Newsletter · · Ashutosh Agarwal

US Macro Recap - Week of June 23, 2026: Oil Cracks, Warsh Bites, the Curve Goes Flat

US macro recap for the week of June 23, 2026. The Strait of Hormuz reopened and crude cracked from the low $80s to the mid-$70s, yet Kevin Warsh's hawkish debut scrapped forward guidance and pushed the 2-year to multi-year highs, leaving the front end pricing hikes while collapsing breakevens and a flattening 2s10s say the economy can't take them.

US Macro Recap

Week of June 23, 2026: Oil Cracks, Warsh Bites, the Curve Goes Flat

The swing variable everyone complained they couldn't price last week went and resolved itself, just not the way the doves wanted. Iran stepped back, the Strait of Hormuz reopened, and crude fell from the low $80s into the mid-$70s. You'd think that buys the Fed room. Instead it handed Kevin Warsh's first meeting a reason to sound hawkish, scrap forward guidance, and let the front end of the curve do the talking. This week's tape is a genuine tug-of-war: the two-year is screaming hikes while the long end quietly insists the economy can't take them.

TL;DR

  • De-escalation cracked WTI from ~$83 to ~$75 and pushed gas back under $4, the disinflation camp finally has a hard catalyst, not just a forecast.
  • Warsh's debut: no dot plot, no forward guidance, and "the left side of the decimal point has to be a 1." The 2-year yield jumped to ~4.2%, a multi-year high.
  • Breakevens collapsed (5-year ~230bps, down ~40bps in a month) even as hike odds rose, the 2s10s curve flattened to ~29bps on policy-error fear.

What's new

A note on voices: this week's macro conversation was carried mostly by desk strategists and house economists, the people closest to the flow, with the loudest sticky-inflation takes coming from independent commentators. I've flagged who's who.

1. Warsh turned hawkish, and the front end repriced for hikes, not cuts. On Money, Markets & New Age Investing, Greg Weldon (strategist/trader) flagged that the 12-month overnight interest-rate swap, a Fed-funds proxy, "got to 4.01%" and the 2-year is "four and a quarter," with Bank of America "now calling for three hikes"; he quoted Warsh insisting price stability means "the left side has to be a 1." On RenMac, Neil Dutta (strategist) cautioned that for the hawks it "really isn't about oil... it's about non-housing services," which "remain sticky," so the oil drop alone "won't move them away from this tightening bias."

2. The oil crack is the disinflation catalyst the doves were waiting for. On Bloomberg Daybreak: US Edition, Bloomberg's Stuart Paul (house economist) called the May data "the local peak," expecting headline PCE around 4.1% and core 3.4% on Thursday, then "disinflation coming in June and thereafter" as the Hormuz reopening eases energy and tariff pass-through rolls off ("past peak tariff pass through").

3. The bond market is pricing a Fed mistake. On Eurodollar University, Jeff Snider (commentator) walked through the collapse: the 5-year breakeven "down roughly 20 basis points in just two weeks and nearly 40 basis points in a month" to ~230bps, the 2-year up "around 15 basis points to roughly 4.2%," and the 2s10s flattened "to just about 29 basis points." His read: "the front end is saying the Fed might hike... the long end says the economy just can't take the demand hit... pricing a Federal Reserve increasingly likely to misdiagnose an oil shock as inflation."

4. AI capex is still the growth engine, and the buyback tailwind is officially gone. On Excess Returns, Andy Constan (operator, Damped Spring) sized capex "running at a trillion a year and growing" and described hyperscalers shifting "$600, $700 billion" from share reduction to net issuance. On Thoughts on the Market, Morgan Stanley's Vishwas Patkar (credit strategist) put AI-related debt issuance at "nearly $250 billion year-to-date," on track "to double to $500 billion" for full-year 2026. And on The Compound and Friends, MS's Michael Zezas (strategist) noted AI infrastructure drove "approximately a quarter of 2025 GDP growth."

5. "K is for Kroger." On RiskReversal Pod, investor Danny Moses (operator) framed the bifurcated consumer through trade-down to grocery private label and flagged delinquency rates at "13 to 15-year highs," the bottom-half stress that keeps surfacing even as the top end holds.

The debate

Both camps had real airtime this week, so both get steel-manned, though note the split is mostly economists vs. economists, not operators putting on opposing risk.

Sticky-inflation / hawkish-Fed. Weldon's services data (PPI +1.1% m/m, ~13% annualized; CPI 4.2% YoY) plus Dutta's sticky non-housing services plus Warsh's own "1-handle" framing plus BofA's three-hike call. The front-end tape agrees.

Disinflation / soft-landing. Stuart Paul's "local peak"; on Moody's Talks – Inside Economics, Claudia Sahm and Mark Zandi (economists) made the textbook case, "don't raise rates into this," the Fed "can't reverse the energy shock," and breakevens "came right back in... not signaling" an expectations problem; Snider's long-end demand-destruction read rounds it out. The disinflationists own the bond market; the hawks own the Fed.

The trades in play

The instrument-level expressions skewed to FX and the dollar this week:

  • Dollar / FX: On At Any Rate, J.P. Morgan's FX desk flipped to "bullish beta, bullish dollar," bearish EUR/USD toward 112–110, USD/JPY to 164, funding carry out of low-yield CAD. On The KE Report, Marc Chandler (FX strategist) put the dollar index "above 101.15" with "next target... 102, 102.5," driven by 2-year-yield/dollar correlations "at the highest we've been in, like, 20 years."
  • Rates / sectors: On Real Vision: Finance & Investing, receive rates (short bonds) "given benign inflation, sideways growth," rotate toward industrials, and stay long AI semis (Micron, SanDisk) into earnings.
  • Picks-and-shovels: On Behind the Balance Sheet, James Aitken (operator/advisor) is long BHP, Rio, Glencore and Bloom Energy (data-center power in "55 days" vs. years for the grid), and expresses a cheap-yen view via Japanese equities.
  • Barbell / hedges: On Masters in Business, Michael Guyad (PM) runs the FMKT ETF ~80% in deregulation beneficiaries (financials, nuclear, aerospace). On Wealthion, Henrik Zeberg (cycle analyst) is long NASDAQ toward 33,000–34,000 paired with long TLT for the eventual crunch. On Macro Voices, a DBA Jan-2027 $27/$30 bull call spread for ~$0.90 net debit on agricultural disruption.

Read-throughs

  • Corporate credit: The hyperscaler pivot from buybacks to bond issuance (Constan, Patkar) is a structural new supplier of IG duration just as the front end reprices higher, watch spreads if issuance keeps doubling.
  • Margins: On FinPod, tariffs are now in the P&L, Apple "a $900 million quarterly tariff hit," GM "$3.1 billion gross tariff cost erasing 3 percentage points of profit margin."
  • Policy: A Fed that won't pre-commit, into a flattening curve and a hot-print/oil-crack tape, raises the variance of every expression above.

What changed vs. last Friday

The Iran swing variable resolved toward de-escalation and oil cracked, but the Fed reaction got more hawkish, not less. Last week's ~49% coin-flip on a hike has hardened into a front end at multi-year highs and a BofA three-hike call, while breakevens collapsed and the curve flattened. The duration-vs-hike tension we flagged is now the whole story. Still missing from the audio, two weeks running: any serious treatment of immigration as a labor-supply / break-even-payrolls variable, and the Sahm rule. Consumer-credit delinquency detail stayed thin, Danny Moses's "13 to 15-year highs" was the week's only real data point.