stabilises, the softer inflation data can keep pulling hike risk out of the curve and help tech extend. If energy climbs again, CPI relief will start to look like a rear-view mirror comfort in a forward-looking oil shock.

Overnight Headlines

BoC Set To Hold As Middle East Conflict Revives Inflation Risks
Trump Held Situation Room Meeting On Massive New Iran Strikes
Trump Says US To Abandon Proposed Strait Of Hormuz Cargo Fee
US Backs Iraq-Syria Oil Pipeline To Weaken Iran’s Hormuz Hold
New Russia Oil Sanctions Bill Targets China, India For Tariffs
Bond Traders Ditch July Rate-Hike Bets On Surprise Inflation Dip
Warsh Tells Congress The Fed Has ‘No Tolerance’ For High Inflation
Bank Of England’s Bailey Pushes Back Against Deregulation
BoE Governor Urges UK Growth Push In Direct Appeal To Burnham
UK PM Starmer Nears Exit With Record That Failed By His Own Metrics
Ukraine To Buy Chinese Drone Parts With EU Funds
China’s GDP Growth Unexpectedly Dips Below Official Target Range
China Slashes Oil Refining Volumes After Crude Imports Collapse
Japan Manufacturers Stay Upbeat On Chip Demand, Services Hit By Costs
Rio Tinto Iron Ore Shipments Rise; Copper Cost Guidance Lowered

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD: 1.1380 (EU1.38b), 1.1500 (EU1.27b), 1.1650 (EU797.3m)
USD/JPY: 160.50 ($1.91b), 162.00 ($857.4m), 155.85 ($620m)
GBP/USD: 1.2900 (GBP1.01b), 1.3400 (GBP639.6m), 1.2750 (GBP587.9m)
EUR/GBP: 0.9000 (EU913.1m), 0.8530 (EU332.4m), 0.8730 (EU302.4m)
AUD/USD: 0.6900 (AUD1.22b), 0.5825 (AUD450m), 0.6500 (AUD398.5m)
USD/KRW: 1550.00 ($555.4m)
NZD/USD: 0.5770 (NZD388.8m)

CFTC Positions as of July 10

Equity fund speculators raised their net short position in the S&P 500 CME by 4,100 contracts to 352,582, while fund managers decreased their net long position by 7,794 contracts to 971,333.
Speculators also increased their net short positions in various Treasury futures: CBOT US 5-year by 38,606 contracts to 1,359,116, CBOT US 10-year by 5,371 contracts to 814,262, and CBOT US UltraBond by 21,150 contracts to 307,819. They reduced the net short position in CBOT US 2-year futures by 26,573 contracts to 1,261,008 and increased the net short position in Treasury bonds by 52,811 contracts to 143,591.
Bitcoin's net long position stands at 3,500 contracts. The Swiss franc, British pound, euro, and Japanese yen have net short positions of -37,414, -87,903, -16,227, and -123,778 contracts, respectively.

Technical & Trade Views

'Yesterday's session was positive, with a softer CPI reducing Fed risks and strong bank earnings boosting momentum, particularly in the NDX. The market stayed above the crucial short-term CTA pivot, with an implied range of 7,477–7,609 for the S&P. However, caution remains due to thin volumes, poor liquidity, rising oil prices, negative earnings in software and healthcare, and mixed bank performance. The outlook is constructive above 7,477, especially above 7,427, but with low VIX and the earnings season underway, inexpensive index protection is advisable'

SP500 - 7500 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 7500 Target 7619
Below 7490 Target 7390

DXY - 100 weekly bull/bear level

Daily VWAP Bearish
Weekly VWAP Bullish
Above 100 Target 102.50
Below 99.40 Target 98.40

EURUSD - 1.15 weekly bull/bear level

Daily VWAP 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
Weekly VWAP Bearish
Above 4200 Target 4500
Below 4100 Target 3569

BTCUSD - 60.5 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bearish>Bullish
Above 67.2k Target 70.5k
Below 60.5k Target 52.2k