Deja Vu In The Gulf: Strikes Return, Markets Shrug, A Heavy Event Week Begins

Russell Thompson, CIO, on renewed Hormuz strikes, a completely divided Fed, CPI week, the CLARITY field hearing and Bitcoin’s quiet resilience

Overnight, CENTCOM forces struck targets in and around the Strait of Hormuz and Iran retaliated against US bases in Bahrain and Jordan, putting markets right back where they were a month ago. The reaction has been notably muted, with oil higher but far from crisis levels and Bitcoin down only 1 percent at 62,900. Attention now shifts to a packed calendar: CPI and Warsh’s first semi-annual testimony on Tuesday, PPI on Wednesday, retail sales on Thursday, and Michigan inflation expectations plus a CLARITY Senate field hearing on Friday. Last week’s FOMC minutes revealed a completely divided Fed, and the house view remains firmly contrarian to the 87 percent hike probability priced for December.

Geopolitics: Hormuz Strikes Return, Markets Barely React

Global macro is a case of deja vu. Overnight, CENTCOM and US forces hit targets in and around the Strait of Hormuz, and Iran retaliated by striking US bases in the region, including Bahrain and Jordan. The situation has essentially reset to where it stood a month ago. The US says the strait is open, while the Iranians say it is closed and that any shipping passing through will be attacked. Nothing is really getting resolved beyond rhetoric going back and forth. What stands out is how little the market has reacted. Russell’s read is that investors are simply tired of the story and see no genuinely new information in this round of escalation. Energy markets moved, with WTI at 75 and Brent at 79, up about 3 percent and 4.5 percent respectively since the open, and natural gas at 2.88. But as Russell noted, we remain a long way away from 100 dollars a barrel, which is the level at which the oil story would start to genuinely threaten the inflation and growth outlook.

The Week Ahead: CPI, Warsh Testimony And An Event-Packed Calendar

The Senate returns today and the market kicks off a very event-driven week. Tomorrow brings CPI, which will be closely watched, alongside the semi-annual testimony of the Fed in front of the House Committee. It will be Warsh’s first time testifying in the seat, and every word will be scrutinised and analysed for his views on the current state of the economy. It is likely to be a market mover. Wednesday brings PPI, putting the two most important inflation numbers back to back, and Thursday brings retail sales. Friday delivers Russell’s favourite number: the University of Michigan consumer inflation expectations. Breakevens in the US market have been falling quite significantly, and the house view is that the consumer expectations number will be a beat. This is one of the most closely watched inputs at the Fed, which prefers forward-pointing data over inflation data that sits in the past. Friday the 17th is the day to watch this week. Key macro takeaway: The 13th through the 17th is packed with event risk: CPI, Warsh’s first testimony, PPI, retail sales, Michigan inflation expectations and a CLARITY field hearing. With breakevens falling, a soft Michigan expectations print could meaningfully strengthen the contrarian case for cuts.

Macro: A Completely Divided Fed, A Contrarian Cut Call

Last week’s big number was the FOMC minutes, which revealed a completely divided Fed. Warsh declined to provide any indications. Seven governors predicted at least one rate hike, eight predicted no rate hikes by the end of the year, and one predicted rate cuts. The market is looking through the division and largely believing the Fed: Fed funds futures price a zero percent chance of an ease for June, a 64 percent chance of a hold and a 36 percent chance of hikes. By December the pricing moves to zero percent ease, 13 percent hold and 87 percent hike, and one year forward in July the market prices a 2 percent chance of an ease, 11 percent hold and 87 percent hikes. Russell called that pricing madness. The house view remains massively contrarian: the next move will be cuts, not in June, but with quite reasonable probabilities of cuts by December, against the zero percent chance currently implied by Fed funds futures. The two major reasons are the rise in liquidity, particularly the short-term liquidity now visible in the system, and falling inflation expectations. In rates, 10-year US Treasuries sit at 4.58, 2-years at 4.22 and the 2s10s curve at 36 basis points, with really not much happening there.

Markets: Flight To Quality, Oil Higher, Equities Softer

Risk assets are getting hit this morning but in an orderly fashion. The Nasdaq at 29,400 is down about 1.4 percent since the New Zealand open and the S&P at 7,537 is down about 40 basis points. Gold sits at 4,059 and the dollar index is up again at 101.1, a flight to quality that is exactly what you would expect to see against this geopolitical backdrop. The overall picture is one of measured de-risking rather than panic. Market Level Comment Down about 1.4% since the NZ open Nasdaq 29,400 S&P 500 7,537 Down about 40bps Gold 4,059 Flight to quality bid Dollar index Up again on safe haven flows 101.1 WTI / Brent 75 / 79 Up 3% and 4.5% on Iran news Source: Hilbert Trader’s Call 13 July 2026

CLARITY Act: Field Hearing Friday, August 7 Deadline Looms

CLARITY comes back into the headlines this week with a Senate field hearing on the 17th. The hearing is not by itself a market mover, but it is bound to start generating headlines around the framework for getting the bill into law, the dates involved and when a potential vote could take place. As Russell has said in recent podcasts, this needs to be law by August 7th, so it is not going to be something that sits around. The market should get a very clear view on the chances of CLARITY making it into law within the next week or so. Russell has done a deep dive on the vote count in the Senate and believes CLARITY has a much better chance of passing than the market is predicting. That analysis is available on one of the recently released podcasts for anyone who wants to revisit it. The combination of a hard deadline and a public hearing means the binary risk around this bill is about to become a live market factor again. CLARITY catalyst: The Senate field hearing on Friday 17 July should start putting a framework and dates around the bill. With an August 7th deadline for it to become law, resolution one way or another is coming within weeks, and the house view is that passage odds are better than the market is pricing.

Bitcoin: Holding Up Well, But Overhead Supply Caps The Big Picture

Technically, Bitcoin has done OK. The short-term moving average crosses went bullish last Monday, the 6th of July, at around 62,100, and the market is trading at 62,900 as of the call, down only about 1 percent despite the return of geopolitical and event risk. That is surprisingly resilient. Russell sees a degree of exhaustion in the market: open interest is down and the sellers appear to have done a lot of their selling, while buyers lack the appetite to step in aggressively with this much event risk outstanding, including the unresolved CLARITY question. The bigger picture is less kind. There is a lot of overhead supply, and any move up into the high 60s runs into very tough resistance at 70, 74 and 76. On the downside, support sits at 62, then 58, then 55. Given how the world feels and how these markets feel, despite Bitcoin looking relatively solid, the house view is that the market is likely to test the downside and possibly have a look at the mid-50s area, where support spans 50 to 55,000. Russell Thompson, CIO "Bitcoin is down 1 percent and really holding up well, considering we are back to all the geopolitical risk and all the event risk. The sellers have done a lot of their selling, but buyers do not have a huge amount of appetite to step in with this event risk."

Volatility, Gamma, Flows And A New Liquidity Indicator

ETFs saw small inflows last week, with about 200 million dollars coming in. The volatility structure remains unusual: realised volatility continues to run above implied, which is a challenge. Implied is around 35.6 and realised around 37.7, a 2 percent premium of realised over implied, when the vast majority of the time the market carries a premium on implied. DVol sits at 37.7 on Deribit. Skew remains heavily defensive, with July 5-delta puts at around 51 percent implied against calls at 33 percent, an 18 percent premium of puts over calls. In gamma terms, the topside kicks in around 65 with quite a lot around 68, although that runs into strong technical resistance at around 70. On the downside there is a lot of gamma around 56,000 and a ton at 50,000, a level Russell would not like to see break, although it is clearly a long way from here. Finally, Hilbert has implemented a global liquidity indicator into its directional momentum models, built by the firm’s AI agents. The indicator has proven highly predictive of Bitcoin both medium term and short t erm. A note on the framework and model, without giving away proprietary secrets, will be released sometime this week. intended for professional and institutional investors only. Hilbert Group AB is listed on Nasdaq First North Growth Market.