AE Wealth Management: Weekly Market Insights | 7/12/26 – 7/18/26

Weekly Market Commentary

THE WEEK IN REVIEW: July 12-18, 2026

Don’t fall for the inflation head fake

Last week’s inflation report for June surprised to the downside, reviving hopes for potential rate cuts later this year. But does anyone really think inflation has gone away? All that happened was that oil dropped from around $93 per barrel at the beginning of June to just below $69 per barrel by month end.¹

We’ve previously documented the events that led to oil’s decline back down to where it was trading when the Iran conflict began. By the end of June, a ceasefire was (mostly) in place, a memorandum of understanding (MOU) was signed and meetings were set for the next 60 days to iron out details. Plus, the naval blockade of Iran was lifted, Iran would be allowed to sell oil on the international market, and the Strait of Hormuz was opened up. All that drove oil prices sharply downward.

Oil and other forms of energy are used pretty much by everyone for everything. When oil prices decrease, so does the cost of doing business. Your personal costs also decline alongside the price of gas.

So, when the Consumer Price Index (CPI) dropped from 4.2% in May to 3.5% in June, the consensus missed by a wide margin and the financial media called the result a “surprise.”² But the surprise didn’t last long; things blew up again in the Gulf, and oil is now back over $80 per barrel.³ Next month’s inflation reading will likely jump back to 4% or more, and the price of gas is climbing back up.

There are two common ways to get inflation. The first is to give people money to buy things while keeping the supply of those things the same as before the additional money was given. This spikes demand and prices rise. (We saw this happen in 2022.) The second is if energy costs rise, then the costs to produce those things must increase. That’s what we’re going through now.

That brings us to core producer prices, which also came in lower (4.7% in June versus 4.9% in May).⁴ Consensus was actually calling for producer prices to increase to 5.2%. This is mind blowing, especially since producers should benefit initially from any price declines (which they do) and take their sweet time passing on the lower costs to consumers to maximize profits. The clearest example is at the gas station; as soon as the price of oil goes up, so do gas prices. When oil declines, the price at the pump goes down much less quickly.

We probably shouldn’t believe the energy-driven inflation spike is over or be fooled into thinking things are improving. With oil back up and the situation with Iran still in flux, inflation may pop right back to where it was in May. This isn’t over by a wide margin.

Tensions in the Middle East re-escalate

After Iran attacked some ships in the Strait of Hormuz and two military bases in Jordan, President Trump said enough was enough and ordered new strikes to “further degrade” Iran’s military capabilities.⁵ The markets have lost interest in the Iran situation, and as long as oil hovers between $75-$90 per barrel and yields stay where they are, markets will focus on other things.

The heightened tensions barely impacted the markets last week; instead, it was all about tech stocks, chip stocks and AI.⁶ The same old arguments keep boiling up: Are cheaper AI open source models challenging our dominance? Are we spending too much on data centers? Is there hostility toward data center construction and will construction be delayed or stopped? And the debate goes on.

The markets needed to readjust because we were near market highs once more. There’s really nothing new to propel us forward and we continue to trade in a range until the next “big thing” comes along. (That could be a permanent cessation of hostilities in the Gulf, which would crater inflation and let us start talking about other things.) Until that happens, markets will be tentative and keep looking at the situation as a “glass half full” scenario.

Coming this week

• This week may be one of the slowest weeks for data all year. Monday will feature only leading indicators and a Federal Reserve Board of Governors closed Monday.
• The only data released on Tuesday and Wednesday will be MBA mortgage applications.
• Thursday will feature weekly job claims and the KC Fed survey of businesses.
• Pending home sales and U.S. flash manufacturing and services PMI will be reported on Friday.
• This is what you get in the depths of summer, but the tech sell-off could reverse on a dime while the Iran situation may hammer markets. This is where the old saying, “Go away in May” comes from. If you step away from the markets, you can avoid a lot of summer turmoil. (But you can also miss a lot of growth like we saw last summer.) Our advice is to stick with your plan and don’t get too caught up in the headlines.

Sources:

¹ Business Insider. “Oil (WTI).” https://markets.businessinsider.com/commodities/oil-price?type=wti. Accessed July 19, 2026.

² U.S. Bureau of Labor Statistics. July 14, 2026. “Consumer Price Index Summary.” https://www.bls.gov/news.release/cpi.nr0.htm. Accessed July 19, 2026.

³ Cris Tolomia. Yahoo! Finance. July 17, 2026. “Oil prices surge 12% on Iran Kuwait attack and Red Sea threat.” https://finance.yahoo.com/energy/articles/oil-prices-surge-12-iran-120930473.html. Accessed July 19, 2026.

⁴ Trading Economics. July 15, 2026. “United States Producer Prices Final Demand Less Foods and Energy YoY.” https://tradingeconomics.com/united-states/core-producer-prices-yoy. Accessed July 20, 2026.

⁵ Filip Timotija. The Hill. July 18, 2026. “US military unleashes retaliatory strikes against Iran after soldiers killed in Jordan.” https://thehill.com/homenews/5976478-us-strikes-iran-retaliation/. Accessed July 19, 2026.

⁶ Sean Conlon, et al. CNBC. July 17, 2026. “S&P 500 closes lower, Nasdaq falls more than 1% as chip stocks suffer: Live updates.” https://www.cnbc.com/2026/07/16/stock-market-today-live-updates.html. Accessed July 19, 2026.

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