How about a hedge fund started in 2024 by a 22-year old “wunderkind” who had worked at FTX’s Future Fund, the philanthropic arm tied to Sam Bankman-Fried. At its recent peak, fund assets had inflated to a staggering $45 billion. Unbelievably, after dropping 67% in July (desperate for a Citadel bailout), the (now $10bn) fund apparently is still up 80% y-t-d. When you thought you’d seen about everything… Leverage: genius on the upside, big trouble on the downside.
July 31 – Wall Street Journal (Peter Rudegeair and Berber Jin) “Leopold Aschenbrenner’s hedge-fund firm Situational Awareness is down around 67% so far in July after incurring heavy losses on AI stocks, according to a person who saw a letter the firm sent to investors Thursday. ‘We let you down this month,’ Aschenbrenner wrote in the investor letter… The deep losses prompted the firm to sell the bulk of its stockholdings to Ken Griffin’s investment firm Citadel as it raced to gather cash to cover margin calls from its lenders… Situational’s gains earlier in the year were so large that, even including July’s losses, the fund remains up about 80% on the year, the letter said. Through the end of May, Situational gained about 270%...”
July 31 – CNBC (Hugh Son) “Two years ago, Leopold Aschenbrenner argued he was one of few people in the world who saw the future clearly. In a sprawling, 165-page essay that became required reading in Silicon Valley, the former OpenAI researcher positioned himself as a kind of prophet for the coming age of artificial super intelligence. But this week, the limits of Aschenbrenner’s vision were on display when the AI-themed hedge fund he runs — named Situational Awareness, also the title of his viral June 2024 manifesto — ran into the harsh reality of tumbling semiconductor stocks and Wall Street margin calls. At its peak earlier this month, his fund sat atop $45 billion in assets. By Thursday, however, after being forced to offload all of his leveraged stock bets — including hard-hit names like SK Hynix and CoreWeave — to Ken Griffin’s Citadel at a discount, the fund’s holdings plunged to around $10 billion…”
The Citadel bailout triggered a decent rally/squeeze. The Semiconductors ended the week 8.4% above Wednesday’s intraday lows, with the Nasdaq100 4.0% off lows. Some unbelievable volatility and moves. Microsoft surged 21.8% this week, with Amazon up 17.0%, and Alphabet gaining 11.4%. Meanwhile, Qualcomm dropped 11.6%, Micron 10.6%, and AMD 8.8%. The MAG7 Index recovered 4.2% this week.
Oracle, CoreWeave, and technology bonds more generally rallied late in the week. I expect worries to only build over time. The first “bailout” is always the easiest. Citadel and others will have less capacity in the future.
July 28 – Reuters (Marc Jones) “The AI boom and the risk of a correction are emerging as major global credit risks, ratings agency Fitch has warned, adding to growing concerns that soaring tech valuations and unprecedented AI spending may be running ahead of uncertain future returns. In its third-quarter Global Risk Outlook, Fitch said the credit backdrop remains dominated by two short-term risks: mounting vulnerability to an AI-related market correction and continued uncertainty linked to the U.S.-Iran conflict… ‘The scale of AI investment is such that the exposure of the economy and overall capital market to such a correction is significant,’ Fitch said.”
Thirty-year Treasury yields surged 12 bps this week to 5.27%, trading this week to the high back to 2007. Global yields continue their march higher. EM bonds remained under pressure, with notable weakness in dollar-denominated debt. Yields in Panama, Peru, Colombia and Chile all posted double-digit increases.
Global “carry trade” stress is building. The yen surged 4.1% this week. And while not “unbelievable,” for the first time in three decades Japan’s Ministry of Finance and the U.S. Treasury coordinated market intervention to support the yen.
July 31 – Financial Times (Kate Duguid, Claire Jones, Katie Martin, Ian Smith and David Keohane) “The US Treasury intervened in yen exchange rates on Friday, marking the first time Tokyo and Washington joined forces to support the Japanese currency via outright purchases in nearly 30 years. The Federal Reserve Bank of New York undertook the unusual move of conducting a sale of euros to buy yen on behalf of the Treasury… The sales were conducted through Goldman Sachs and Morgan Stanley… The Treasury had earlier told several banks on Wall Street that it was considering an intervention to support the Japanese currency, which on July 23 hit its weakest level against the dollar since 1986.”
Not quite unbelievable, but Kevin Warsh is really struggling. It’s almost as if central to his strategy was a belief he could simply smooth talk the markets. Tense markets are having none of it. Not the time or the place. I hope an overconfident Warsh doesn’t think he can do the Greenspan thing and have the markets eating out of the palm of his hand. This is such a different era. At least markets trusted that Powell wasn’t trying to BS them.
There’s too much debt, speculative leverage and Bubble excess. The system has too much underlying fragility for Warsh to push through major changes at the Fed. We need traditional central banking and sound judgement. Federal Reserve credibility is today at the greatest risk in decades. A fractured committee. And this is certainly not the time to tinker with inflation indicators. Not the time to adjust the meeting schedule either. Warsh needs to quickly right the ship.
July 30 – Bloomberg (Bill Dudley) “Federal Reserve Chair Kevin Warsh seemingly wants to outsource monetary policy to financial markets. In his telling, the central bank’s job is to be the referee, not the one influencing market expectations. Warsh says he wants markets to play the ball, not the Fed. To ensure that outcome, he argues that not only is it essential that the Fed provide no forward guidance about the future path of interest rates, but also that the Fed not explain how it would likely respond as circumstances change, that is, not explain the central bank’s monetary policy reaction function. I have no quarrel for ending forward guidance when the Fed is not at the zero lower bound for short-term rates… But when Warsh goes considerably beyond that and refuses to provide information about what is important to him and the Fed in conducting monetary policy, that’s where I get off the bus.”
July 30 – Financial Times (Editorial Board) “Warsh is seeking to square a circle. He has bemoaned persistent inflation over the past few years and vowed to pull it back down to the central bank’s 2% target. But he has not adequately explained why he and the committee he chairs were reluctant to raise interest rates to achieve that goal. Markets are already suggesting persistent above-target inflation and higher interest rates lie ahead. He did not seek to correct this interpretation, stating instead that ‘the message from markets is the message from markets’, sparking concerns that his reticent style is already backfiring. It is possible, as they have been in the past, that political considerations are at play.”
July 30 – Wall Street Journal (Sam Goldfarb) “The bond market has a message for Kevin Warsh: Don’t try that again. Yields on longer-term U.S. Treasurys held near their highest levels in 19 years Thursday, a day after the Federal Reserve chairman jolted the market by failing to persuade investors that he was willing to support rate increases to fight inflation. The moves were unusual—and alarming. Even as yields on longer-term bonds surged, those on short-term Treasurys fell, indicating concerns that the Fed would wait too long to lift rates and then have to raise them aggressively down the road. For the new Fed chairman, the action amounted to a warning shot.”
July 30 – Reuters (Jamie McGeever) “The plunge in long-dated U.S. bond prices reveals two things about how investors view Federal Reserve Chair Kevin Warsh: his honeymoon period is over, and his inflation-fighting credibility is under serious scrutiny. The 30-year Treasury yield surged above 5.20% on Wednesday, the highest in two decades. The move snowballed in the wake of Warsh’s press conference rather than immediately after the central bank’s decision to keep interest rates on hold, a sign that bond investors were unimpressed with his plans – or lack thereof – to get inflation back to the 2% target, which it has been above for five years and counting.”
July 30 – Bloomberg (Enda Curran and Greg Ritchie) “Tucked into Federal Reserve Chairman Kevin Warsh’s eventful press conference… was a suggestion the US central bank could shift its approach to assessing inflation — a remark that’s sowing angst among some investors… ‘We’re going to deliver 2% inflation and not a whisper more,’ Warsh said. ‘But to achieve that, I’m looking at a broader set of inflation data than PCE.’”
July 31 – New York Times (Colby Smith and Ben Casselman) “Kevin M. Warsh is considering reducing the number of regularly scheduled meetings at which the Federal Reserve sets interest rates, a potentially seismic move that would mark the most significant change in how the central bank operates in years. The Federal Reserve’s 12-person policy committee meets eight times a year and votes on whether to lift, lower or hold borrowing costs. Mr. Warsh raised the idea of changing the frequency of those meetings at the Fed’s gathering this week, according to four people… Mr. Warsh… left the impression that a revised schedule could be decided on before the next meeting in mid-September, even if the changes would not be carried out until later.”
July 31 – Financial Times (Claire Jones and Myles McCormick) “The Federal Reserve will face a bigger challenge in taming inflation unless the central bank quickly raises interest rates, according to the three dissenting officials… Beth Hammack, president of the Cleveland Fed, and Neel Kashkari of the Minneapolis Fed said… on Friday that they had rebelled against the majority decision to hold rates steady because of concerns that inflation had been too high for too long. ‘The longer that high inflation persists, the more challenging and costly it can be to bring it back down,’ Hammack said. Kashkari said: ‘I increasingly believe that monetary policy does have an important role to play in addressing a series of successive supply shocks that might lead to entrenched higher inflation. ‘If inflation remains elevated, in my view, a potential series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary.’ A third dissenter, Dallas Fed president Lorie Logan, echoed their remarks…, saying: ‘Modest action in the near term would reduce the likelihood of needing to take sharper action later.’ ‘Every month of above-target inflation compounds the strain on the budgets of American families and businesses,’ Logan added.”
July 31 – Financial Times (Claire Jones) “A top Federal Reserve official has warned this week’s sell-off in US Treasuries is a signal that the central bank must earn its ‘credibility’ on fighting inflation by backing up its rhetoric with interest rate rises. ‘Mr Market spoke this week, and I took [a] signal from it,’ Alberto Musalem, president of the St Louis Fed, told the FT. ‘The signal emphasised to me that we need to continue to earn our credibility every day with both effective communications and actions as needed.’ The yield on 30-year US government debt hit its highest level since 2007 this week, peaking at 5.28% amid concerns that the US central bank will struggle to contain the inflationary shock from President Donald Trump’s Iran war.”
For the Week:
The S&P500 recovered 1.0% (up 9.4% y-t-d), and the Dow gained 1.0% (up 9.2%). The Utilities dropped 4.0% (up 4.7%). The Banks dipped 0.7% (up 13.9%), while the Broker/Dealers rose 2.3% (up 16.1%). The Transports sank 6.4% (up 21.2%). The S&P 400 Midcaps dipped 0.7% (up 13.7%), while the small cap Russell 2000 was unchanged (up 18.1%). The volatile Nasdaq100 increased 0.5% (up 12.0%). The Semiconductors dropped 4.3% (up 59.7%). The Biotechs declined 1.0% (up 19.3%). With bullion slipping $7, the HUI gold index fell 1.3% (down 11.9%).
Three-month Treasury bill rates ended the week at 3.6687%. Two-year government yields dipped four bps to 4.29% (up 82bps y-t-d). Five-year T-note yields added two bps to 4.45% (up 72bps). Ten-year Treasury yields gained six bps to 4.73% (up 57bps). Long bond yields jumped another 12 bps to 5.27% (up 43bps). Benchmark Fannie Mae MBS yields rose six bps to 5.77% (up 73bps).
Italian 10-year yields added two bps to 4.02% (up 47bps y-t-d). Greek 10-year yields increased two bps to 3.91% (up 47bps). Spain's 10-year yields added two bps to 3.65% (up 36bps). German bund yields gained three bps to 3.21% (up 35bps). French yields increased three bps to 4.00% (up 44bps). The French to German 10-year bond spread was little changed at 79 bps. U.K. 10-year gilt yields added two bps to 5.05% (up 57bps). U.K.’s FTSE equities index gained 1.2% (up 9.3% y-t-d).
Japan’s Nikkei 225 Equities Index slipped 0.4% (up 27.9% y-t-d). Japan’s 10-year “JGB” yields dipped a basis point to 2.81% (up 75bps y-t-d). France’s CAC40 gained 1.6% (up 4.4%). The German DAX equities index rose 2.1% (up 4.7%). Spain’s IBEX 35 equities index added 1.0% (up 14.3%). Italy’s FTSE MIB index increased 0.7% (up 16.1%). EM equities were mixed. Brazil’s Bovespa index jumped 2.3% (up 10.5%), and Mexico’s Bolsa index increased 0.8% (up 4.0%). South Korea’s Kospi fell 1.4% (up 56.5%). India’s Sensex equities index rallied 2.7% (down 8.4%). China’s Shanghai Exchange Index increased 0.5% (down 3.4%). Turkey’s Borsa Istanbul National 100 index dropped 3.5% (up 195%).
Federal Reserve Credit added $1.3 billion last week to a 16-month high $6.699 TN, with a 33-week expansion of $209 billion. Fed Credit was down $2.190 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.973 TN, or 80%. Fed Credit inflated $3.888 TN, or 138%, since November 7, 2012 (716 weeks). Elsewhere, NY Fed holdings for foreign owners of Treasury, Agency Debt recovered $33 billion last week to $2.918 TN - off the low back to August 2010. “Custody holdings” were down $311 billion y-o-y, or 9.6%.
Total money market fund assets (MMFA) declined $7 billion to $7.854 TN - with a three-week decline of $89 billion. MMFA were up $778 billion, or 11.0%, y-o-y - having ballooned a historic $3.270 TN, or 71%, since October 26, 2022.
Total Commercial Paper increased $5.6 billion to $1.397 TN. CP declined $29 billion, or 2.0%, y-o-y.
Freddie Mac 30-year fixed mortgage rates rose eight bps to 6.66% (down 6bps y-o-y). Fifteen-year rates jumped eight bps to 6.04% (up 19bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate up five bps to 6.76% (down 10bps).
Currency Watch:
July 31 – Reuters (Daniel Heuer and David Lawder) “U.S. Treasury Secretary Scott Bessent on Friday exposed a ‘to-do’ list during President Donald Trump's cabinet meeting indicating he was contemplating U.S. purchases of $5 billion to $10 billion worth of Japanese yen, a Reuters photograph taken during the meeting held at Camp David shows. Taken over Bessent’s shoulder during an on-the-record portion of the meeting, the Camp David notepad bears the underscored words ‘To Do’ followed by ‘Buy Japanese Yen (JPY) $5-10 bil.’”
For the week, the U.S. Dollar Index dropped 1.5% to 99.914 (up 1.6% y-t-d). On the upside, the Japanese yen increased 4.1%, the Swedish krona 2.0%, the South African rand 1.9%, the New Zealand dollar 1.5%, the South Korean won 1.4%, the euro 1.4%, the Swiss franc 1.3%, the British pound 1.2%, the Norwegian krone 1.1%, the Mexican peso 0.8%, the Singapore dollar 0.6%, the Australian dollar 0.6%, the Canadian dollar 0.5%, and the Brazilian real 0.2%. China's (onshore) renminbi added 0.27% versus the dollar (up 3.48% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index dropped 2.1% (up 20.4% y-t-d). Spot Gold slipped 0.2% to $4,046 (down 6.3%). Silver declined 1.0% to $57.5953 (down 19.6%). WTI Crude dropped $4.64, or 5.2%, to $84.67 (up 48%). Gasoline sank 8.3% (up 82%), and Natural Gas dropped 4.3% to $2.747 (down 26%). Copper bounced 2.0% (up 14%). Wheat dropped 5.7% (up 26%), and Corn fell 5.1% (unchanged). Bitcoin lost $1,200, or 1.9%, to $62,950 (down 28.2%).
Market Instability Watch:
July 31 – Bloomberg (Abhishek Vishnoi, Winnie Hsu, and Bernadette Toh) “Billionaire Ken Griffin’s deal with embattled hedge fund Situational Awareness helped trigger a relief rally in global AI stocks, leaving traders debating whether the worst is over or more market turbulence is on the way. South Korea’s Kospi Index, dominated by chipmakers, surged a record 18% on Friday following a three-day selloff. Its Taiwanese peer rose 8%, while Japan’s Nikkei 225 advanced 4%. On Thursday, a closely watched US gauge of semiconductor giants climbed the most since April 2025.”
July 30 – Bloomberg (Edward Bolingbroke) “A raft of wagers placed ahead of the Federal Reserve’s policy decision to hedge the possibility of an interest-rate hike are unraveling after officials kept rates unchanged. The widely watched trade in the August fed funds futures amassed positions that topped a million futures for the first time in history, with roughly $5 trillion in notional value at stake. The sheer scale of risk on the table underscored the extraordinary uncertainty ahead of the July meeting, only the second to be held under new Chairman Kevin Warsh, and is now being rapidly unwound.”
July 27 – Bloomberg (Geoffrey Morgan) “The broader S&P 500 Index looks steady in recent weeks because individual moves in its constituents — however big — largely cancel each other out. Things are different on a sector level, where capital is shifting from one industry to the next at a lightning speed. So far in 2026, there have been eight cases when the weekly gap between the S&P 500's best- and worst-performing groups reached double-digit percentages. The three other instances this century when that happened by this point in the year were in 2000, 2001 and 2009 — all ignominious periods for the market, data compiled by Sevens Report show.”
July 29 – Bloomberg “Chinese tech stocks plunged on Thursday, led by high-flying semiconductor names, as concerns over stretched valuations and crowded positioning intensified a rotation out of one of this year's best-performing sectors. The STAR 50 Index tumbled more than 6% to its lowest since April 30... The tech-heavy gauge — on track for its sixth decline in seven sessions — has lost nearly 29% in July after surging about 75% in the previous three months.”
U.S. Credit Trouble Watch:
July 30 – Financial Times (Michelle Chan) “CoreWeave has offered major concessions to win over investors in its latest $2.6bn loan supported by its computing deal with Anthropic, underscoring Wall Street’s waning enthusiasm to fund the AI boom. The cloud computing company has raised yields on the debt to nearly 9.1% and tightened lender protections to get the deal across the finish line after a week of sluggish demand… Key deal sweeteners include a bespoke ‘lockbox’ feature that ensures incoming cash from underlying contracts is used for debt repayment before other expenses.”
July 27 – Financial Times (Michelle Chan in New York and Ramsay Hodgson) “A closely watched gauge of risk in holding the debt of companies at the centre of the AI boom is rising rapidly, underscoring growing jitters over Big Tech’s vast spending on data centres, chips and computer memory. Prices for credit default swaps, popular tools to bet against corporate debt, tied to Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia have risen to record highs in recent days, according to LSEG data. The sharp moves echo a sell-off in debt issued by so-called hyperscalers, which are piling hundreds of billions of dollars into developing vast data centres and sophisticated AI models. It comes as investors have grown increasingly worried about the deluge of debt sold by these companies.”
July 30 – Bloomberg (Rene Ismail) “The default rate across 1,300 US private debt borrowers tracked by Fitch Ratings rose to a record high in the second quarter… The trailing 12-month private credit default rate in the US increased to 6% as of the end of the quarter, up from a previous high of 5.7% reached in the prior three-month period. Fitch recorded 32 instances of private credit default events from 20 new, unique defaulters during the quarter, bringing total defaulters to 84. Maturity extensions under stress overtook payment-in-kind and interest-rate deferrals as the leading driver of quarterly delinquencies, Fitch said.”
July 30 – Bloomberg (Nabila Ahmed) “Blue Owl Capital Inc. said fundraising slowed in the second quarter as turmoil in the private credit market caused investors to pull back from its lending business… The… asset manager raised $7.6 billion in the three months through the end of June, compared with $12.1 billion for the same period a year ago.”
July 31 – Reuters (Aashna Shah) “US state and local government debt is on track to notch its weakest July in more than two decades, as rising benchmark Treasury yields and a flood of new issuance take a toll on what usually is one of the strongest months for the $4 trillion market. The Bloomberg Municipal Bond Index has declined 1.72% so far this month through Thursday, for the worst July since 2003. And it marks only the second monthly loss of the year — the first was in March when oil prices spiked at the start of the Iran war.”
Global Credit Bubble and Boom Watch:
July 29 – Bloomberg (Paul J. Davies) “Europe’s big banks have joined the global stock trading party. Danger lurks, however: When the market turns, it is often brutal. Barclays Plc and UBS Group AG this week reported increased equity trading revenue of 46% and 53% in dollar terms, respectively, versus last year’s second quarter. BNP Paribas SA showed a 47% rise last week. Citigroup Inc., which is also playing catchup, reported similar growth. As strong as these numbers are, they pale next to the 70%-plus gains at the other four big US banks. The key difference for the US leaders in the second quarter was their already huge businesses lending to hedge funds and other leveraged traders.”
Leveraged Speculation Watch:
July 28 – Financial Times (Ortenca Aliaj, Kate Duguid, Amelia Pollard, Costas Mourselas and James Fontanella-Khan) “Wall Street banks have demanded more collateral from hedge funds in recent weeks as a rout in AI stocks accelerates and triggers heavy losses across several popular strategies. Banks asked funds whose holdings are heavily concentrated in certain industries to provide additional collateral to keep their existing levels of leverage, according to four people familiar with the matter. The collateral demands highlight the mounting fears on Wall Street about the scale and speed of the sell-off in AI stocks over the past fortnight, which has upended a rally in a sector favoured by many funds.”
July 26 – Financial Times (Alan Livsey) “Assets managed by hedge funds rose by the largest amount ever last quarter due to the AI-driven boom in share prices and investors moving away from private equity and credit funds. Last quarter, total assets under management grew by $409bn to $5.6tn, with investment performance accounting for much of that rise, according to… HFR. Hedge funds lost money in a volatile March following the outbreak of the Iran war. Since then, they have benefited from a powerful equity price rally led by chip stocks such as Samsung, AMD and SK Hynix. ‘I think this is going to be a golden era for hedge funds after a long, long time,’ said Shenan Dhanani, co-chief executive at Trium Capital, which manages $5.1bn in assets.”
Iran War Watch:
August 1 – New York Times (Steven Erlanger) “To America’s allies, President Trump’s war in Iran, now in its sixth month, seems headed for a strategic defeat. They worry that the inability of the United States to turn military superiority into a sustainably changed Iran has displayed a vulnerability that Russia and China will welcome. In addition, Mr. Trump’s goals remain unmet, and the U.S. military is running short on key armaments that it needs for global reach. For the moment, Iran is seemingly resolute under a more radical government, its nuclear and ballistic missile programs are degraded but not destroyed, and the Strait of Hormuz is effectively under its control. The war has left both the United States and Israel in weaker positions — and blaming each other for the mess.”
July 29 – Wall Street Journal (Jared Malsin and Suha Ma’ayeh) “Iran’s surprise missile attack on U.S. forces in Jordan shows Tehran’s military leaders would rather risk ramping up the war than play defense or accept a peace deal that would expose them to greater domestic political pressures. Iran fired ballistic missiles on U.S. troops early Wednesday local time, demonstrating a willingness by the Islamic Revolutionary Guard Corps, which exerts more power than ever in Tehran, to escalate during a relative lull in the conflict and attempt to seize the initiative after weeks in which Iran has mostly reacted to U.S. and Israeli attacks. ‘They see themselves as having the upper hand,’ said Hamidreza Azizi, a visiting fellow specializing in Iran at the German Institute for International and Security Affairs. ‘It was a signal of a sort of calibrated escalation.’”
August 1 – CNBC (Azhar Sukri) “A tanker near Oman reported being struck overnight, with another saying it saw an explosion nearby as Iran warned Washington that the U.S. military’s blockade of the Strait of Hormuz would result in the closure of key shipping routes. Separately, Kuwait said its air defenses confronted hostile drone attacks by Iran.”
July 30 – New York Times (Vivian Nereim and Ismaeel Naar) “Saudi Arabia entered the U.S.-Iran war on Wednesday with airstrikes in Iraq. Its delayed entry, six months into the war, illustrated the bind the kingdom faces as it tries to deter attacks without getting sucked into the broader conflict, analysts say. The kingdom’s defense ministry announced the airstrikes, accusing Iran-backed militias in Iraq of attacking Saudi oil facilities this week… Iraq’s National Security Council said… the strikes had caused the deaths and injuries of ‘a number of innocent people,’ and Prime Minister Ali al-Zaidi of Iraq called the strikes ‘an unacceptable aggression.’”
July 28 – Wall Street Journal (Benoit Faucon and Summer Said) “Iran rejected a proposal to evenly divide control of the Strait of Hormuz, jeopardizing hopes that Tehran and Washington would quickly resume negotiations to end the war. Oman, which sits opposite Iran across the strait, suggested a temporary plan to establish even lanes of control, but Tehran demanded Tuesday that it take the lion’s share of the waterway critical to the flow of the world’s oil supply, one of its top diplomats said.”
July 29 – Reuters (Nafisa Eltahir, Elwely Elwelly and Tala Ramadan) “A drone strike that sparked fires on two gas vessels in Egypt’s Mediterranean port of Damietta has raised a new threat to shipping through the Suez Canal, one of the last major export routes available to Saudi oil amid the expanding U.S.-Iran war. No one has claimed responsibility for what Egypt’s cabinet said… was an unidentified drone that caused a fire on two vessels…”
July 27 – Financial Times (Jacob Judah) “Soon after the US launched its joint attack with Israel on Iran in late February, defence secretary Pete Hegseth declared that among its aims were to ‘destroy Iranian offensive missiles, destroy Iranian missile production’. Yet five months later and after hundreds of US attacks, Iran has been able to sustain the effectiveness of its missile force, continuing to launch apparently precise strikes on targets across the region. Its missile crews have killed Americans at their barracks in Jordan, repeatedly struck buildings on major bases in Kuwait and Bahrain, targeted installations in Saudi Arabia and Qatar, and appear to have learnt from their experiences under intense bombardment in March and April.”
July 28 – Bloomberg (Sherif Tarek) “Iran-backed militias in Iraq fired drones at oil facilities in Saudi Arabia’s Eastern Region for the second day in a row, piling pressure on the kingdom, which is grappling with a maritime blockade limiting its crude oil shipments. The Saudi Defense Ministry said it had intercepted the drones on Tuesday… Similar attacks were carried out from Iraq on Riyadh and the Eastern Region on Monday.”
Iran War Ramifications Watch:
July 26 – Wall Street Journal (Georgi Kantche and Summer Said) “Saudi Arabia’s vast oil exports increasingly depend on one last narrow exit. Since the Iran war began, the kingdom has ramped up exports across the country to its Red Sea coast, bypassing the Strait of Hormuz, and shipped them through the Bab al-Mandeb Strait to Asian customers. Now, threats from Houthi militants—and several attacks against Saudi vessels in recent days—risk choking off that workaround, forcing more Saudi barrels onto a longer, costlier and technically challenging journey through Egypt’s Suez Canal and around Africa.”
July 29 – Financial Times (Jamie Smyth) “US crude stockpiles fell sharply last week as local oil refineries boosted activity to take advantage of surging fuel prices driven by renewed hostilities with Iran. Commercial crude oil inventories decreased by 7.2mn barrels and the US Strategic Petroleum Reserve fell by 3.8mn barrels, as refiners drew down stocks to make products such as petrol, diesel and jet fuel. Government data… showed US refineries were running at 97% of capacity, with those in some parts of the Midwest operating at 100%, as US energy companies increase exports to supply energy-hungry markets in Asia and Europe.”
July 29 – Bloomberg (Nicholas Lua) “Diesel is ‘at the epicenter’ of a supply squeeze in fuels as global refinery activity fell this month to its lowest seasonal level since the pandemic, according to Goldman Sachs… The weakness in run rates was due to refinery outages in Russia and the Middle East from ongoing conflicts, along with subdued processing in China, analysts including Yulia Zhestkova Grigsby and Daan Struyven said in a note... That cut global throughput by an estimated 6.5 million barrels a day from a year earlier, they said. The slowdown is tightening fuel supplies just as demand heads toward the fourth-quarter peak season.”
July 31 – New York Times (Lisa Friedman) “Nearly five months of war in the Middle East is complicating an already difficult annual rite in Europe: stocking up on energy for the cold months of winter. Storage facilities for natural gas, which households and businesses use extensively for boilers and furnaces, are only 54% full. That’s the second-lowest level for summer since 2011, and the lowest for July since 2021, when Russia’s state-owned energy company was restricting gas supplies to Europe… ‘It’s quite a worrying situation,’ said Chris Aylett, a research fellow in the Environment and Society Center at Chatham House... ‘When you look at the situation in the Hormuz, you just don’t have a sense of how this gets resolved,’ he added.”
Trump Administration Watch:
July 27 – Reuters (Trevor Hunnicutt) “U.S. President Donald Trump on Monday called on the Federal Reserve to lower interest rates, saying the U.S. should have the lowest interest rate in the world. ‘Rates should be lowered... We have other countries that are paying less interest rates,’ Trump told reporters…”
July 29 – Reuters (Steve Holland) “President Donald Trump… refused to turn on his ‘brilliant’ hand-picked U.S. central banker in chief despite the fact that Federal Reserve Chairman Kevin Warsh has not delivered the rate cuts Trump desperately wants and has dim prospects for doing so anytime soon. ‘He’s a brilliant guy,’ Trump told reporters... ‘I know he’d love to see lower interest rates, but he’s got a board, and it’s a political board, and they want to keep rates up. But we fight through rates.’”
July 31 – Yahoo Finance (Jennifer Schonberger and David Hollerith) “The Trump administration is rolling back red tape for community banks to try to boost lending in the economy. The Office of the Comptroller of the Currency is updating a regulation known as the Community Bank Leverage Ratio framework to reduce the regulatory burden on the country’s smallest banks. The move is expected to free up as much as $64 billion for community lending, with 95% of all community banks eligible for the change in the rule.”
July 31 – Axios (Ben Berkowitz) “The Justice Department moved to drop the indictment of an Olympian who’d been charged with damaging the Lincoln Memorial Reflecting Pool, saying the problems were actually caused by a contractor. It’s an unusual public contradiction by the DOJ of President Trump, who’d insisted the damage after the $14 million renovation was caused by vandals. The DOJ filed in D.C. Superior Court to drop an indictment against David Hearn, a former Olympic canoeist, who’d been accused of ‘forcefully and violently pulling up and removing the bottom liner with both hands.’ At a news conference earlier this month, D.C. U.S. Attorney Jeanine Pirro said the charge against Hearn was about ‘accountability’ and that he faced up to 10 years in prison.”
Trade War Watch:
July 27 – Financial Times (Editorial Board) “They are the tariffs that refuse to die. Anyone who thought the US president’s signature trade policy might be in tatters when the US Supreme Court ruled in February that last year’s so-called liberation day tariffs were illegal has had to think again. New duties of between 10 and 12.5% on 60 trading partners announced last Thursday demonstrate that the president is not done with his policy, but is moving it into a new phase. The administration is aiming to rebuild its tariff wall on more durable legal foundations. Its latest measures rebuilt the baseline — and there are more to come.”
July 29 – CNBC (Evelyn Cheng) “The U.S. Federal Communications Commission has repeatedly ignored Beijing’s restrained stance on product bans, China’s commerce ministry said…, threatening retaliation. The FCC… said due to cybersecurity concerns, it added foreign-made advanced robotic devices, including humanoids, to a list restricting imports to the U.S… As the FCC keeps escalating restrictions on Chinese goods, it ‘severely damages China-U.S. economic and trade stability,’ China’s commerce ministry said…”
Deficit Watch:
July 30 – Wall Street Journal (Drew FitzGerald and Marcus Weisgerber) “The Pentagon… earmarked more than $120 billion for contractors to step up production of Patriot missiles and long-delayed submarines to support future combat operations. The Patriot contract with missile maker Lockheed Martin is now valued at nearly $59 billion, a significant expansion of an order announced in April. General Dynamics Electric Boat and HII Newport News Shipbuilding received a $76.6 billion deal for nine Virginia-class and five Columbia-class nuclear submarines that will be delivered by 2038. Replenishing munitions stockpiles and increasing shipbuilding capacity are top Trump administration priorities, and have been pain points for the U.S. military. Congress must still provide annual funding for the deals.”
July 29 – Reuters (Mike Stone) “The U.S. Army awarded Lockheed Martin a contract worth up to $58.6 billion to produce Patriot interceptor missiles, the Pentagon said on Wednesday, as conflicts in Iran and Ukraine strain U.S. weapons stockpiles. The U.S. has supplied large quantities of weapons to allies while also using munitions in its own military operations in Iran, raising concerns about inventories of key air defense and precision-guided weapons.”
New World Order Watch:
July 28 – Financial Times (Edward Luce) “‘Tweets don’t overturn signed agreements,’ said a Saudi official last week. Amid America’s broiling ocean of surrealism, being instructed by a dynastic autocracy on the sanctity of the contract stands out. Donald Trump had claimed to amend a US-Saudi nuclear deal on his Truth Social site the day after it was signed. That the deal was controversial is one thing. That he thought he could change it without asking the Saudis was another. Trump keeps making fantasy announcements. His grip on power is suffering as a result. That might seem paradoxical for a US president who has done more than any other to create an all-powerful presidency. But power is the ability to shape the world to your advantage. This should not be confused with constantly declaring how powerful you are.”
U.S./Russia/China/Europe/Iran Watch:
July 26 – CNBC (Azhar Sukri) “Iran summoned a Ukrainian diplomat in Tehran… to protest an attack on an Iranian commercial vessel in the Caspian Sea, as the war in the Middle East threatened to overlap with the Ukraine conflict. Iran said the attack left one sailor dead and injured several others. The country’s foreign ministry complained to Ukraine’s chargé d’affaires in Tehran early on Sunday and ‘conveyed Iran’s strong protest over the ‘hostile and criminal act.’’ Iran’s Islamic Republic News Agency reported.”
Ukraine War Watch:
August 2 – BBC (Jaroslav Lukiv): “Ukraine has said it carried out overnight strikes deep inside Russia, hitting a major oil refinery and an airfield that houses Russian strategic aviation. President Volodymyr Zelensky said the Engels airfield and the refinery, both in the Saratov region some 600km (373miles) from Ukraine's border, were hit. An oil depot was also struck in Kaluga region and a drone launch site in Bryansk. Russia said eight people were killed in the Ukrainian strikes, and 635 drones shot down or intercepted. It also reported yet another strike on a warehouse of Russia's biggest online retailer Wildberries.”
Taiwan Watch:
July 31 – Bloomberg (Yian Lee and Chien-Hua Wan) “Taiwan’s economy expanded at the fastest pace in some 50 years in the first half of 2026… Gross domestic product grew 13.72% in the period, the statistics bureau… said... It said the economy expanded 12.92% in the second quarter, topping the 10.50% median estimate…”
AI Bubble/Arms Race Watch:
August 1 – Axios (Zachary Basu and Madison Mills) “Chinese AI lab DeepSeek released a powerful new coding model Friday that charges pennies for vast amounts of code — the latest sign that some of the smartest software on Earth is rapidly becoming a commodity. Tech giants are pouring hundreds of billions of dollars into the computing infrastructure powering the AI revolution. Yet the intelligence that infrastructure produces is getting cheaper by the week. DeepSeek is the same Chinese startup that ignited a market meltdown last January by showing it could build a world-class AI model with far fewer resources than its U.S. rivals. Its newest model, V4 Flash, performs close to the level of Anthropic's Claude Opus 4.8, one of the industry’s most capable systems, on tests of complex coding and autonomous software tasks.”
July 30 – Financial Times (Cristina Criddle) “Anthropic has disclosed that its Claude AI models hacked into three organisations while the start-up was testing cyber capabilities, a week after OpenAI reported a similar incident. The group said Claude gained unauthorised access to outside companies during an evaluation of its cyber-offensive tasks. ‘A misunderstanding’ gave Claude access to the internet in its testing environment, when it was meant to be blocked, Anthropic said.”
July 31 – Reuters (Deepa Seetharaman and Raphael Satter) “OpenAI has discovered other instances in which autonomous agents have escaped containment as the company expands its investigation of the hacking incident at tech firm Hugging Face that drew global attention this month, two people familiar… said... The new breakouts were uncovered during the company's publicly announced investigation, opens new tab into how one of its agents escaped what was meant to be a contained testing environment this month, the two people said, and OpenAI is now looking into those instances as well. One of the sources said that the escapes were limited in nature and that none of the agents were thought to have left OpenAI's network.”
August 1 – CNBC (Daniel Heuer and David Lawder) “For months, cybersecurity leaders warned that artificial intelligence would reshape the threat landscape, compressing weeks- and dayslong cyberattacks into a matter of minutes. Until last week, those threats still felt like a distant risk. The OpenAI agent hack on Hugging Face illustrates that this era has not only arrived but also created a new challenge: AI agents will go to extremes to accomplish their goals, and do it in unpredictable ways. ‘The reality is Pandora’s box is open,’ said Sam Curry, chief information security officer at Zscaler. ‘We need to act as if AI is just a fact of life going forward. The most those things will do is slow it. They won’t stop it.’”
July 27 – Financial Times (Cristina Criddle and Rafe Rosner-Uddin) “Microsoft’s AI chief has said the hacking spree by a rogue OpenAI model was a ‘warning shot’ for the rise of AI-enabled cyber attacks… Mustafa Suleyman, chief executive of AI at Microsoft and a DeepMind co-founder, said OpenAI’s admission last week that one of its AI ‘agents’ had escaped a test environment to attack start-up Hugging Face was an ‘important lesson’. ‘These are very powerful [tools] and they need to be handled incredibly carefully. And we need extreme attention to detail… The precautionary principle is going to matter here as the models get more and more powerful and I think it’s a warning shot.’”
July 30 – Financial Times (Ryan McMorrow, Rafe Rosner-Uddin and Hannah Murphy) “The four big hyperscalers have ploughed more than $1tn into capital investments since their race to dominate AI began three and a half years ago… Combined capital spending by Google, Amazon, Microsoft and Meta from the beginning of the AI boom in 2023 to the end of June hit $1.1tn, according to earnings reports from the four companies... The massive expenditure is a mark of both the scale of their AI ambitions and the speed with which the US tech giants have turned from capital-light businesses into huge investors in physical infrastructure. ‘There is basically no end in sight for the growth in capex,’ said Rishi Jaluria, an RBC Capital analyst. ‘Investors need these companies to toe the tight line between investing in AI and not compromising the things that have made them successful.’”
July 27 – Bloomberg (Dina Bass and Winnie Hsu) “Nvidia Corp. is working on a fresh round of AI infrastructure deals potentially worth more than $750 billion, accelerating a streak of investments that skeptics warn is artificially inflating demand and valuations across the industry. An artificial intelligence initiative with the parent of South Korean chipmaker SK Hynix Inc. unveiled late Friday is worth more than $500 billion, Nvidia said. The world's most valuable company is also in discussions to provide a guarantee of as much as $250 billion to help OpenAI lease computing from a US data center project…”
July 30 – Associated Press (Stan Choe) “A monster day for Microsoft’s stock following signals that its big spending on AI is translating into profits led a powerful rebound on Wall Street Thursday, while computer-chip companies regained some of their sharp recent losses. In the bond market, though, worries remained about inflation potentially remaining high for years… Microsoft led the way and leaped 15.5% for its best day in nearly 18 years after reporting a stronger profit for the latest quarter than analysts expected.”
July 29 – Financial Times (Brody Ford and Matt Day) “Microsoft Corp. reported more than $130 billion in new data center leases in the past quarter, signaling an accelerating pace of spending on artificial intelligence infrastructure. The company's total commitments for leases that have not yet commenced were $329.1 billion…”
July 30 – CNBC (Annie Palmer) “Amazon reported surging cloud growth during the second quarter, pointing to strong artificial intelligence demand, and the company boosted its capital spending forecast for the year. The stock shot up more than 10% in extended trading… Amazon said it expects to spend even more on AI, with capital expenditures projected to hit $220 billion this year… In February, the company said capex would hit $200 billion…”
July 30 – Wall Street Journal (Asa Fitch) “Meta Platforms might not be the first Big Tech company to rein in AI spending. But the argument that it should be is growing stronger. Meta is the most financially stretched of the biggest tech companies. Its ability to generate returns from artificial intelligence hinges almost solely on ad sales. And it has no record of building successful new businesses beyond its core social-media franchise.”
July 27 – Bloomberg (John Ainger) “The biggest US power grid is warning that data centers may face involuntary outages under a plan to avert widespread blackouts and protect residential ratepayers from electricity price spikes. Digital warehouses that fail to secure enough power generation to slake their needs may be temporarily dropped from the grid during high-demand periods as soon as mid-2027, PJM Interconnection LLC said in a letter to stakeholders…”
Inflation Watch:
July 31 – Wall Street Journal (Ryan Dezember) “The continuing closure of the Strait of Hormuz is beginning to hit Americans’ wallets far beyond the pump. Companies say they are raising prices on products ranging from french fries and beer to paint and packaging to offset their own rising commodity and freight costs. Samuel Adams brewer Boston Beer, Sherwin-Williams, International Paper and Unilever—maker of Dove soap and Hellmann’s mayonnaise—are among the companies that have told investors in recent days that they have raised prices or plan to soon to compensate for more expensive raw materials. The price increases have been cheered by investors, who have bid up shares of several companies following notice of increases.”
August 1 – Bloomberg (Mark Niquette) “When fuel costs jumped earlier in the Iran war, US consumers powered through it — with a hefty assist from federal tax refunds. Now they’re getting hit by another wave of higher gasoline prices, and the buffer is gone. That’s a risk to US economic growth, which just got a bigger-than-expected boost from consumer spending last quarter… Average pump prices rose more than 50% in the months after the US and Israel attacked Iran, peaking at $4.56 a gallon in May, according to the American Automobile Association. Around that time, Americans had been getting tax refunds that were fattened up by Trump’s One Big Beautiful Bill Act. The average check this year rose 11.5% to $3,276…”
July 30 – Wall Street Journal (Matt Grossman) “The inflation gauge tracked by the Federal Reserve cooled in June but remains well above the central bank’s 2% target… The price index of personal-consumption expenditures declined by 0.1% last month as lower energy prices helped pull down the overall price level… That yielded a 12-month PCE inflation rate of 3.7%, a decline from 4.1% in May. Setting aside volatile food and energy categories, a 0.1% price increase in June gave rise to a 12-month core PCE inflation rate of 3.3%, slightly cooler than the 3.4% recorded in May.”
August 1 – CNBC (Kevin Crowley) “High fuel prices are likely to stick around even if oil prices drop in the coming months as the wars in Russia and Middle East leave global refining capacity critically short, ExxonMobil Holdings Corp. and Chevron Corp. warned. Gasoline, diesel and jet fuel prices typically rise and fall with crude oil. But that link is growing tenuous because so many refineries have been knocked offline, causing fuel prices to remain stubbornly high and accelerating inflation even as oil falls. ‘The constraint pain point in the energy system is refining,’ ExxonMobil Chief Financial Officer Neil Hansen said... It’s ‘something that perhaps the market isn’t fully focused on.’”
July 31 – Wall Street Journal (Anna Wilde Mathews) “Suzanne Mercer and her husband Kip lost their Affordable Care Act plan this year because they couldn’t afford to pay more than $4,000 a month for the coverage. The couple… have stopped going to see their doctors. Mercer, 59 years old, also hasn’t gotten a follow-up scan that a doctor ordered after a mammogram in December turned up a concerning spot. ‘It’s awful, you just cross your fingers,’ she said. ‘I just don’t want to know right now, because I can’t do anything about it.’ Mercer is one of millions of Americans going without health insurance after the ending of federal subsidies that kept their ACA premium bills down. The loss is starting to bleed into the wider healthcare economy.”
July 30 – Bloomberg (Carla Samon Ros) “Americans worried about their grocery bill have another popular superfood to worry about: already expensive blueberries are facing even more pricing pressure. That’s because potentially the strongest El Niño in more than 75 years is expected to pick up during Peru’s peak blueberry harvest, coinciding with the start of the rainy season along the country’s northern coast where most blueberries are grown. Peru, the world’s largest exporter of fresh blueberries, is already facing disruptions from the weather phenomenon.”
Federal Reserve Watch:
July 29 – Reuters (Dan Burns) “Kevin Warsh came into the Federal Reserve chairman’s seat busting for, as he repeatedly called it, a ‘good family fight,’ and he appears to have had a bruiser at this week's two-day policy meeting, just the second he has overseen. Three of his fellow Federal Open Market Committee members dissented against a decision to hold interest rates unchanged, preferring they be raised… No Fed leader since the 1970s has faced such great opposition so early in their tenure, according to a record of FOMC dissents maintained by the St. Louis Fed. Arthur Burns had three FOMC members vote against his very first policy decision in February 1970. And Paul Volcker had two members object at his first meeting — then four at his second.”
July 30 – Financial Times (Ian Smith) “Federal Reserve chair Kevin Warsh’s stripped-back approach to communication is ‘already backfiring’ and risks eroding the central bank’s influence over the $31tn US Treasury market, investors have warned. Thirty-year US borrowing costs jumped to their highest since 2007 on Thursday, despite the Fed holding its policy rates steady. Warsh vowed… that the central bank ‘will not waver’ in the battle against inflation. But investors said the lack of forward guidance on where rates are going — and the lack of an explanation as to why the Fed had not raised them if inflation is a concern — had spooked the market. ‘Whether by intent or accident, he has let go of any air of control over the Treasury market,’ said Stephen Jones, chief investment officer at Aegon Asset Management. ‘That’s quite a change from the desires and modus operandi of Fed chairs in the past.’”
July 30 – New York Times (Colby Smith) “Early in Kevin M. Warsh’s second news conference as chairman of the Federal Reserve, he laid out how the central bank would ultimately be assessed as it takes on one its most challenging inflation problems in decades. The central bank was in the business of ‘performance,’ he told reporters…, after the Fed’s decision to hold rates steady at a range of 3.5 to 3.75%. ‘We are going to be judged by how we perform.’ Financial markets swiftly rejected Mr. Warsh’s approach, which involved tough talk on inflation but stopped well short of embracing the prospects of higher interest rates to quell price pressures. The response, primarily from the $28 trillion U.S. government bond market, was unequivocal. Markets expected more from a policymaker who has made taming inflation a top priority of his chairmanship.”
July 30 – Bloomberg (Catarina Saraiva) “Kevin Warsh’s second press conference as Federal Reserve chairman puzzled economists and investors, who appear unconvinced the new central bank chief is as committed to stamping out inflation as he says. Warsh, who has said he won’t share his view of when or whether the Fed might adjust interest rates, went further on Wednesday and refused to explain how policymakers might react to different economic outcomes. He praised a run-up in bond yields since the Fed’s last meeting, arguing it was helping the central bank and could mean officials don’t need to raise rates to bring down inflation. Investors responded by dumping 30-year Treasury bonds and dialed back expectations for rate hikes over the coming months.”
U.S. Economic Bubble Watch:
July 29 – CNBC (Jeff Cox) “Economic growth was weaker than expected in the second quarter though underlying drivers were mostly solid. At the same time, inflation in June held well above the Federal Reserve’s goal… Gross domestic product… increased just 1.5% for the April-through June period… Economists… had been looking for a growth rate of 1.8%, following the 2.1% increase in the first quarter.”
July 27 – Wall Street Journal (Chip Cutter) “America’s biggest companies say they might need more people after all. For months, major employers treated hiring as an expensive last resort. Now, a shift is emerging across industries. Companies ranging from railroad giant CSX to Google parent Alphabet have told investors in recent days that they plan to hire to meet growth goals or to seize on emerging technologies. The push to expand head count, at least modestly, is a reversal from the prevailing corporate messaging during much of the AI era. Major employers largely held back on adding people due to economic uncertainties or a belief that artificial intelligence could shoulder more tasks on the job. But some executives say the costs and limitations of AI now demand that more people be added; others want to hire people back following layoffs.”
July 30 – Reuters (Lucia Mutikani) “The number of Americans filing claims for unemployment benefits increased less than expected last week, suggesting that labor market conditions remained stable. Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 197,000… The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, fell 7,000 to a seasonally adjusted 1.782 million during the week ended July 18…”
July 28 – Associated Press (Matt Ott) “Americans’ confidence in the economy fell this month as gas prices resumed their climb after the U.S. and Iran stepped up their fighting. The Conference Board said… that its consumer confidence index fell to 90.8 in July from 92.2 in June. That’s essentially the same tepid range its been in since the beginning of the year. In late 2024 and early 2025 the readings were well above 100.”
China Watch:
July 30 – Bloomberg “China’s factory activity unexpectedly contracted for the first time in five months and construction slumped to the lowest since the start of the pandemic, pointing to a further loss of momentum in the economy after a slowdown last quarter. The official manufacturing purchasing managers’ index slipped to 49.2 in July… That fell short of all estimates… The non-manufacturing measure of activity in construction and services retreated more than forecast to 49 — the lowest since December 2022 — from 50.2 last month… The construction PMI plummeted to 47.”
July 30 – Financial Times (Thomas Hale and William Sandlund) “China’s leadership has signalled it will speed up public spending but stopped short of delivering sudden stimulus measures for the economy, as President Xi Jinping acknowledged a need to ‘tap the potential of domestic demand’ during the rest of the year. Officials of the Chinese Communist Party’s politburo, a top decision-making body, met on Thursday and agreed to ‘accelerate the pace of fiscal expenditure’, according to a readout of the meeting…”
July 26 – Wall Street Journal (Rory Jones) “For decades, founders and investors in China’s technology firms used tax-haven shell companies to list overseas and keep billions of dollars in offshore centers. The loophole allowed China’s superrich to bypass strict capital controls and avoid government oversight of their wealth. Now, the party is ending. In a series of new rules and laws, China is reordering the wealth landscape, seeking to better control how money leaves the country, with effects rippling beyond its borders. Authorities are pressuring companies to abandon foreign structures and incorporate locally.”
Central Banker Watch:
July 28 – Financial Times (Delphine Strauss) “The AI boom is blurring the economic signals central banks rely on to set monetary policy, raising the risk they will make damaging mistakes, economists at the Bank for International Settlements have warned. Staff at the… organization… said AI’s effect on investment, trade and asset prices was powerful enough ‘to shape the global outlook in real time’, supporting growth in the face of trade tensions and geopolitical shocks. These effects were now ‘large and observable’ and could add to price pressures, they said, noting that spending on data centres and IT manufacturing facilities in the US had risen to 0.8% of GDP, while the wealth effect of equity price gains was boosting consumers.”
July 30 – Associated Press (Danica Kirka) “The Bank of England kept its key interest rate on hold for the fifth time this year… after a bigger-than-expected drop in the inflation rate last month gave policymakers breathing space to assess the fallout from renewed fighting in Iran. The bank’s monetary policy committee voted 6-3 to keep the rate at 3.75%, in line with the expectations of most economists… The split decision highlights growing tensions within central banks around the world about how to respond to stubbornly high inflation and concerns that the war in Iran will lead to another round of price increases.”
Europe/UK Watch:
August 1 – Bloomberg (Will Mathis) “A series of blistering heat waves has weakened some of Europe’s most historically reliable sources of electricity, forcing the continent to lean more heavily on imported fossil fuels and variable renewable energy. France’s river-cooled nuclear plants have suffered a record amount of heat-related outages this summer. Hungary’s only nuclear station faces shutdown as river levels fall. And hydroelectric plants in the Alps and Nordic region — a crucial source of on-demand, low-carbon power — have been hobbled by hot, dry weather.”
Japan Watch:
July 30 – Reuters (Leika Kihara and Makiko Yamazaki) “The Bank of Japan on Friday warned for the first time that underlying inflation could exceed its target and said future policy discussions would focus on upside price risks, signalling the chance of a rate hike as soon as September... ‘Given underlying inflation is approaching our 2% target, we must be mindful of upside price risks more than ever. We will debate our policy from our next meeting onward with this point in mind,’ Governor Kazuo Ueda told a news briefing… ‘At a time when there is a risk of underlying inflation overshooting, delaying necessary policy action could materialise such a risk and hurt the economy,’ he said, warning risks of an inflation overshoot were ‘too big to ignore.’”
EM Watch:
July 31 – Reuters (Marcela Ayres) “Brazil’s overall budget deficit widened to nearly 10% of gross domestic product (GDP) in the 12 months through June…, reaching its highest level since 2021 as elevated interest costs weighed on public finances. The shortfall rose to 1.3 trillion reais ($257.03bn), equivalent to 9.99% of GDP, from 9.61% in May and 7.27% a year earlier. The reading was the highest since April 2021, when the deficit reached 10.25% of GDP as Latin America’s largest economy grappled with extraordinary spending linked to the COVID-19 pandemic.”
July 29 – Reuters (Marcela Ayres) “Brazil’s Treasury is increasing its reliance on floating-rate debt tied to the benchmark Selic interest rate as investors shun longer-dated securities amid global volatility and persistent fiscal concerns… The trend leaves Latin America's largest economy more exposed to high borrowing costs and marks a setback for the Treasury's long-running effort to improve the composition of public debt.”
July 30 – Reuters (Juana Casas) “Latin America is expected to experience a severe El Niño weather phenomenon from October to December, which is likely to worsen agricultural supply shocks caused by conflict in the Strait of Hormuz, a senior United Nations official told Reuters. Maximo Torero, chief economist of the Food and Agriculture Organization, warned the region faces a ‘double blow’ of extreme weather stress and reduced supplies of fertilizers and hybrid seeds.”
Social, Political, Environmental, Cybersecurity Instability Watch:
August 1 – Bloomberg (Brian K Sullivan) “Phoenix has had a record-breaking run of high temperatures and that streak will continue through the coming week, as heat and fire risks spread across the wider US West. Through July 31, Phoenix had reached 95F (35C) or higher 100 times so far this year, said Marc Chenard, a senior branch forecaster at the US Weather Prediction Center. The fifth most populous US city, whose broader metropolitcan area is home to about 5 million people, has been above 90F or higher since May 30. Phoenix is forecast to reach a high of 116F Saturday and remain above 110F through at least Tuesday…”
July 27 – Bloomberg (Eric Roston) “A powerful El Niño already beginning to roil weather around the world may push the monthly global average temperature past 2C of warming for the first time on record, according to projections published by a University of Miami-based ocean and atmospheric research center. The probability that a single month in early 2027 passes 2C has reached 35% to 40%, said Ben Kirtman, dean of the Rosenstiel School of Marine, Atmospheric, and Earth Science at Miami. ‘That’s a large probability,’ he said. ‘That’s really large, and maybe that’s what people don’t appreciate.’”
July 31 – New York Times (Scott Dance) “Communities and farms across Arizona, Nevada and California face potentially drastic cuts in the water they can use from the Colorado River over the next decade under a plan the Trump administration published… The proposal is meant to try to break a logjam among the seven states that rely on the Colorado and comes as rising temperatures and decades of drought and water overuse have overwhelmed a river system that feeds major cities and important farmland. The proposal raises the potential for complex legal battles that could play out for years.”
The S&P500 recovered 1.0% (up 9.4% y-t-d), and the Dow gained 1.0% (up 9.2%). The Utilities dropped 4.0% (up 4.7%). The Banks dipped 0.7% (up 13.9%), while the Broker/Dealers rose 2.3% (up 16.1%). The Transports sank 6.4% (up 21.2%). The S&P 400 Midcaps dipped 0.7% (up 13.7%), while the small cap Russell 2000 was unchanged (up 18.1%). The volatile Nasdaq100 increased 0.5% (up 12.0%). The Semiconductors dropped 4.3% (up 59.7%). The Biotechs declined 1.0% (up 19.3%). With bullion slipping $7, the HUI gold index fell 1.3% (down 11.9%).
Three-month Treasury bill rates ended the week at 3.6687%. Two-year government yields dipped four bps to 4.29% (up 82bps y-t-d). Five-year T-note yields added two bps to 4.45% (up 72bps). Ten-year Treasury yields gained six bps to 4.73% (up 57bps). Long bond yields jumped another 12 bps to 5.27% (up 43bps). Benchmark Fannie Mae MBS yields rose six bps to 5.77% (up 73bps).
Italian 10-year yields added two bps to 4.02% (up 47bps y-t-d). Greek 10-year yields increased two bps to 3.91% (up 47bps). Spain's 10-year yields added two bps to 3.65% (up 36bps). German bund yields gained three bps to 3.21% (up 35bps). French yields increased three bps to 4.00% (up 44bps). The French to German 10-year bond spread was little changed at 79 bps. U.K. 10-year gilt yields added two bps to 5.05% (up 57bps). U.K.’s FTSE equities index gained 1.2% (up 9.3% y-t-d).
Japan’s Nikkei 225 Equities Index slipped 0.4% (up 27.9% y-t-d). Japan’s 10-year “JGB” yields dipped a basis point to 2.81% (up 75bps y-t-d). France’s CAC40 gained 1.6% (up 4.4%). The German DAX equities index rose 2.1% (up 4.7%). Spain’s IBEX 35 equities index added 1.0% (up 14.3%). Italy’s FTSE MIB index increased 0.7% (up 16.1%). EM equities were mixed. Brazil’s Bovespa index jumped 2.3% (up 10.5%), and Mexico’s Bolsa index increased 0.8% (up 4.0%). South Korea’s Kospi fell 1.4% (up 56.5%). India’s Sensex equities index rallied 2.7% (down 8.4%). China’s Shanghai Exchange Index increased 0.5% (down 3.4%). Turkey’s Borsa Istanbul National 100 index dropped 3.5% (up 195%).
Federal Reserve Credit added $1.3 billion last week to a 16-month high $6.699 TN, with a 33-week expansion of $209 billion. Fed Credit was down $2.190 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.973 TN, or 80%. Fed Credit inflated $3.888 TN, or 138%, since November 7, 2012 (716 weeks). Elsewhere, NY Fed holdings for foreign owners of Treasury, Agency Debt recovered $33 billion last week to $2.918 TN - off the low back to August 2010. “Custody holdings” were down $311 billion y-o-y, or 9.6%.
Total money market fund assets (MMFA) declined $7 billion to $7.854 TN - with a three-week decline of $89 billion. MMFA were up $778 billion, or 11.0%, y-o-y - having ballooned a historic $3.270 TN, or 71%, since October 26, 2022.
Total Commercial Paper increased $5.6 billion to $1.397 TN. CP declined $29 billion, or 2.0%, y-o-y.
Freddie Mac 30-year fixed mortgage rates rose eight bps to 6.66% (down 6bps y-o-y). Fifteen-year rates jumped eight bps to 6.04% (up 19bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate up five bps to 6.76% (down 10bps).
Currency Watch:
July 31 – Reuters (Daniel Heuer and David Lawder) “U.S. Treasury Secretary Scott Bessent on Friday exposed a ‘to-do’ list during President Donald Trump's cabinet meeting indicating he was contemplating U.S. purchases of $5 billion to $10 billion worth of Japanese yen, a Reuters photograph taken during the meeting held at Camp David shows. Taken over Bessent’s shoulder during an on-the-record portion of the meeting, the Camp David notepad bears the underscored words ‘To Do’ followed by ‘Buy Japanese Yen (JPY) $5-10 bil.’”
For the week, the U.S. Dollar Index dropped 1.5% to 99.914 (up 1.6% y-t-d). On the upside, the Japanese yen increased 4.1%, the Swedish krona 2.0%, the South African rand 1.9%, the New Zealand dollar 1.5%, the South Korean won 1.4%, the euro 1.4%, the Swiss franc 1.3%, the British pound 1.2%, the Norwegian krone 1.1%, the Mexican peso 0.8%, the Singapore dollar 0.6%, the Australian dollar 0.6%, the Canadian dollar 0.5%, and the Brazilian real 0.2%. China's (onshore) renminbi added 0.27% versus the dollar (up 3.48% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index dropped 2.1% (up 20.4% y-t-d). Spot Gold slipped 0.2% to $4,046 (down 6.3%). Silver declined 1.0% to $57.5953 (down 19.6%). WTI Crude dropped $4.64, or 5.2%, to $84.67 (up 48%). Gasoline sank 8.3% (up 82%), and Natural Gas dropped 4.3% to $2.747 (down 26%). Copper bounced 2.0% (up 14%). Wheat dropped 5.7% (up 26%), and Corn fell 5.1% (unchanged). Bitcoin lost $1,200, or 1.9%, to $62,950 (down 28.2%).
Market Instability Watch:
July 31 – Bloomberg (Abhishek Vishnoi, Winnie Hsu, and Bernadette Toh) “Billionaire Ken Griffin’s deal with embattled hedge fund Situational Awareness helped trigger a relief rally in global AI stocks, leaving traders debating whether the worst is over or more market turbulence is on the way. South Korea’s Kospi Index, dominated by chipmakers, surged a record 18% on Friday following a three-day selloff. Its Taiwanese peer rose 8%, while Japan’s Nikkei 225 advanced 4%. On Thursday, a closely watched US gauge of semiconductor giants climbed the most since April 2025.”
July 30 – Bloomberg (Edward Bolingbroke) “A raft of wagers placed ahead of the Federal Reserve’s policy decision to hedge the possibility of an interest-rate hike are unraveling after officials kept rates unchanged. The widely watched trade in the August fed funds futures amassed positions that topped a million futures for the first time in history, with roughly $5 trillion in notional value at stake. The sheer scale of risk on the table underscored the extraordinary uncertainty ahead of the July meeting, only the second to be held under new Chairman Kevin Warsh, and is now being rapidly unwound.”
July 27 – Bloomberg (Geoffrey Morgan) “The broader S&P 500 Index looks steady in recent weeks because individual moves in its constituents — however big — largely cancel each other out. Things are different on a sector level, where capital is shifting from one industry to the next at a lightning speed. So far in 2026, there have been eight cases when the weekly gap between the S&P 500's best- and worst-performing groups reached double-digit percentages. The three other instances this century when that happened by this point in the year were in 2000, 2001 and 2009 — all ignominious periods for the market, data compiled by Sevens Report show.”
July 29 – Bloomberg “Chinese tech stocks plunged on Thursday, led by high-flying semiconductor names, as concerns over stretched valuations and crowded positioning intensified a rotation out of one of this year's best-performing sectors. The STAR 50 Index tumbled more than 6% to its lowest since April 30... The tech-heavy gauge — on track for its sixth decline in seven sessions — has lost nearly 29% in July after surging about 75% in the previous three months.”
U.S. Credit Trouble Watch:
July 30 – Financial Times (Michelle Chan) “CoreWeave has offered major concessions to win over investors in its latest $2.6bn loan supported by its computing deal with Anthropic, underscoring Wall Street’s waning enthusiasm to fund the AI boom. The cloud computing company has raised yields on the debt to nearly 9.1% and tightened lender protections to get the deal across the finish line after a week of sluggish demand… Key deal sweeteners include a bespoke ‘lockbox’ feature that ensures incoming cash from underlying contracts is used for debt repayment before other expenses.”
July 27 – Financial Times (Michelle Chan in New York and Ramsay Hodgson) “A closely watched gauge of risk in holding the debt of companies at the centre of the AI boom is rising rapidly, underscoring growing jitters over Big Tech’s vast spending on data centres, chips and computer memory. Prices for credit default swaps, popular tools to bet against corporate debt, tied to Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia have risen to record highs in recent days, according to LSEG data. The sharp moves echo a sell-off in debt issued by so-called hyperscalers, which are piling hundreds of billions of dollars into developing vast data centres and sophisticated AI models. It comes as investors have grown increasingly worried about the deluge of debt sold by these companies.”
July 30 – Bloomberg (Rene Ismail) “The default rate across 1,300 US private debt borrowers tracked by Fitch Ratings rose to a record high in the second quarter… The trailing 12-month private credit default rate in the US increased to 6% as of the end of the quarter, up from a previous high of 5.7% reached in the prior three-month period. Fitch recorded 32 instances of private credit default events from 20 new, unique defaulters during the quarter, bringing total defaulters to 84. Maturity extensions under stress overtook payment-in-kind and interest-rate deferrals as the leading driver of quarterly delinquencies, Fitch said.”
July 30 – Bloomberg (Nabila Ahmed) “Blue Owl Capital Inc. said fundraising slowed in the second quarter as turmoil in the private credit market caused investors to pull back from its lending business… The… asset manager raised $7.6 billion in the three months through the end of June, compared with $12.1 billion for the same period a year ago.”
July 31 – Reuters (Aashna Shah) “US state and local government debt is on track to notch its weakest July in more than two decades, as rising benchmark Treasury yields and a flood of new issuance take a toll on what usually is one of the strongest months for the $4 trillion market. The Bloomberg Municipal Bond Index has declined 1.72% so far this month through Thursday, for the worst July since 2003. And it marks only the second monthly loss of the year — the first was in March when oil prices spiked at the start of the Iran war.”
Global Credit Bubble and Boom Watch:
July 29 – Bloomberg (Paul J. Davies) “Europe’s big banks have joined the global stock trading party. Danger lurks, however: When the market turns, it is often brutal. Barclays Plc and UBS Group AG this week reported increased equity trading revenue of 46% and 53% in dollar terms, respectively, versus last year’s second quarter. BNP Paribas SA showed a 47% rise last week. Citigroup Inc., which is also playing catchup, reported similar growth. As strong as these numbers are, they pale next to the 70%-plus gains at the other four big US banks. The key difference for the US leaders in the second quarter was their already huge businesses lending to hedge funds and other leveraged traders.”
Leveraged Speculation Watch:
July 28 – Financial Times (Ortenca Aliaj, Kate Duguid, Amelia Pollard, Costas Mourselas and James Fontanella-Khan) “Wall Street banks have demanded more collateral from hedge funds in recent weeks as a rout in AI stocks accelerates and triggers heavy losses across several popular strategies. Banks asked funds whose holdings are heavily concentrated in certain industries to provide additional collateral to keep their existing levels of leverage, according to four people familiar with the matter. The collateral demands highlight the mounting fears on Wall Street about the scale and speed of the sell-off in AI stocks over the past fortnight, which has upended a rally in a sector favoured by many funds.”
July 26 – Financial Times (Alan Livsey) “Assets managed by hedge funds rose by the largest amount ever last quarter due to the AI-driven boom in share prices and investors moving away from private equity and credit funds. Last quarter, total assets under management grew by $409bn to $5.6tn, with investment performance accounting for much of that rise, according to… HFR. Hedge funds lost money in a volatile March following the outbreak of the Iran war. Since then, they have benefited from a powerful equity price rally led by chip stocks such as Samsung, AMD and SK Hynix. ‘I think this is going to be a golden era for hedge funds after a long, long time,’ said Shenan Dhanani, co-chief executive at Trium Capital, which manages $5.1bn in assets.”
Iran War Watch:
August 1 – New York Times (Steven Erlanger) “To America’s allies, President Trump’s war in Iran, now in its sixth month, seems headed for a strategic defeat. They worry that the inability of the United States to turn military superiority into a sustainably changed Iran has displayed a vulnerability that Russia and China will welcome. In addition, Mr. Trump’s goals remain unmet, and the U.S. military is running short on key armaments that it needs for global reach. For the moment, Iran is seemingly resolute under a more radical government, its nuclear and ballistic missile programs are degraded but not destroyed, and the Strait of Hormuz is effectively under its control. The war has left both the United States and Israel in weaker positions — and blaming each other for the mess.”
July 29 – Wall Street Journal (Jared Malsin and Suha Ma’ayeh) “Iran’s surprise missile attack on U.S. forces in Jordan shows Tehran’s military leaders would rather risk ramping up the war than play defense or accept a peace deal that would expose them to greater domestic political pressures. Iran fired ballistic missiles on U.S. troops early Wednesday local time, demonstrating a willingness by the Islamic Revolutionary Guard Corps, which exerts more power than ever in Tehran, to escalate during a relative lull in the conflict and attempt to seize the initiative after weeks in which Iran has mostly reacted to U.S. and Israeli attacks. ‘They see themselves as having the upper hand,’ said Hamidreza Azizi, a visiting fellow specializing in Iran at the German Institute for International and Security Affairs. ‘It was a signal of a sort of calibrated escalation.’”
August 1 – CNBC (Azhar Sukri) “A tanker near Oman reported being struck overnight, with another saying it saw an explosion nearby as Iran warned Washington that the U.S. military’s blockade of the Strait of Hormuz would result in the closure of key shipping routes. Separately, Kuwait said its air defenses confronted hostile drone attacks by Iran.”
July 30 – New York Times (Vivian Nereim and Ismaeel Naar) “Saudi Arabia entered the U.S.-Iran war on Wednesday with airstrikes in Iraq. Its delayed entry, six months into the war, illustrated the bind the kingdom faces as it tries to deter attacks without getting sucked into the broader conflict, analysts say. The kingdom’s defense ministry announced the airstrikes, accusing Iran-backed militias in Iraq of attacking Saudi oil facilities this week… Iraq’s National Security Council said… the strikes had caused the deaths and injuries of ‘a number of innocent people,’ and Prime Minister Ali al-Zaidi of Iraq called the strikes ‘an unacceptable aggression.’”
July 28 – Wall Street Journal (Benoit Faucon and Summer Said) “Iran rejected a proposal to evenly divide control of the Strait of Hormuz, jeopardizing hopes that Tehran and Washington would quickly resume negotiations to end the war. Oman, which sits opposite Iran across the strait, suggested a temporary plan to establish even lanes of control, but Tehran demanded Tuesday that it take the lion’s share of the waterway critical to the flow of the world’s oil supply, one of its top diplomats said.”
July 29 – Reuters (Nafisa Eltahir, Elwely Elwelly and Tala Ramadan) “A drone strike that sparked fires on two gas vessels in Egypt’s Mediterranean port of Damietta has raised a new threat to shipping through the Suez Canal, one of the last major export routes available to Saudi oil amid the expanding U.S.-Iran war. No one has claimed responsibility for what Egypt’s cabinet said… was an unidentified drone that caused a fire on two vessels…”
July 27 – Financial Times (Jacob Judah) “Soon after the US launched its joint attack with Israel on Iran in late February, defence secretary Pete Hegseth declared that among its aims were to ‘destroy Iranian offensive missiles, destroy Iranian missile production’. Yet five months later and after hundreds of US attacks, Iran has been able to sustain the effectiveness of its missile force, continuing to launch apparently precise strikes on targets across the region. Its missile crews have killed Americans at their barracks in Jordan, repeatedly struck buildings on major bases in Kuwait and Bahrain, targeted installations in Saudi Arabia and Qatar, and appear to have learnt from their experiences under intense bombardment in March and April.”
July 28 – Bloomberg (Sherif Tarek) “Iran-backed militias in Iraq fired drones at oil facilities in Saudi Arabia’s Eastern Region for the second day in a row, piling pressure on the kingdom, which is grappling with a maritime blockade limiting its crude oil shipments. The Saudi Defense Ministry said it had intercepted the drones on Tuesday… Similar attacks were carried out from Iraq on Riyadh and the Eastern Region on Monday.”
Iran War Ramifications Watch:
July 26 – Wall Street Journal (Georgi Kantche and Summer Said) “Saudi Arabia’s vast oil exports increasingly depend on one last narrow exit. Since the Iran war began, the kingdom has ramped up exports across the country to its Red Sea coast, bypassing the Strait of Hormuz, and shipped them through the Bab al-Mandeb Strait to Asian customers. Now, threats from Houthi militants—and several attacks against Saudi vessels in recent days—risk choking off that workaround, forcing more Saudi barrels onto a longer, costlier and technically challenging journey through Egypt’s Suez Canal and around Africa.”
July 29 – Financial Times (Jamie Smyth) “US crude stockpiles fell sharply last week as local oil refineries boosted activity to take advantage of surging fuel prices driven by renewed hostilities with Iran. Commercial crude oil inventories decreased by 7.2mn barrels and the US Strategic Petroleum Reserve fell by 3.8mn barrels, as refiners drew down stocks to make products such as petrol, diesel and jet fuel. Government data… showed US refineries were running at 97% of capacity, with those in some parts of the Midwest operating at 100%, as US energy companies increase exports to supply energy-hungry markets in Asia and Europe.”
July 29 – Bloomberg (Nicholas Lua) “Diesel is ‘at the epicenter’ of a supply squeeze in fuels as global refinery activity fell this month to its lowest seasonal level since the pandemic, according to Goldman Sachs… The weakness in run rates was due to refinery outages in Russia and the Middle East from ongoing conflicts, along with subdued processing in China, analysts including Yulia Zhestkova Grigsby and Daan Struyven said in a note... That cut global throughput by an estimated 6.5 million barrels a day from a year earlier, they said. The slowdown is tightening fuel supplies just as demand heads toward the fourth-quarter peak season.”
July 31 – New York Times (Lisa Friedman) “Nearly five months of war in the Middle East is complicating an already difficult annual rite in Europe: stocking up on energy for the cold months of winter. Storage facilities for natural gas, which households and businesses use extensively for boilers and furnaces, are only 54% full. That’s the second-lowest level for summer since 2011, and the lowest for July since 2021, when Russia’s state-owned energy company was restricting gas supplies to Europe… ‘It’s quite a worrying situation,’ said Chris Aylett, a research fellow in the Environment and Society Center at Chatham House... ‘When you look at the situation in the Hormuz, you just don’t have a sense of how this gets resolved,’ he added.”
Trump Administration Watch:
July 27 – Reuters (Trevor Hunnicutt) “U.S. President Donald Trump on Monday called on the Federal Reserve to lower interest rates, saying the U.S. should have the lowest interest rate in the world. ‘Rates should be lowered... We have other countries that are paying less interest rates,’ Trump told reporters…”
July 29 – Reuters (Steve Holland) “President Donald Trump… refused to turn on his ‘brilliant’ hand-picked U.S. central banker in chief despite the fact that Federal Reserve Chairman Kevin Warsh has not delivered the rate cuts Trump desperately wants and has dim prospects for doing so anytime soon. ‘He’s a brilliant guy,’ Trump told reporters... ‘I know he’d love to see lower interest rates, but he’s got a board, and it’s a political board, and they want to keep rates up. But we fight through rates.’”
July 31 – Yahoo Finance (Jennifer Schonberger and David Hollerith) “The Trump administration is rolling back red tape for community banks to try to boost lending in the economy. The Office of the Comptroller of the Currency is updating a regulation known as the Community Bank Leverage Ratio framework to reduce the regulatory burden on the country’s smallest banks. The move is expected to free up as much as $64 billion for community lending, with 95% of all community banks eligible for the change in the rule.”
July 31 – Axios (Ben Berkowitz) “The Justice Department moved to drop the indictment of an Olympian who’d been charged with damaging the Lincoln Memorial Reflecting Pool, saying the problems were actually caused by a contractor. It’s an unusual public contradiction by the DOJ of President Trump, who’d insisted the damage after the $14 million renovation was caused by vandals. The DOJ filed in D.C. Superior Court to drop an indictment against David Hearn, a former Olympic canoeist, who’d been accused of ‘forcefully and violently pulling up and removing the bottom liner with both hands.’ At a news conference earlier this month, D.C. U.S. Attorney Jeanine Pirro said the charge against Hearn was about ‘accountability’ and that he faced up to 10 years in prison.”
Trade War Watch:
July 27 – Financial Times (Editorial Board) “They are the tariffs that refuse to die. Anyone who thought the US president’s signature trade policy might be in tatters when the US Supreme Court ruled in February that last year’s so-called liberation day tariffs were illegal has had to think again. New duties of between 10 and 12.5% on 60 trading partners announced last Thursday demonstrate that the president is not done with his policy, but is moving it into a new phase. The administration is aiming to rebuild its tariff wall on more durable legal foundations. Its latest measures rebuilt the baseline — and there are more to come.”
July 29 – CNBC (Evelyn Cheng) “The U.S. Federal Communications Commission has repeatedly ignored Beijing’s restrained stance on product bans, China’s commerce ministry said…, threatening retaliation. The FCC… said due to cybersecurity concerns, it added foreign-made advanced robotic devices, including humanoids, to a list restricting imports to the U.S… As the FCC keeps escalating restrictions on Chinese goods, it ‘severely damages China-U.S. economic and trade stability,’ China’s commerce ministry said…”
Deficit Watch:
July 30 – Wall Street Journal (Drew FitzGerald and Marcus Weisgerber) “The Pentagon… earmarked more than $120 billion for contractors to step up production of Patriot missiles and long-delayed submarines to support future combat operations. The Patriot contract with missile maker Lockheed Martin is now valued at nearly $59 billion, a significant expansion of an order announced in April. General Dynamics Electric Boat and HII Newport News Shipbuilding received a $76.6 billion deal for nine Virginia-class and five Columbia-class nuclear submarines that will be delivered by 2038. Replenishing munitions stockpiles and increasing shipbuilding capacity are top Trump administration priorities, and have been pain points for the U.S. military. Congress must still provide annual funding for the deals.”
July 29 – Reuters (Mike Stone) “The U.S. Army awarded Lockheed Martin a contract worth up to $58.6 billion to produce Patriot interceptor missiles, the Pentagon said on Wednesday, as conflicts in Iran and Ukraine strain U.S. weapons stockpiles. The U.S. has supplied large quantities of weapons to allies while also using munitions in its own military operations in Iran, raising concerns about inventories of key air defense and precision-guided weapons.”
New World Order Watch:
July 28 – Financial Times (Edward Luce) “‘Tweets don’t overturn signed agreements,’ said a Saudi official last week. Amid America’s broiling ocean of surrealism, being instructed by a dynastic autocracy on the sanctity of the contract stands out. Donald Trump had claimed to amend a US-Saudi nuclear deal on his Truth Social site the day after it was signed. That the deal was controversial is one thing. That he thought he could change it without asking the Saudis was another. Trump keeps making fantasy announcements. His grip on power is suffering as a result. That might seem paradoxical for a US president who has done more than any other to create an all-powerful presidency. But power is the ability to shape the world to your advantage. This should not be confused with constantly declaring how powerful you are.”
U.S./Russia/China/Europe/Iran Watch:
July 26 – CNBC (Azhar Sukri) “Iran summoned a Ukrainian diplomat in Tehran… to protest an attack on an Iranian commercial vessel in the Caspian Sea, as the war in the Middle East threatened to overlap with the Ukraine conflict. Iran said the attack left one sailor dead and injured several others. The country’s foreign ministry complained to Ukraine’s chargé d’affaires in Tehran early on Sunday and ‘conveyed Iran’s strong protest over the ‘hostile and criminal act.’’ Iran’s Islamic Republic News Agency reported.”
Ukraine War Watch:
August 2 – BBC (Jaroslav Lukiv): “Ukraine has said it carried out overnight strikes deep inside Russia, hitting a major oil refinery and an airfield that houses Russian strategic aviation. President Volodymyr Zelensky said the Engels airfield and the refinery, both in the Saratov region some 600km (373miles) from Ukraine's border, were hit. An oil depot was also struck in Kaluga region and a drone launch site in Bryansk. Russia said eight people were killed in the Ukrainian strikes, and 635 drones shot down or intercepted. It also reported yet another strike on a warehouse of Russia's biggest online retailer Wildberries.”
Taiwan Watch:
July 31 – Bloomberg (Yian Lee and Chien-Hua Wan) “Taiwan’s economy expanded at the fastest pace in some 50 years in the first half of 2026… Gross domestic product grew 13.72% in the period, the statistics bureau… said... It said the economy expanded 12.92% in the second quarter, topping the 10.50% median estimate…”
AI Bubble/Arms Race Watch:
August 1 – Axios (Zachary Basu and Madison Mills) “Chinese AI lab DeepSeek released a powerful new coding model Friday that charges pennies for vast amounts of code — the latest sign that some of the smartest software on Earth is rapidly becoming a commodity. Tech giants are pouring hundreds of billions of dollars into the computing infrastructure powering the AI revolution. Yet the intelligence that infrastructure produces is getting cheaper by the week. DeepSeek is the same Chinese startup that ignited a market meltdown last January by showing it could build a world-class AI model with far fewer resources than its U.S. rivals. Its newest model, V4 Flash, performs close to the level of Anthropic's Claude Opus 4.8, one of the industry’s most capable systems, on tests of complex coding and autonomous software tasks.”
July 30 – Financial Times (Cristina Criddle) “Anthropic has disclosed that its Claude AI models hacked into three organisations while the start-up was testing cyber capabilities, a week after OpenAI reported a similar incident. The group said Claude gained unauthorised access to outside companies during an evaluation of its cyber-offensive tasks. ‘A misunderstanding’ gave Claude access to the internet in its testing environment, when it was meant to be blocked, Anthropic said.”
July 31 – Reuters (Deepa Seetharaman and Raphael Satter) “OpenAI has discovered other instances in which autonomous agents have escaped containment as the company expands its investigation of the hacking incident at tech firm Hugging Face that drew global attention this month, two people familiar… said... The new breakouts were uncovered during the company's publicly announced investigation, opens new tab into how one of its agents escaped what was meant to be a contained testing environment this month, the two people said, and OpenAI is now looking into those instances as well. One of the sources said that the escapes were limited in nature and that none of the agents were thought to have left OpenAI's network.”
August 1 – CNBC (Daniel Heuer and David Lawder) “For months, cybersecurity leaders warned that artificial intelligence would reshape the threat landscape, compressing weeks- and dayslong cyberattacks into a matter of minutes. Until last week, those threats still felt like a distant risk. The OpenAI agent hack on Hugging Face illustrates that this era has not only arrived but also created a new challenge: AI agents will go to extremes to accomplish their goals, and do it in unpredictable ways. ‘The reality is Pandora’s box is open,’ said Sam Curry, chief information security officer at Zscaler. ‘We need to act as if AI is just a fact of life going forward. The most those things will do is slow it. They won’t stop it.’”
July 27 – Financial Times (Cristina Criddle and Rafe Rosner-Uddin) “Microsoft’s AI chief has said the hacking spree by a rogue OpenAI model was a ‘warning shot’ for the rise of AI-enabled cyber attacks… Mustafa Suleyman, chief executive of AI at Microsoft and a DeepMind co-founder, said OpenAI’s admission last week that one of its AI ‘agents’ had escaped a test environment to attack start-up Hugging Face was an ‘important lesson’. ‘These are very powerful [tools] and they need to be handled incredibly carefully. And we need extreme attention to detail… The precautionary principle is going to matter here as the models get more and more powerful and I think it’s a warning shot.’”
July 30 – Financial Times (Ryan McMorrow, Rafe Rosner-Uddin and Hannah Murphy) “The four big hyperscalers have ploughed more than $1tn into capital investments since their race to dominate AI began three and a half years ago… Combined capital spending by Google, Amazon, Microsoft and Meta from the beginning of the AI boom in 2023 to the end of June hit $1.1tn, according to earnings reports from the four companies... The massive expenditure is a mark of both the scale of their AI ambitions and the speed with which the US tech giants have turned from capital-light businesses into huge investors in physical infrastructure. ‘There is basically no end in sight for the growth in capex,’ said Rishi Jaluria, an RBC Capital analyst. ‘Investors need these companies to toe the tight line between investing in AI and not compromising the things that have made them successful.’”
July 27 – Bloomberg (Dina Bass and Winnie Hsu) “Nvidia Corp. is working on a fresh round of AI infrastructure deals potentially worth more than $750 billion, accelerating a streak of investments that skeptics warn is artificially inflating demand and valuations across the industry. An artificial intelligence initiative with the parent of South Korean chipmaker SK Hynix Inc. unveiled late Friday is worth more than $500 billion, Nvidia said. The world's most valuable company is also in discussions to provide a guarantee of as much as $250 billion to help OpenAI lease computing from a US data center project…”
July 30 – Associated Press (Stan Choe) “A monster day for Microsoft’s stock following signals that its big spending on AI is translating into profits led a powerful rebound on Wall Street Thursday, while computer-chip companies regained some of their sharp recent losses. In the bond market, though, worries remained about inflation potentially remaining high for years… Microsoft led the way and leaped 15.5% for its best day in nearly 18 years after reporting a stronger profit for the latest quarter than analysts expected.”
July 29 – Financial Times (Brody Ford and Matt Day) “Microsoft Corp. reported more than $130 billion in new data center leases in the past quarter, signaling an accelerating pace of spending on artificial intelligence infrastructure. The company's total commitments for leases that have not yet commenced were $329.1 billion…”
July 30 – CNBC (Annie Palmer) “Amazon reported surging cloud growth during the second quarter, pointing to strong artificial intelligence demand, and the company boosted its capital spending forecast for the year. The stock shot up more than 10% in extended trading… Amazon said it expects to spend even more on AI, with capital expenditures projected to hit $220 billion this year… In February, the company said capex would hit $200 billion…”
July 30 – Wall Street Journal (Asa Fitch) “Meta Platforms might not be the first Big Tech company to rein in AI spending. But the argument that it should be is growing stronger. Meta is the most financially stretched of the biggest tech companies. Its ability to generate returns from artificial intelligence hinges almost solely on ad sales. And it has no record of building successful new businesses beyond its core social-media franchise.”
July 27 – Bloomberg (John Ainger) “The biggest US power grid is warning that data centers may face involuntary outages under a plan to avert widespread blackouts and protect residential ratepayers from electricity price spikes. Digital warehouses that fail to secure enough power generation to slake their needs may be temporarily dropped from the grid during high-demand periods as soon as mid-2027, PJM Interconnection LLC said in a letter to stakeholders…”
Inflation Watch:
July 31 – Wall Street Journal (Ryan Dezember) “The continuing closure of the Strait of Hormuz is beginning to hit Americans’ wallets far beyond the pump. Companies say they are raising prices on products ranging from french fries and beer to paint and packaging to offset their own rising commodity and freight costs. Samuel Adams brewer Boston Beer, Sherwin-Williams, International Paper and Unilever—maker of Dove soap and Hellmann’s mayonnaise—are among the companies that have told investors in recent days that they have raised prices or plan to soon to compensate for more expensive raw materials. The price increases have been cheered by investors, who have bid up shares of several companies following notice of increases.”
August 1 – Bloomberg (Mark Niquette) “When fuel costs jumped earlier in the Iran war, US consumers powered through it — with a hefty assist from federal tax refunds. Now they’re getting hit by another wave of higher gasoline prices, and the buffer is gone. That’s a risk to US economic growth, which just got a bigger-than-expected boost from consumer spending last quarter… Average pump prices rose more than 50% in the months after the US and Israel attacked Iran, peaking at $4.56 a gallon in May, according to the American Automobile Association. Around that time, Americans had been getting tax refunds that were fattened up by Trump’s One Big Beautiful Bill Act. The average check this year rose 11.5% to $3,276…”
July 30 – Wall Street Journal (Matt Grossman) “The inflation gauge tracked by the Federal Reserve cooled in June but remains well above the central bank’s 2% target… The price index of personal-consumption expenditures declined by 0.1% last month as lower energy prices helped pull down the overall price level… That yielded a 12-month PCE inflation rate of 3.7%, a decline from 4.1% in May. Setting aside volatile food and energy categories, a 0.1% price increase in June gave rise to a 12-month core PCE inflation rate of 3.3%, slightly cooler than the 3.4% recorded in May.”
August 1 – CNBC (Kevin Crowley) “High fuel prices are likely to stick around even if oil prices drop in the coming months as the wars in Russia and Middle East leave global refining capacity critically short, ExxonMobil Holdings Corp. and Chevron Corp. warned. Gasoline, diesel and jet fuel prices typically rise and fall with crude oil. But that link is growing tenuous because so many refineries have been knocked offline, causing fuel prices to remain stubbornly high and accelerating inflation even as oil falls. ‘The constraint pain point in the energy system is refining,’ ExxonMobil Chief Financial Officer Neil Hansen said... It’s ‘something that perhaps the market isn’t fully focused on.’”
July 31 – Wall Street Journal (Anna Wilde Mathews) “Suzanne Mercer and her husband Kip lost their Affordable Care Act plan this year because they couldn’t afford to pay more than $4,000 a month for the coverage. The couple… have stopped going to see their doctors. Mercer, 59 years old, also hasn’t gotten a follow-up scan that a doctor ordered after a mammogram in December turned up a concerning spot. ‘It’s awful, you just cross your fingers,’ she said. ‘I just don’t want to know right now, because I can’t do anything about it.’ Mercer is one of millions of Americans going without health insurance after the ending of federal subsidies that kept their ACA premium bills down. The loss is starting to bleed into the wider healthcare economy.”
July 30 – Bloomberg (Carla Samon Ros) “Americans worried about their grocery bill have another popular superfood to worry about: already expensive blueberries are facing even more pricing pressure. That’s because potentially the strongest El Niño in more than 75 years is expected to pick up during Peru’s peak blueberry harvest, coinciding with the start of the rainy season along the country’s northern coast where most blueberries are grown. Peru, the world’s largest exporter of fresh blueberries, is already facing disruptions from the weather phenomenon.”
Federal Reserve Watch:
July 29 – Reuters (Dan Burns) “Kevin Warsh came into the Federal Reserve chairman’s seat busting for, as he repeatedly called it, a ‘good family fight,’ and he appears to have had a bruiser at this week's two-day policy meeting, just the second he has overseen. Three of his fellow Federal Open Market Committee members dissented against a decision to hold interest rates unchanged, preferring they be raised… No Fed leader since the 1970s has faced such great opposition so early in their tenure, according to a record of FOMC dissents maintained by the St. Louis Fed. Arthur Burns had three FOMC members vote against his very first policy decision in February 1970. And Paul Volcker had two members object at his first meeting — then four at his second.”
July 30 – Financial Times (Ian Smith) “Federal Reserve chair Kevin Warsh’s stripped-back approach to communication is ‘already backfiring’ and risks eroding the central bank’s influence over the $31tn US Treasury market, investors have warned. Thirty-year US borrowing costs jumped to their highest since 2007 on Thursday, despite the Fed holding its policy rates steady. Warsh vowed… that the central bank ‘will not waver’ in the battle against inflation. But investors said the lack of forward guidance on where rates are going — and the lack of an explanation as to why the Fed had not raised them if inflation is a concern — had spooked the market. ‘Whether by intent or accident, he has let go of any air of control over the Treasury market,’ said Stephen Jones, chief investment officer at Aegon Asset Management. ‘That’s quite a change from the desires and modus operandi of Fed chairs in the past.’”
July 30 – New York Times (Colby Smith) “Early in Kevin M. Warsh’s second news conference as chairman of the Federal Reserve, he laid out how the central bank would ultimately be assessed as it takes on one its most challenging inflation problems in decades. The central bank was in the business of ‘performance,’ he told reporters…, after the Fed’s decision to hold rates steady at a range of 3.5 to 3.75%. ‘We are going to be judged by how we perform.’ Financial markets swiftly rejected Mr. Warsh’s approach, which involved tough talk on inflation but stopped well short of embracing the prospects of higher interest rates to quell price pressures. The response, primarily from the $28 trillion U.S. government bond market, was unequivocal. Markets expected more from a policymaker who has made taming inflation a top priority of his chairmanship.”
July 30 – Bloomberg (Catarina Saraiva) “Kevin Warsh’s second press conference as Federal Reserve chairman puzzled economists and investors, who appear unconvinced the new central bank chief is as committed to stamping out inflation as he says. Warsh, who has said he won’t share his view of when or whether the Fed might adjust interest rates, went further on Wednesday and refused to explain how policymakers might react to different economic outcomes. He praised a run-up in bond yields since the Fed’s last meeting, arguing it was helping the central bank and could mean officials don’t need to raise rates to bring down inflation. Investors responded by dumping 30-year Treasury bonds and dialed back expectations for rate hikes over the coming months.”
U.S. Economic Bubble Watch:
July 29 – CNBC (Jeff Cox) “Economic growth was weaker than expected in the second quarter though underlying drivers were mostly solid. At the same time, inflation in June held well above the Federal Reserve’s goal… Gross domestic product… increased just 1.5% for the April-through June period… Economists… had been looking for a growth rate of 1.8%, following the 2.1% increase in the first quarter.”
July 27 – Wall Street Journal (Chip Cutter) “America’s biggest companies say they might need more people after all. For months, major employers treated hiring as an expensive last resort. Now, a shift is emerging across industries. Companies ranging from railroad giant CSX to Google parent Alphabet have told investors in recent days that they plan to hire to meet growth goals or to seize on emerging technologies. The push to expand head count, at least modestly, is a reversal from the prevailing corporate messaging during much of the AI era. Major employers largely held back on adding people due to economic uncertainties or a belief that artificial intelligence could shoulder more tasks on the job. But some executives say the costs and limitations of AI now demand that more people be added; others want to hire people back following layoffs.”
July 30 – Reuters (Lucia Mutikani) “The number of Americans filing claims for unemployment benefits increased less than expected last week, suggesting that labor market conditions remained stable. Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 197,000… The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, fell 7,000 to a seasonally adjusted 1.782 million during the week ended July 18…”
July 28 – Associated Press (Matt Ott) “Americans’ confidence in the economy fell this month as gas prices resumed their climb after the U.S. and Iran stepped up their fighting. The Conference Board said… that its consumer confidence index fell to 90.8 in July from 92.2 in June. That’s essentially the same tepid range its been in since the beginning of the year. In late 2024 and early 2025 the readings were well above 100.”
China Watch:
July 30 – Bloomberg “China’s factory activity unexpectedly contracted for the first time in five months and construction slumped to the lowest since the start of the pandemic, pointing to a further loss of momentum in the economy after a slowdown last quarter. The official manufacturing purchasing managers’ index slipped to 49.2 in July… That fell short of all estimates… The non-manufacturing measure of activity in construction and services retreated more than forecast to 49 — the lowest since December 2022 — from 50.2 last month… The construction PMI plummeted to 47.”
July 30 – Financial Times (Thomas Hale and William Sandlund) “China’s leadership has signalled it will speed up public spending but stopped short of delivering sudden stimulus measures for the economy, as President Xi Jinping acknowledged a need to ‘tap the potential of domestic demand’ during the rest of the year. Officials of the Chinese Communist Party’s politburo, a top decision-making body, met on Thursday and agreed to ‘accelerate the pace of fiscal expenditure’, according to a readout of the meeting…”
July 26 – Wall Street Journal (Rory Jones) “For decades, founders and investors in China’s technology firms used tax-haven shell companies to list overseas and keep billions of dollars in offshore centers. The loophole allowed China’s superrich to bypass strict capital controls and avoid government oversight of their wealth. Now, the party is ending. In a series of new rules and laws, China is reordering the wealth landscape, seeking to better control how money leaves the country, with effects rippling beyond its borders. Authorities are pressuring companies to abandon foreign structures and incorporate locally.”
Central Banker Watch:
July 28 – Financial Times (Delphine Strauss) “The AI boom is blurring the economic signals central banks rely on to set monetary policy, raising the risk they will make damaging mistakes, economists at the Bank for International Settlements have warned. Staff at the… organization… said AI’s effect on investment, trade and asset prices was powerful enough ‘to shape the global outlook in real time’, supporting growth in the face of trade tensions and geopolitical shocks. These effects were now ‘large and observable’ and could add to price pressures, they said, noting that spending on data centres and IT manufacturing facilities in the US had risen to 0.8% of GDP, while the wealth effect of equity price gains was boosting consumers.”
July 30 – Associated Press (Danica Kirka) “The Bank of England kept its key interest rate on hold for the fifth time this year… after a bigger-than-expected drop in the inflation rate last month gave policymakers breathing space to assess the fallout from renewed fighting in Iran. The bank’s monetary policy committee voted 6-3 to keep the rate at 3.75%, in line with the expectations of most economists… The split decision highlights growing tensions within central banks around the world about how to respond to stubbornly high inflation and concerns that the war in Iran will lead to another round of price increases.”
Europe/UK Watch:
August 1 – Bloomberg (Will Mathis) “A series of blistering heat waves has weakened some of Europe’s most historically reliable sources of electricity, forcing the continent to lean more heavily on imported fossil fuels and variable renewable energy. France’s river-cooled nuclear plants have suffered a record amount of heat-related outages this summer. Hungary’s only nuclear station faces shutdown as river levels fall. And hydroelectric plants in the Alps and Nordic region — a crucial source of on-demand, low-carbon power — have been hobbled by hot, dry weather.”
Japan Watch:
July 30 – Reuters (Leika Kihara and Makiko Yamazaki) “The Bank of Japan on Friday warned for the first time that underlying inflation could exceed its target and said future policy discussions would focus on upside price risks, signalling the chance of a rate hike as soon as September... ‘Given underlying inflation is approaching our 2% target, we must be mindful of upside price risks more than ever. We will debate our policy from our next meeting onward with this point in mind,’ Governor Kazuo Ueda told a news briefing… ‘At a time when there is a risk of underlying inflation overshooting, delaying necessary policy action could materialise such a risk and hurt the economy,’ he said, warning risks of an inflation overshoot were ‘too big to ignore.’”
EM Watch:
July 31 – Reuters (Marcela Ayres) “Brazil’s overall budget deficit widened to nearly 10% of gross domestic product (GDP) in the 12 months through June…, reaching its highest level since 2021 as elevated interest costs weighed on public finances. The shortfall rose to 1.3 trillion reais ($257.03bn), equivalent to 9.99% of GDP, from 9.61% in May and 7.27% a year earlier. The reading was the highest since April 2021, when the deficit reached 10.25% of GDP as Latin America’s largest economy grappled with extraordinary spending linked to the COVID-19 pandemic.”
July 29 – Reuters (Marcela Ayres) “Brazil’s Treasury is increasing its reliance on floating-rate debt tied to the benchmark Selic interest rate as investors shun longer-dated securities amid global volatility and persistent fiscal concerns… The trend leaves Latin America's largest economy more exposed to high borrowing costs and marks a setback for the Treasury's long-running effort to improve the composition of public debt.”
July 30 – Reuters (Juana Casas) “Latin America is expected to experience a severe El Niño weather phenomenon from October to December, which is likely to worsen agricultural supply shocks caused by conflict in the Strait of Hormuz, a senior United Nations official told Reuters. Maximo Torero, chief economist of the Food and Agriculture Organization, warned the region faces a ‘double blow’ of extreme weather stress and reduced supplies of fertilizers and hybrid seeds.”
Social, Political, Environmental, Cybersecurity Instability Watch:
August 1 – Bloomberg (Brian K Sullivan) “Phoenix has had a record-breaking run of high temperatures and that streak will continue through the coming week, as heat and fire risks spread across the wider US West. Through July 31, Phoenix had reached 95F (35C) or higher 100 times so far this year, said Marc Chenard, a senior branch forecaster at the US Weather Prediction Center. The fifth most populous US city, whose broader metropolitcan area is home to about 5 million people, has been above 90F or higher since May 30. Phoenix is forecast to reach a high of 116F Saturday and remain above 110F through at least Tuesday…”
July 27 – Bloomberg (Eric Roston) “A powerful El Niño already beginning to roil weather around the world may push the monthly global average temperature past 2C of warming for the first time on record, according to projections published by a University of Miami-based ocean and atmospheric research center. The probability that a single month in early 2027 passes 2C has reached 35% to 40%, said Ben Kirtman, dean of the Rosenstiel School of Marine, Atmospheric, and Earth Science at Miami. ‘That’s a large probability,’ he said. ‘That’s really large, and maybe that’s what people don’t appreciate.’”
July 31 – New York Times (Scott Dance) “Communities and farms across Arizona, Nevada and California face potentially drastic cuts in the water they can use from the Colorado River over the next decade under a plan the Trump administration published… The proposal is meant to try to break a logjam among the seven states that rely on the Colorado and comes as rising temperatures and decades of drought and water overuse have overwhelmed a river system that feeds major cities and important farmland. The proposal raises the potential for complex legal battles that could play out for years.”
