Market Insights Recap — Week of July 27, 2026

Hi, I’m Tim Gereg, Head of Capital Solutions at Texas Capital.

We’re expecting a volatile week ahead with a string of economic data releases, the second FOMC meeting under Kevin Warsh and a constant stream of headlines out of Iran. 

Let’s dive in: This Wednesday will be Kevin Warsh’s second FOMC meeting as Fed chair, and due to his strict aversion to forward guidance, the market has not been this uncertain about a Fed meeting in many years. The futures market is currently implying, or pricing in, over a one third probability of a 25-basis point this hike, and over a 90% chance of at least one hike by year end. Of course, economists views often differ from market pricing, and expectations on what will actually come to fruition vary greatly. Our current expectation is for no hike through year end, though I do believe that Kevin Warsh has the support on the committee to take action if and when needed.

Markets will continue pricing a premium for the lack of transparency from the Fed. We also know that Kevin Warsh is exceptionally intolerant of persistent inflation, so which inflation measures he emphasizes, and how he describes his observations of the current landscape, will materially affect the market’s response. In his first meeting as Fed chair last month, Warsh was quite critical of the handling of inflation over the past five years, and I doubt he will deviate too much from that message, if at all.

Last week, the yield on ten-year treasuries breached 4.7%, an 18-month high. The economy continues to show broad signs of strength and resilience to recession, pointing to an environment that will demand structurally higher rates. 2s10s are down nearly 40 basis points from the peak in February, and we could see that flattening trend continue, depending on how hawkish the messaging is from Warsh this week. 

Over the weekend, the U.S. and Iran reached an apparent ceasefire, which brought WTI back to around $83 and Brent to around 90. The Treasury curve rallied a few basis points in sympathy, but gave most of that back by 9 a.m. central — possibly on a “believe it when I see” or a resumed focus on this week’s FOMC meeting.

The move was also discounted because, even though WTI is off over $30 from its April highs, prices at the pump are little changed, thanks to refining capacity and gasoline inventories. So, short term inflation expectations have ticked up materially. Wednesday, we had the FOMC rate decision and Thursday we get second quarter GDP, June PCE and a good look at the consumer, via personal income and spending data. Expect the market to pay the most attention to PCE. Of course, all of this is against the backdrop of the Iran war, but recall that when the conflict first began in late February, oil was the principal driver of U.S. rates. Then, in mid-May, when the conflict first appeared to be resolved, WTI sold off close to its pre-conflict levels and the two-year Treasury kept grinding higher. Now the market is pricing in nearly a full additional rate hike from when we thought we were close to a resolution. So, the market is simultaneously digesting an ever- changing geopolitical landscape, a new set of inflation dynamics and the least transparent Fed chair in years.

Have a great week. And as always, don’t hesitate to reach out if we can help.