📊 Today's Numbers
Brent Crude ▼ $70/bbl: worst quarter since COVID
Fed Hike Probability (July) ▲ 36.3%: was 6.4% last week
Rate Hike by Year-End ▲ 88.2%: nearly nine-in-ten traders
USD/JPY ▲ approaching breakout: BOJ intervention risk rising
U.S. Avg. Gas Price ▼ $3.90/gal: down from $5.00+ peak
Nasdaq ▲ +1.5%: Q3 opens at all-time high
🛢️ COMMODITIES
Photo: Michael Steinberg
Brent Crude Slides Below $70, Sealing 38% Quarterly Collapse
Oil just closed the books on its ugliest quarter since the pandemic. Brent dropped below $70 a barrel as the Strait of Hormuz reopened following U.S.-Iran diplomacy, erasing the conflict premium that had drivers furious at the pump all spring. That's not a blip. A 38% quarterly decline is a structural shift in the cost-of-living picture.
Brent settled below $70/bbl, completing a 38% Q2 decline — the steepest since Q1 2020
U.S. national average gasoline fell to $3.90/gallon, down from a peak above $5.00 earlier this year
EIA inventory data today forecast a 4.8M barrel draw, which could briefly slow the slide
💬 Oil just had its worst quarter since the pandemic — and if it stays cheap, the Fed's inflation fight gets a lot easier, but Saudi Arabia's budget gets a lot tighter.
📉 BONDS
Photo: Atlantic Ambience
Fed Rate-Hike Odds Surge to 36% After Hawkish June Dot Plot
Two weeks ago, markets priced roughly a 6% chance the Fed hikes in July. Today it's 36%. That's not a drift — that's a whipsaw, and it came straight from the June dot plot, where 17 of 18 FOMC members submitted forecasts showing hikes ahead. Fed Chair Kevin Warsh, who notably declined to add his dot, speaks at an ECB symposium in Portugal today. Whatever he says will either calm this or pour fuel on it.
The wild card is that Brent crude's collapse offers a genuine disinflation argument. But May PCE just came in at a multi-year high, and the hawkish camp has the data on its side right now.
July hike probability jumped to 36.3% from 6.4% in one week, driven by the June 17 FOMC dot plot
88.2% of futures now price at least one hike before year-end, up from 57.1%
A rate hike would push 30-year fixed mortgage rates potentially above 7.50%, squeezing buyers and HELOC holders alike
💬 Almost nine in ten traders now think the Fed will raise rates at least once before New Year — which means your mortgage rate might be about to get more expensive, not less.
💱 CURRENCIES
Photo: Pixabay
Japan's BOJ Holds at 1.00% as Fed Divergence Pushes Yen Lower
Japan's rates are at their highest since 1995. The yen is still falling. That tells you something. The BOJ voted 7-to-1 to hold at 1.00% this week, and that decision makes total sense in isolation. The problem is the U.S. side of the equation. With Fed hike odds spiking, the interest-rate gap between Washington and Tokyo is widening again, and carry traders are piling back in. USD/JPY is approaching a technical level that, historically, gets the BOJ reaching for its intervention tools.
Brent crude's collapse is genuinely helpful here. Japan imports almost all its energy, so cheaper oil eases the inflation pressure that's been running above the 2% target since the pandemic. If oil holds below $70, the BOJ might get some breathing room in Q3.
BOJ held at 1.00% in a 7-to-1 vote — the highest benchmark rate since 1995
USD/JPY approaching a key technical breakout level as the U.S.-Japan rate gap widens further
A weaker yen raises import costs for Japanese households and can ripple into global equity volatility via carry-trade unwinds
💬 Japan's interest rates are at their highest since 1995, yet the yen is still weakening — because the U.S. is threatening to raise rates even faster, making every other currency look cheap by comparison.
📰 Also Today
U.S. Stocks Hit Q3-Open Records as Nasdaq Surges 1.5%: The Nasdaq hit a new all-time high on Q3's first session and the S&P 500 rose 0.8% to a record close above JPMorgan's 7,800 year-end target, led by AI semiconductor names with falling oil prices reducing inflation fears.
ISM Manufacturing PMI for June Released: Factory Expansion Continues: June consensus was 53.7, marking a sixth straight month of U.S. factory expansion — but the ISM Prices Paid sub-index sat at 82.1 in May, meaning the factory sector is growing and still passing costs along to consumers.
Bitcoin Drops Below $59K as Stablecoin Oversight Fears Grip Crypto: Bitcoin fell below $59,000 as California's crypto registration deadline hit today and federal GENIUS Act rules loom on July 18, pushing the Fear & Greed Index to Extreme Fear — Ethereum is down nearly 68% from its 2025 peak.
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Not investment advice. For informational purposes only.