📊 Investment Committee Briefing - July 10, 2026 - Tactical Horizon: 3–6 Months | Senior Macro Strategies

🗂 MACRO CONTEXT

Fed Funds Rate -  3.50–3.75% (4 consecutive holds)                

FOMC Split - 9 hike / 8 hold / 1 cut (Warsh withheld his dot)

CPI May YoY - ~4.0%+ (tariffs + Iran war energy)              

Core PCE (May) - ~4.0% YoY (+0.4% MoM)                          

GDP Q1 2026 (Final) - +2.1% SAAR                                      

Full Year 2026 GDP - ~2.0% consensus                                 

10Y Treasury - ~4.56–4.57%                                     

30Y Treasury - ~5.06% (breached 5% this week)                  

S&P 500 - ~7,544 (+10% YTD through Q2)                    

S&P Fwd P/E - 20.4x (10Y avg: 19.0x)                          

CY26 EPS Growth - +24.1% / $340/share (GS target: 8,000)          

HY Credit Spread - ~267–275 bps (historically tight)               

WTI Crude - ~$72–77/bbl (Iran shock spike)                  

🔥 This Week's Events:

• Jul 7- 8: US military strikes on Iran; oil surged; chips/equities sold off

• Jul 8: FOMC minutes confirmed hawkish 9-dot split; Warsh's silence noted

• Jul 10: 30Y above 5%; 10Y at 4.56%; equities stabilizing into weekend

• Jul 14 (next week): June CPI print - the key risk event

 

1 - INTEREST RATES: 📈 SLIGHTLY HIGHER

With 9/18 FOMC members projecting a hike, core PCE at 4.0%, and Chair Warsh withholding his own dot (optionality, not dovishness), the vector is up. The Iran oil shock hits right before June CPI on July 14. Markets pricing ~25% July hike probability - too low. 30Y breaking 5% is a fiscal-inflation premium re-rating. Fed holds July 28–29, but September is live.

❌ View breaks if: June CPI ≤3.5% or severe market dislocation forces dovish pivot (20% prob)

🎯 Trade: Short 2Y Treasuries / SOFR Dec '26 puts - fade remaining cut pricing in front end

 

2 - INFLATION EXPECTATIONS: 🔴 RISING

Not a close call. CPI running 4%+ YoY with 0.6% monthly prints. Tariff passthrough still working through the system. Now add US-Iran oil shock - WTI from $69 → $77 in days with Hormuz traffic "significantly below normal." June CPI (Jul 14) will capture the energy impulse. The "tariff bump is transitory" narrative is dead.

❌ View breaks if: Hormuz resolves immediately, oil collapses to $60 (15% prob)

🎯 Trade: Long TIPS / 5Y breakevens vs. short nominals; Long XLE + GLD

 

3 - EQUITY MARKETS: 🐻 MODERATELY BEARISH

At 20.4x fwd P/E above historical average, equities are priced for perfection. Next 3-6 months face: (1) hot June CPI July 14, (2) Fed hike probability rising, (3) 5% long yields compressing multiples, (4) Iran geopolitical overhang, (5) Q2 earnings season (starts July 13) will surface tariff/energy margin pressure. Wall St range 7,100–8,250 reflects genuine uncertainty. Q3 correction risk to 6,800-7,000 is our base.

❌ View breaks if: CPI surprise + Q2 earnings blow-out + Fed signals done (25% prob → 8,000+)

🎯 Trade: Long SPX Aug/Sep $7,200 puts; Short QQQ vs. Long RSP (equal-weight)

 

4 - CREDIT CONDITIONS: ⚠️ STABLE → TIGHTENING

HY OAS at 267–275bps is historically tight - near 2021 complacency levels. Rising long-end yields mean higher all-in borrowing costs even without spread widening. If CPI prints hot + Fed signals hike, expect 25–50bps spread widening from here. IG credit holds better; HY is increasingly priced for a soft landing that isn't guaranteed.

❌ View breaks if: Q2 earnings confirm strong balance sheets, defaults stay near zero (30% prob)**

🎯 Trade: Short HYG via puts or CDX HY; overweight short-duration IG

 

5 - ECONOMIC GROWTH: 📉 SLOW GROWTH

Q1 GDP final +2.1%; consumer spending +1.4% - respectable but not robust. Q2 tracking ~2.1%. The 2.0% full-year consensus masks AI capex masking consumer weakness. 3–6 month risk is sequential deceleration to sub-2% as: higher long yields bite consumer credit, energy costs hit disposable income, fiscal impulse moderates. Not recession – but

not enough to validate current multiples.

❌ View breaks if: AI capex boom materially exceeds forecasts, re-accelerating to 3% (20% prob)

🎯 Trade: Underweight cyclicals (XLY, XLI); Long USD vs. AUD on growth asymmetry

 

6 - PORTFOLIO EMPHASIS: ⬇️ REDUCE RISK

The confluence - 4% inflation, split FOMC with hike risk, 30Y at 5%, Iran/Hormuz overhang, elevated 20.4x valuations, and key CPI July 14 - argues for deliberate risk reduction. If CPI hot + rates spike + Fed confirms hike path, drawdown risk is 8–12% equities, 25–50bps spread widening, significant duration losses. Trim gross exposure, raise cash to 8–10%, buy options protection. Be ready to re-add risk post CPI/earnings resolution.

🎯 Trade: Reduce gross equity exposure 10–15%; buy VIX calls / SPX puts; raise gold to 3–5%

 

7 - SECTORS & REGIONS

🇺🇸 US Equities - ⚠️ Neutral→Neg (20.4x not supported by rising rates)

🌍 Intl Developed (Europe/Japan) - ✅ Positive (Lower valuations, ECB easing, structural reforms)

🌏 Emerging Markets - ⚠️ Neutral  (Selective; India/SE Asia over China)

💻 Technology - ⚠️ Neutral→Neg (AI priced in; semis weak; rate sensitivity)

🏥 Healthcare - ✅ Positive (Defensive growth, pricing power, YTD laggard)

⚡ Energy - ✅ Positive (Iran risk premium + sticky oil; XLE undervalued)

🏦 Financials - ✅ Positive (NIM expansion; bank earnings start July 13)

📈 Long Duration Bonds -❌ Negative (30Y at 5% not the ceiling)

💵 Cash / T-Bills - ✅ Positive (3.6%+ yield; dry powder for re-entry)

Cross-Asset Trades:

• Long XLE / Short QQQ - energy inflation hedge vs. rate-sensitive tech

• Long GLD - Iran + inflation premium; 3–6 month hold

• Long EZU (Europe) vs. Short SPY - valuation convergence + ECB vs. Fed divergence

• Short HYG - spreads at compression extreme

• Long TIPS (5Y breakevens) - CPI trending higher

• Long USD/AUD - US rate premium + global growth deceleration

• Long VIX calls / SPX puts - protection into July 14 CPI + July 28 FOMC

 

8 - CASH PREFERENCE: 💵 HOLD MORE CASH (8–10%)

T-bills yielding ~3.6% with funds floor at 3.50%. Cash is the right risk manager going into an event-dense two weeks. Provides buffer against volatility AND dry powder if CPI surprises to the downside. Park in 3–6M T-bills; avoid money market funds with credit exposure; maintain a ladder for rapid re-deployment.

🎯 Trade: 3–6M T-bill ladder at 3.60–3.75%

 

9 - MAJOR RISKS

• 🔴 Iran escalation / Hormuz disruption - Oil could spike to $90+; stagflation risk

• 🔴 June CPI (July 14) hot print - Could confirm Fed hike path and reset equity multiples

• 🔴 Fed policy error - Hiking into a consumer slowdown while AI capex masks weakness

• 🔴 Earnings season disappointment - 24% EPS consensus may be too optimistic given tariff + energy margin pressure

• 🟡 HY credit spread widening - 267bps is near complacency floor; binary risk higher

• 🟡 Fiscal/sovereign risk - 30Y at 5%+ reflects deficit concerns; "Big Beautiful Bill" still in pipeline

• 🟡 China slowdown / EM contagion - S&P Global flags persistent EM inflation in Q3

• 🟡 AI capex cycle peak - 50% of EPS growth is AI-linked; risk if capex decelerates

 

What breaks the view (bull case requires ALL three):

1. June CPI ≤3.5% (disinflation surprise)

2. US-Iran deal → oil back to $65

3. Q2 earnings blow-out upside

Simultaneous probability: ~15%

 

10 - CONFIDENCE LEVEL: 🟡 MODERATE

High conviction on directional calls (inflation rising, rates up, reduce risk, hold cash). Moderate confidence on timing - July 14 CPI and July 28 FOMC are two pivotal binary events within 3 weeks. Iran adds an unpredictable overlay. The distribution of outcomes is unusually wide. Manage via hedges, liquidity, and relative value - not maximum-size directional bets.

 

📋 ONE-PAGER SUMMARY

Question       Answer                         Conviction 

Interest Rates - Slightly Higher  🔴 High      

Inflation - Rising                          🔴 High     |

Equities - Moderately Bearish     🟡 Moderate |

Credit - Stable→Tightening         🟡 Moderate |

Growth - Slow Growth                 🟡 Mod-High |

Portfolio - Reduce Risk                🔴 High     |

Top Longs - Energy, Healthcare, Financials, Intl DM, Gold

Top Shorts - Long Duration Bonds, US Tech                 

Cash - Hold More (8–10%)          🔴 High     |

Top Risk - Iran escalation + CPI hot + Fed hike  🔴 High     |

Confidence - Moderate                                    

🗓 Key Watch Next Week:

• July 14 - June CPI (8:30 AM ET) - month's most important data point

• July 13+ - Q2 earnings season begins (JPM, WFC, C)

• Weekend - Iran/Hormuz escalation or deal news

• Fed speakers - Any Warsh comments before July 28 blackout