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Daily Commentary

Commentary prepared by Alloya Investment Services(opens in new tab), a division of the wholly owned CUSO of Alloya Corporate Federal Credit Union. Alloya Investment Services is a leading broker/dealer consultant to credit unions.

Friday, July 31, 2026 at 8:00 am CT
Commentary prepared by Tom Slefinger, Market Strategist

Market Indications

Historic Treasury Curves for the week of July 27, 2026.

Other Market Indicators

Market Indicators
2s/5s Tsy Spread0.14-0.01
2s/10s Tsy Spread0.41-0.01
2s/30s Tsy Spread 0.95-0.02
DJIA-30 52,208.06+1.19
S&P-500 7,437.63+1.66
NASDAQ25,122.18+2.78
Dollar Idx 100.19+0.33
WTI84.02+0.51
4,086.344,110.70+0.00

Daily Commentary

Recap — The rebound in global chip stocks is extending into Friday. Dow futures are up well over +300 points at the moment. Even with Thursday’s gains, Micron’s stock is down about -24%, Intel has lost -35% and AMD is -16% lower over the past month. So, even as the primary beneficiaries of the continued increase in hyperscaler capex budgeting have been going through the wringer, it has not rained on anyone’s parade.   

At the same time, bonds cannot find a bid. The 10-year Treasury benchmark is at 4.67% and approaching the cycle peak of 4.8%. The long bond is yielding and is trading at nearly a 20-year high of 5.21%. The long end of the curve is being pressured by inflation, fiscal problems and hyperscaler issuance.

Line chart titled "10-Year Treasury Yield" showing the yield on the U.S. 10-year Treasury note from mid-2024 through July 2026. The yield fluctuates between approximately 3.7% and 4.8% during the period. After reaching a high near 4.8% in late 2024, the yield declines and moves within a range of roughly 4.0% to 4.5% through most of 2025. Beginning in early 2026, the yield trends upward and reaches 4.67% by July 2026, matching a highlighted red reference line. The chart emphasizes the recent rise in long-term interest rates and shows the current yield near the upper end of the two-year range.

Meanwhile, the 30-year fixed rate mortgage just hit a one-year devilish high of 6.66% this week (from 6.58% the week before). According to Redfin, U.S. pending home sales in the four weeks ending July 26 sagged to their lowest level since early April (the latest week showing a huge -1.7% falloff). It comes as no surprise that homebuilding stocks have rolled over again and are down nearly -17% from the pre-war nearby high.

Yesterday, the bond market could not have asked for a cleaner setup, at least in theory. Real GDP growth for Q2 undercut expectations with a +1.5% annualized growth rate while the market was looking for a +2.0% print. And that came with a better tone to the consumer, where personal consumption accelerated to a +3.2% annualized rate in real terms from +0.5% in Q1 (consensus was +2.3%). Keep in mind that this past quarter contained the One Big Beautiful Bill Act (OBBBA) tax goodies, the World Cup and the earlier timing of Amazon Prime Day. One can reasonably expect a big deceleration for this quarter and likely Q4 as well, with the sharp but brief sources of support fading away.

Frankly, if not for the fact that households, some of which are feeling a lot wealthier, have been willing to spend at a pace far above their income, we would have practically seen no growth in real consumer spending over the past year. Question is, can a four-year-low personal savings rate at a mere 2.7%, far below the long-run norm of 8% (back to 1970), be sustained?

Line chart titled "Personal Savings Rate" showing U.S. personal savings as a percentage of disposable income from 2018 to 2026. The savings rate averaged about 8% before COVID-19, then surged above 30% in 2020 after government stimulus payments and economic disruptions. Savings remained elevated through early 2021 before declining sharply. The rate fell below the pre-pandemic average in 2021 and reached a low point in 2022. Since then, it has remained relatively low, ending at 2.7% in 2026, the lowest level since October 2022 and well below the pre-COVID average. Red annotations highlight the COVID-19 period, stimulus-related spike, the 8% pre-pandemic average, and the current 2.7% savings rate.

Of all the numbers, the one that should be speaking the most to the bond market was that light print on the core PCE deflator in June. As an aside, the headline PCE fell -0.1% month-over-month. The core PCE deflator came in light at +0.1% month-over-month, the softest pulse since March 2025 and below the +0.2% consensus estimate.

Line chart titled "Core PCE YOY%" showing year-over-year Core Personal Consumption Expenditures inflation from the 1960s through the 2020s. A dashed red horizontal line marks the Federal Reserve's 2% inflation target. The blue line fluctuates widely over the decades, reaching peaks near 10% during the 1970s and early 1980s, then generally trends lower afterward. Since 2021, inflation has remained above the 2% target, rising to roughly 5% before moderating. The most recent value shown is approximately 3.3%, still above the Federal Reserve's target rate. Red shaded vertical bands highlight historical recession periods.


The key number for bonds was the light June core PCE print. The old “Powell Supercore,” services excluding energy and shelter, rose just +0.1% for the second time in three months. This matters because it signals whether labor slack is building.

Digging through the details, the Fed should take some comfort in how broad the disinflation was across both goods and services.

Line chart titled "Core PCE YOY%" showing year-over-year inflation trends for services and goods from 2020 to 2026. Services inflation (blue line) rises from about 1.8% in 2020 to a peak above 4% in 2022, then gradually declines and ends at 2.77% in 2026. Goods inflation (red line) increases from near 0% in 2020 to about 1.5% in 2022, then falls sharply to near 0% in 2023 before edging up to 0.34% in 2026. Services inflation remains consistently higher than goods inflation and is the primary driver of core inflation throughout the period.

Stay tuned and have a great day!

Economic Calendar

July 27 - 31, 2026

Economic Calendar for the week of July 27, 2026 through July 31, 2026.

Future Fed Expectations

Source: Bloomberg

Implied Fed Funds and change from one week prior chart for 7/30/26 through 11/7/27.

as of 7/27/2026

Expected Fed Funds Path for the week for the week of July 27, 2026.

Select Probabilities based on the Futures
Probability of Fed Funds rate HIKE on July 29, 202634%
Probability of Fed Funds rate HIKE on September 16, 202672%

**All quoted rates are indications and are subject to change without notice.
* ISI is a member of the FINRA/SIPC.

The information contained herein is prepared by ISI Registered Representatives for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Alloya Investment Services to discuss your specific situation and objectives.