Fed Watch – 7/24/2026

The below transcript is a literal translation of the podcast audio that has been machine generated by Adobe Podcast.

The war in the Middle East is back on. Missiles are flying. Oil’s back in the 90s. Bond yields are up and things are getting spicy, I’ll say, heading into our July Fed meeting next week.

Hey, everybody, this is Connor Lokar, Senior Forecaster here at ITR Economics. And my reign of terror has begun. I’m going to be your extended guest host here, as Lauren, our favorite, is out on maternity leave. She and her family welcomed a beautiful baby girl to their family. So we are wishing them well, in her time in recovery and a very special time with family. And now you get Connor here for the next few months to, as I said, you know, reign over this Fed Watch series here. Which is interesting for me because, you know, I, I don’t really like the Fed. I might go as far to say I hate the Fed and I’m not sure that they should maybe, you know, be in the business of playing economic god, which depending on how you look at it, that makes me the perfect or the worst host here for Fed Watch. And I think we’re going to find out over the next few months. But so a lot of exciting things happening. And we see Lauren, she leaves us for a week and all of a sudden the war is back on. Oil is back in the 90s. I don’t know if there’s a correlation there. We might have to see how the next couple of weeks go. And if it’s not good, we might have to pull Lauren back a little bit sooner from her maternity leave.

But it is an exciting week. I’ll call this a setup week, if you will. So we have our July Fed meeting coming up next week. We’re going to get official comments out of that on July 29th as those meetings conclude in the afternoon. And so heading into that, as we look at last week, right, we had that exciting low CPI print for June. There was very brief hopes of maybe possible Fed cuts on the horizon, or at least some alleviated concerns as it relates to inflation when we saw oil get back into the low 70s last month and all of that has been unwound, I’ll say, in the last couple of weeks where we now see oil back up, we see ten year yields approaching the highest level since January 2025, we’re north of 4.6 now 4.7 as we look at this here on July 24th. And as we look into next week, that’s going to be a very interesting backdrop heading into that Fed meeting as well as we’re going to get some data like the prelim 2Q GDP number. That’ll be coming out mid late next week as well. So as we look at it today, I think any sort of thoughts of rate cuts, which I think were dubious at best, even last week, are, you know, back in the cupboard with the doors firmly closed at this point. Now, we don’t expect any rate changes here coming up next week. I really think what will be most interesting is the language surrounding what we have seen over the last couple of weeks and this reignition of some energy upside risk.

Now, I think the Fed would be quite reluctant to hike rates, particularly into a situation like a supply shock for oil, right? Like I’m not sure that rate hikes into a supply shock would necessarily be wholly productive, and I feel like the Fed would agree with me, but I guess we’ll find out with some pointed language next week. So I wouldn’t expect any changes here, certainly for this meeting or probably for the balance of the third quarter. But we’ll see how things play out as we see, you know, instead of cuts, are hikes potentially on the table for the fourth quarter, as some futures markets indicate, could be a possibility as we look in the latter stages of this year. So a lot to watch, a lot of exciting things happening, not loving what we’re seeing out of the bond market with these higher yields. Certainly they are not thrilled with these higher rates. I think we’re going to learn a whole heck of a lot as we look into next week and get those comments. So thanks for joining me here and I’m looking forward to keeping this seat warm for Lauren here over the next few months. So thanks for joining us here on Fed Watch. See you next week.