Marc Chandler - Rising Rates, Dollar Strength, Fed Meeting Expectations

The KE Report Jul 24, 2026

Summary

Rising oil is the thread tying it together: the guest argues higher crude prices are pushing up Treasury yields and Fed hike odds.

The market now prices roughly a one-in-three chance of a Fed hike next week, up from about one in six a week earlier.

Foreigners keep buying US equities instead of Treasuries, and the guest sees the dollar tracking short-term US rates.

The two-year yield, not the long end, is the cleanest gauge of policy expectations, so the guest watches it first.

He expects one hike in Q3 and a second in Q4, but leans against a July move under new Fed Chair Kevin Warsh.

Top takeaway He is named in the discussion as the new Fed chairman, with the meeting the following week only his second as chair.
The guest argues he is unlikely to hike at that meeting, calling it a big surprise and saying he wants the economic data more time.
Markets nonetheless price roughly a 1-in-3 chance of a hike the following week, more than double the roughly 1-in-6 priced a week earlier.
The guest notes soft CPI and PPI data earlier in July had lowered the bar for a hike, but the rebound in oil and gasoline prices dashed that progress.
Fed funds futures imply at least one hike this year and about an 80% chance of two, one in Q3 and one in Q4.

Top takeaway His core view is that rising U.S. rates have to be read through oil, pointing to September WTI up almost 25% in three weeks and almost 8% in the week to July 24, 2026, which reversed the ease central banks felt during the ceasefire.
He says markets moved to roughly a 1-in-3 chance of a Fed hike the following week from about 1-in-6 a week earlier, driven by higher oil and still-resilient U.S. data.
He reads the global bond move as investors cutting duration, with 10-year yields up about 50bp year to date in the U.S., 35bp in Europe, 55bp in the U.K. and 72bp in Japan.
He expects further dollar gains toward roughly 102 to 102.5 on the index, near the 200-week moving average and a retracement of last year's peak near 110.
He says foreign investors are funding the U.S. current account deficit with record purchases of U.S. equities rather than Treasuries, with foreign central bank holdings at the Fed falling for four straight weeks before rising in the latest week.

Top takeaway He frames the episode around the two stories of the week to July 24, 2026, rising rates and a rising dollar, and points viewers to central banks, mostly the Fed, the following week.
He asks whether the midterms factor into the Fed's short-end decision and whether foreign selling of 10- and 30-year bonds reflects repositioning into equities.