Market Note
Is US inflation under control?
Technical, sentiment, and flow driven activity in markets is leading to an upswing of market volatility set to the backdrop of a reescalation of “military activities” in the Middle East.
Chart Source(s): NFIB, FRB/Haver
This week has featured rapidly shifting sentiment around where the US is in its inflation/rates cycle.
The resolution to the US inflationary/rates situation over the coming months will set the stage for either calming risk taking appetites if the hawkish trend persists or igniting the next leg higher of speculation if a dovish narrative takes hold.
The first days of the week featured goldilocks inflation data that spurred on a rally in rates/risk and precious metals.
However, yesterday both the KC and Dallas Fed officials signaled their ongoing concerns about inflation, which threw some water on burgeoning dovish expectations.
A recent NFIB small business survey reflected the Fed’s concerns as inflation is considered the single most important problem for a growing number of firms.
Global Markets & Economic Data
- US: Headline inflation figures were cooler than anticipated and PPI figures contracted M/M. The 30-year mortgage rate rose to its highest level since August 2025.
- Switzerland/UK/Europe: SNB minutes from the June meeting indicated the central bank is ready to intervene in FX markets if needed. UK rolling 3-month GDP figures were higher than expected at 0.7%. European May Industrial Production unexpectedly declined, ending three consecutive months of growth.
- China/Japan: China’s trade surplus surged, led by tech exports. Japanese Machine Orders fell 12.4% M/M in May, far worse than forecasts.
Index Returns Summary
| Asset Class | MTD | YTD |
|---|---|---|
| MSCI World | 0.90% | 10.85% |
| MSCI Asia Pacific | 1.42% | 14.51% |
| MSCI Europe | -0.24% | 8.09% |
| MSCI China | 4.55% | -10.36% |
| Bloomberg Barclays Global Aggregate Index | -0.47% | -0.67% |
| Bloomberg Commodities Index | 2.97% | 15.35% |
| HFRX Global | -0.13% | 4.67% |
| HFRX Macro/CTA | -0.21% | 5.50% |
| HFRX Equity Hedge | -0.55% | 8.12% |
*Index data as of July 10, 2026
Disclaimer: This material has been prepared by MASTERPIECE ADVISORS for informational purposes only and should not be construed as financial advice. Investments in hedge funds are speculative and involve a high degree of risk. This material is confidential and may not be disclosed without the express written approval of MASTERPIECE ADVISORS.