Daily Market Outlook, July 10, 2026

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — Hynix Hype, Hormuz Hedges

Forget the Strait—investors are back on the semis. After a week dominated by Iran headlines, oil spikes, and bond-market stress, investors are ending the week by returning to the trade they know best: technology, semiconductors, and the AI capex cycle. The Middle East has not disappeared as a risk, but with Brent off its highs and US-Iran technical talks still alive, markets are no longer pricing a straight line from military escalation to global energy disruption.

Asian equities rallied hard. The MSCI Asia Pacific Index rose 1.7%, cutting its weekly loss to less than 1%, while Hong Kong’s Hang Seng gained 1.9% and is on course for its best week in more than a year. The strongest signal came from South Korea, where the KOSPI jumped 5%, led by SK Hynix after its $26.5bn American depositary share offering. That move matters because Korea remains one of the cleanest global gauges of AI hardware risk appetite. The message from Asia is simple: the AI dip-buyers are still there. The sector had been battered by valuation concerns, oil-driven rate repricing, and profit-taking in crowded semiconductor names. But the willingness to buy back into SK Hynix and the broader Korean chip complex shows investors still view the AI investment boom as a structural story, not just a momentum trade. SK Hynix is the centerpiece. Its ADRs begin trading Friday on the Nasdaq Global Select Market under the ticker SKHYV, before shifting to SKHY when regular trading starts on July 13. The offering is expected to help fund the company’s investment push into AI computing infrastructure, alongside Samsung Electronics, as part of South Korea’s broader government-backed semiconductor initiative valued at $880bn. That is exactly the kind of story equity investors want to own going into earnings season. Not abstract AI enthusiasm, but capital raising, capacity expansion, data center demand, and hardware bottlenecks. The recent pullback has created a cleaner entry point for investors who believe earnings will validate the capex cycle.

Still, the global equity tone is not euphoric. US and European futures are slightly softer, suggesting investors are not blindly chasing the Asia rally. The MSCI All Country World Index has recovered its earlier weekly decline and is now on track for a modest 0.1% weekly gain. That is a recovery, not a breakout. Oil is the reason the rally is still measured. Brent is trading around $76.50–$76.70, almost exactly halfway between last Friday’s close and Tuesday’s spike above $80. The retracement matters. Markets are reading the continuation of US-Iran technical talks as evidence that this week’s strikes may not mark the start of a protracted military campaign. That said, Brent is still elevated. The market has faded the worst-case Hormuz scenario, but it has not removed the geopolitical premium. Energy remains the swing factor for rates, inflation and risk appetite. If crude settles in the mid-$70s, equities can live with it. If it breaks back toward $80 and stays there, the policy conversation changes again.

The bond market has not treated the week evenly. US Treasuries have been relatively contained, with the 10-year yield easing 1bp to 4.54% as bonds rose for a second day. Euro-area long-end yields, by contrast, have risen much more sharply on the week. That divergence reflects different inflation sensitivities, policy credibility dynamics and market positioning. Japan is the standout in the other direction. Long-end JGBs rallied after Finance Minister Satsuki Katayama said the government wants to prioritise encouraging pension funds to increase allocations to domestic financial assets. The 10-year JGB yield fell around 10bps on the day. That is a meaningful move in a market that has recently been under pressure from higher global yields, energy inflation and Yen weakness.Katayama’s comments also helped the Yen. The currency strengthened 0.5% to around 161.65 per Dollar, while the broader Dollar index is heading for a second straight weekly decline. But the Yen move should not be overinterpreted. A return to levels seen earlier in the week does not puncture the broader weak-Yen theme. It merely shows that policy language can still trigger short squeezes when positioning is stretched. In the UK, BoE Chief Economist Pill repeated his familiar view that rates need to rise. The problem is unchanged: without Governor Bailey shifting, Pill is unlikely to command a majority on the MPC. UK rates pricing therefore remains constrained by committee politics as much as by the inflation data. The Fed story is becoming more interesting. The central bank has named the members of Chair Warsh’s taskforces, drawing from central banking, academia and business, while defining their objectives. The productivity taskforce is the one markets should watch most closely. Its remit explicitly includes assessing the economic impact of new general-purpose technologies, including artificial intelligence, to inform Fed policy judgements. That is not just bureaucratic colour. It is the core of the Warsh framework. If AI lifts productivity, stronger demand becomes less inflationary, potential growth rises, and the case for restrictive policy weakens over time. If the productivity gains fail to materialise in the data, then the Fed is left with sticky inflation, resilient demand and less reason to ease. The taskforces are Warsh’s way of replacing forward guidance with conditional ambiguity.

The energy shock also complicates the policy reaction function. Markets initially responded to higher oil by pricing more near-term tightening. That is understandable, but not necessarily optimal. A supply-driven energy shock raises inflation mechanically while acting as a tax on real incomes. Hiking into that shock risks destroying demand further out the curve without materially improving the near-term inflation path. However, a larger energy shock could see Brent rising by around $40/bbl to $110. Potentially putting a 25bp Q4 hike in play, followed by two quarters on hold, this would barely alter the inflation glide path across the US, UK and euro area. The GDP cost, however, would be more persistent. In plain English, central banks can crush demand, but they cannot pump oil. That means an enduring Middle East escalation could ultimately argue for a more accommodative stance, not a more restrictive one, despite the market’s knee-jerk tendency to price hikes first. If the shock is supply-led and growth-damaging, policy divergence should narrow over time rather than widen. The immediate reaction is inflation fear. The second-round reaction may be growth concern.

Next week puts that debate into the data. US inflation is the main event. June CPI is due Tuesday and should moderate at the headline level, reflecting the earlier decline in oil, gasoline and related costs. The more important question is core inflation, where prices are expected to rise another 0.3% m/m, even as headline CPI is seen falling 0.1%. That split is crucial. Energy volatility is visible and predictable. Core stickiness is what matters for the Fed. Survey data have already shown firms passing through higher costs. PPI on Wednesday should give a better read on how those pressures are moving through the pipeline. Import and export prices on Friday are also worth watching. The fingerprints of the AI investment boom are increasingly visible in trade pricing, capital equipment and high-end technology inputs. If AI demand is lifting investment, import demand and pricing pressure at the same time, the Fed’s productivity debate becomes even more important. The US survey calendar is busy as well. NFIB small business optimism lands Tuesday, Empire manufacturing Wednesday, the Philly Fed Thursday and Michigan sentiment Friday. Markets will focus less on the headline sentiment numbers and more on inflation expectations, pricing plans and employment intentions. Retail sales on Thursday and industrial production on Friday will provide the real-economy check. The question is whether consumption is still resilient enough to absorb higher energy prices and sticky core inflation. The Fed’s updated Beige Book on Wednesday will add a regional read on that same issue.

The UK calendar is concentrated on Thursday, when monthly GDP, industry, services, construction and trade data are all released. The underlying story is unlikely to change much. Momentum remains weak, even if monthly prints are volatile. The BRC retail sales monitor on Tuesday will provide an earlier consumer read, but it is unlikely to shift the broader narrative.Eurozone data should be quieter. Industrial production comes Wednesday, trade Thursday and final June CPI Friday. None is likely to be market moving unless the inflation detail is revised meaningfully. The ECB enters its quiet period Thursday, so the scope for policy pushback narrows as the week progresses. China will be more important. Retail sales, housing, trade and monthly production data are all due, alongside the first estimate of Q2 GDP. The market needs to know whether domestic demand is stabilising, whether property remains a drag, and whether industrial strength is still being carried by exports and policy support.

Central banks remain active before quiet periods begin. Warsh testifies to the House Financial Services Committee on Tuesday, giving markets another chance to assess how much of the new Fed regime is genuinely hawkish and how much is simply less willing to provide guidance. The Bank of Canada is expected to leave rates unchanged Wednesday. The ECB enters quiet period Thursday, and the Fed follows on Saturday. The weekly takeaway is cleaner than the daily noise. AI remains the equity market’s preferred growth story, and the SK Hynix-led rebound shows the dip-buying instinct is intact. Oil remains the main macro threat, but the retracement from the highs suggests markets are not pricing a prolonged energy blockade. Bonds are still sensitive, the Yen is still weak despite today’s bounce, and central banks remain caught between sticky inflation and the risk of over-tightening into a supply shock. Risk assets have ended the week on firmer footing. But the foundation is narrow: AI must keep delivering, oil must stay contained, and next week’s US CPI must not revive the inflation scare.

Overnight Headlines

Japan Encourages GPIF To Boost Domestic Investment, FinMin Says
Japan’s Producer Prices Pick Up To Fastest Pace Since Early 2023
US Says Iran Technical Talks To Continue Despite Recent Strikes
Trump’s Iran Truce In Limbo After Renewed Strikes And Sanctions
Iran Hatched Fresh Plot To Kill Trump, Israel Told US
Regional Mediators Push To Salvage US-Iran Deal
Burnham Set To Become Next UK Premier With Majority Of MP Votes
China Gets Chance At Fiscal Rethink After Debt Cleanup Milestone
PBoC Sets Fixing Below 6.8 Per Dollar For First Time Since 2023
South Korea Eyes AI Windfall Fund To Aid Growth, Jobs For Youth
SK Hynix Raises $26.5B In US Market Debut
Lutnick Presses SK Hynix, Samsung To Boost Memory Output In US
Kevin Warsh Names High-Profile Figures To Help Modernise The Fed
US Declines To Immediately Put Tariffs On Aircraft, Jet Parts
OpenAI Executive Fidji Simo To Step Down Following Medical Leave

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD: 1.1300 (EU1.63b), 1.1400 (EU1.42b), 1.1405 (EU1.24b)
USD/JPY: 153.00 ($1.22b), 161.00 ($645.5m), 151.00 ($600m)
GBP/USD: 1.3400 (GBP715.7m), 1.3380 (GBP659m), 1.3340 (GBP596.7m)
AUD/USD: 0.6900 (AUD572.7m)
USD/BRL: 5.1500 ($502.7m)
USD/CAD: 1.4145 ($489.2m), 1.4095 ($424m), 1.3975 ($320.5m)
EUR/GBP: 0.8565 (EU520m), 0.8702 (EU330.1m), 0.9000 (EU310.1m)
USD/KRW: 1350.00 ($606.8m), 1400.00 ($435.1m)
USD/CNY: 6.8000 ($527.9m), 6.7000 ($450m)

CFTC Positions as of July 6

Equity fund speculators have made some notable adjustments recently, reducing their net short position on the S&P 500 CME by 7,187 contracts, bringing the total down to 348,482. Meanwhile, equity fund managers have also trimmed their net long position in the S&P 500 CME, cutting it by 8,851 contracts to a total of 979,126.
In the Treasury futures, speculators have ramped up their net short position on CBOT US 5-year Treasury futures by 19,241 contracts, now standing at 1,320,510. They have also scaled back their net short positions in CBOT US 10-year Treasury futures by 26,375 contracts, resulting in a total of 808,891. The trend continues with CBOT US 2-year Treasury futures, where speculators have trimmed their net short position by 31,265 contracts to reach 1,287,581. Additionally, the net short position in CBOT US UltraBond Treasury futures has been reduced by 31,431 contracts, now totaling 286,669. The most significant cut comes from the CBOT US Treasury bonds futures, where speculators have decreased their net short position by a whopping 85,263 contracts, leaving it at 90,780.
Bitcoin bulls are holding a net long position of 3,770 contracts.
In the currency markets, the Swiss franc has posted a net short position of -38,958 contracts, while the British pound stands at a net short position of -102,147 contracts. The euro is faring better with a net long position of 1,099 contracts, whereas the Japanese yen finds itself in a challenging spot with a net short position of -155,092 contracts.

Technical & Trade Views

SP500 - 7400 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 7450 Target 7575
Below 7400 Target 7285

DXY - 100 weekly bull/bear level

Daily VWAP Bearish
Weekly VWAP Bullish
Above 100 Target 102.50
Below 99.40 Target 98.40

EURUSD - 1.15 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bearish
Above 1.15 Target 1.1780
Below 1.1490 Target 1.1270

GBPUSD - 1.33 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.34 Target 1.35
Below 1.33 Target 1.3050

USDJPY - 160.50 weekly bull bear level

Daily VWAP Bullish>Bearish
Weekly VWAP Bullish
Above 162 Target 163.75
Below 159Target 157.95

XAUUSD - 4100 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bearish
Above 4200 Target 4500
Below 4100 Target 3569

BTCUSD - 60.5 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bearish>Bullish
Above 67.2k Target 70.5k
Below 60.5k Target 52.2k