WTI Jumps To 41-Day High North of $88, But Stock Investors Buy the Dip Anyway: July 22, 2026

Heightening Middle East tensions and the associated lift in oil prices have done little to derail stock market enthusiasm this week, even as WTI jumped to a 41-day high today of almost $89. A lack of light at the end of the geopolitical tunnel and climbing inflation expectations, meanwhile, have the 2-year yield trading at 4.31%, its heaviest level going back to early 2025, as fixed-income watchers price in a 76% chance of the Fed kick-starting a hiking cycle this September. But the Treasury curve is rising in bear-flattening fashion led by the shorter maturities, as holders of duration increasingly consider scenarios in which rate increases and burdensome energy charges slow economic growth. Furthermore, these investors are assessing how stringent the central bank can be without raising recession risk, as an inversion in the government debt complex is certainly on the cards in the next few months. Similarly, the greenback is not appreciating, which is unusual during a session where domestic credit is more costly. Worries that tighter financial conditions could drive a deceleration in activity are holding the dollar steady. Nonetheless, stocks are doing just fine, as traders bought the morning dip and tossed hedges, bringing every sector and major benchmark into the green except the small-cap Russell 2000, which suffers disproportionately from macro shocks, restrictive policy and elevated costs of capital. Elsewhere, commodities are advancing broadly.

Mag7 Earnings Could Offset Geopolitical Worries

With the beginning of Mag7 earnings hitting the wire after the bell, many investors haven’t heavily sold big-tech names in case the reports reflect buoyant returns from massive AI capital expenditures. It’s precisely that optimistic scenario that can lead Wall Street to look past geopolitical tensions, heavier inflation expectations and rate hikes, as robust profitability across corporate America could trump those risks. But numbers that signal an incoming slowdown could spark volatility as we enter an unfriendly seasonal period for equities, offering an incentive for participants to lock in the elevated coupons of the day in the Treasury complex. Additionally, anecdotal evidence suggests that modest tariff headwinds could begin to increasingly become part of the economic narrative, which on its own wouldn’t move the needle much since the duties are expected to be subdued on relative basis, however, when potentially combined with Middle East violence, accelerating cost pressures, tighter financial conditions and waning enthusiasm for chipmakers and growth stocks, they warrant a healthy amount of caution.

International Roundup

Yen Weakness and Pricey Oil Cause Japan’s Trade Deficit to Widen

Japan reduced its volume of oil imports during June, but the higher price of the commodity resulted in more yens spent on the energy product, which in turn contributed to Japan’s trade deficit widening. For the month, imports exceeded exports by ¥406.9 billion, or roughly $2.5 billion, an expansion from ¥391.8 billion in the preceding month. Japan is a heavy oil importer. As such, the elevated stickers for the product along with a weak yen caused the value of June imports to climb 25.4% year over year (y/y), which surpassed the economist consensus estimate of 21% and was up substantially from 12.5% in May. Meanwhile, strengthening demand for AI products helped the growth of exports accelerate from 16.8% in May to 19.3%, which exceeded the economist consensus estimate of 18.6% but fell short of preventing the deficit from expanding. The Bank of Japan’s ultralow 1% key interest rate has weighed on the yen’s exchange rate. Additionally, oil is traded in the US dollar, which has caused both demand and the exchange rate for the greenback to climb as oil prices have surged.

South Korea PPI Depicts Steady Wholesale Prices Compared to May

The South Korea Producer Price Index (PPI) showed wholesalers made no changes in their stickers in June when compared to the preceding month while the y/y print matched May’s 8.6% growth rate, according to the Bank of Korea. The m/m headline eased from May’s 1% jump. It was tamed by the 0.3% drop in the broad manufacturing products category. Within this classification, the coal products and petroleum group and the chemical products segment experienced 5.3% and 1.8% price declines. The electric power, gas, water and waste group, however, became 1% more expensive. It was followed by the 0.7% increase for agricultural, forest and marine products and the 0.2% ascent of services.

UK Consumer Price Pressures Ease

The UK Consumer Price Index climbed 0.1% and 2.6% m/m and y/y in June, cooling slightly from 0.2% and 2.8% m/m and y/y results in May, according to the Office for National Statistics. The m/m headline matched the economist consensus estimate while the annualized report fell short of the 2.7% projection. When including owner-occupied housing, the resulting CPIH slowed from the 0.3% m/m and 3% y/y results in May to 0.2% and 2.8%, respectively. The Core CPI, which excludes energy and food, was unchanged from May’s 0.3% m/m and 2.6% y/y results. Additionally, the 2.6% print exceeded the economist consensus estimate of 2.5%.

Within the m/m CPIH, the following items posted the stated increases:

• Restaurants and hotels, 1%
• Recreation and culture, 0.5%
• Health, 0.4%
• Owner occupiers housing services, 0.3%
• Furniture and household goods, 0.3%
• Miscellaneous goods and services, 0.2%
• Alcohol and tobacco, 0.1%

Conversely, clothing and footwear slipped 1.2% and transport dropped 0.3%. Food and non-alcoholic beverages also sank 0.3%

UK Producers Input Prices Up 7.3%

UK businesses contended with a 7.3% y/y jump in input prices during June, a deceleration from May’s 9.3% hike, according to the Producer Prince Index. With easing energy costs, however, prices were down 2% m/m after climbing 0.6% in May. Economists anticipated a drop of only 0.7%. Despite the monthly easing of energy costs, businesses still paid 42.3% more for oil than in the year-ago period.

And Gate Prices Are Mixed

UK businesses in June increased their selling prices 3.5% y/y after the 3.7% y/y jump in May. Prices were unchanged m/m after climbing 0.3% m/m in May. Economists anticipated a 0.1% decline in June.