Bonds Hit Worst Level Since July of 2025

Geopolitical Tensions Drive Rates Higher

This was a quiet news week. In the absence of major economic news, markets focused on geopolitical turmoil instead. Last Thursday, mortgage-backed securities hit its lowest point since July 2025. The 10-year US treasury note yield hit a high of 4.71%, a level not seen since January of 2025. 

One of the main drivers of the interest rate increase is a spike in energy prices due to continued fears out of the Middle East. Oil prices dipped into the high $60/barrel range in early July. They are now back in the high $80’s, which is a large jump in less than one month. Gas prices are back above $4. 

Red Sea Threats Raise Oil Risks

The Bab al-Mandeb Strait is another major passage for shipping oil and goods. Iran-backed Houthis out of Yemen are attacking ships going through this Strait in the Red Sea. They are threatening a blockade. This is one of the main routes that tankers out of Saudi Arabia take. 

New Tariffs Spark Inflation Jitters

Additional tariffs were also announced this week, which caused a bond selloff on inflation concerns. Many of the tariffs are replacing existing tariffs, so they should not cause inflationary pressure. As a reminder, tariffs produce one-time inflationary pressure and much of that pressure is contained on the seller or wholesale side, and not passed on to the consumer.

Jobless Claims Skewed by Enforcement

This week saw initial jobless claims fall to 187,000, the lowest figure since 1969. In 1969, the labor market was also much smaller than we have today. This may sound like great news for the job market, but there is a little digging needed. 

In June, formal letters were sent by the acting US Labor Secretary, Keith Sonderling, to the governors of US states and territories demanding immediate action against unemployment insurance fraud, waste, and abuse. Threats of large penalties have seen some states delay or cancel their initial claims results. This contributed to the drop in the official claim number reported. Continuing claims remained stable at 1.8 million.

Cotality Equity Report Shows Record Wealth

Cotality released their homeowner equity insights for Q1 2026. It showed that home equity for those with a mortgage have almost reached $18 trillion. Total home equity for all owned homes is roughly $34 trillion. Across 56.7 million owned mortgaged properties, the average borrower has $311,000 in home equity. 

Mortgaged properties with negative equity now stand at only 1.9% or a little over 1 million homes. As a comparison, this number peaked at 26% in Q4 of 2009. Housing has clearly rebounded and remains a source of wealth and stability for millions of families.

New Home Sales Beat Expectations

The new home sales report, which measures signed contracts on new homes, rose 1.6% in June to a seasonally adjusted annualized rate of 628,000. This was stronger than estimates and also saw a large revision higher to the May numbers. If May hadn’t been revised higher, June would have seen an 8.3% rise.

Looking Ahead: There’s Another Federal Reserve Meeting Next Week

• Monday, July 27: Durable Goods Orders
• Tuesday, July 28: ADP Weekly, Case-Shiller and FHFA appreciation reports
• Wednesday, July 29: Fed Meeting results
• Thursday, July 30: Personal Consumption Expenditures, Q2 GDP, Jobless Claims
• Friday, July 31: Employment Cost Index