Edward Meir's week in review and thoughts on the week of July 6, 2026

In the Middle East, the pace of progress in the negotiations between Iran and the US has been agonizingly slow. The Iranians insist on having control of the Strait of Hormuz and want to monetize its crossings as well. The Omanis and the US both vehemently oppose the idea. The two sides were supposed to meet last week, but that meeting got postponed.

Talks are now re-scheduled for later this month. We will see where that leads. The immediate focus for both sides is to get the Strait re-opened. Meanwhile, there were no major incidents in the Persian Gulf since last weekend’s Iranian attack on a container vessel, and traffic seems to be clawing its way back.

In the meantime, crude oil prices continued to decline last week. But the extent of their fall (less than $1.50/barrell on the week) was far more restrained than what we have seen of late. More banks are taking the opportunity to cut their oil price forecasts. Morgan Stanley said that it now sees Brent trading at $70/barrel in the second half of the year and is also calling for an implied surplus of 4.8 million barrels a day going into 2027.

US equity markets

In the US equity markets, shares in chip producers—including Intel, Micron, and SanDisk—experienced sharp declines this past week on concern about whether AI spending is now peaking. The selling was also triggered by reports early on in the week that Apple is seeking approval to purchase memory chips from China. It’s evidence consumers are getting squeezed by shortages and soaring prices and are looking elsewhere to secure processing capacity.

But outside the chip space, other sectors performed generally well, sending all three indices to record highs last week. The S&P 500 tacked on 1.8%. The S&P 500 and NASDAQ added about 2% each on the week. US treasury yields finished the week on a higher note. The two-year yield settled at 4.14% (up 5 basis points). And the 10-year yield settled up 12 basis points to end at just under 4.49%.

Base metals

In the base metals space, the turbulence in the chip space kept copper prices fairly subdued this last week. Copper participants are also waiting for a decision on what the tariff structure will be going forward on cathode imports. A recommendation from the Commerce Department was supposed to have gone to the White House. But we are still waiting for a decision. As per proposals from a year ago, a 15% tariff is supposed to kick in at the start of the year. But the consensus thinking is that nothing will be imposed for now given the lack of refining capacity.

Meanwhile, aluminum continues to struggle. It was down about 3% on the week, with prices now below where they were at the start of the Iran war. The decline is largely attributable to easier outflows from the Persian Gulf, coupled with the fact that some key Gulf producers are announcing recovery schedules that are faster than initially expected. Specifically, Emirates Global Aluminum said that around 10-20% of its production pots at its Al Taweelah smelter in Abu Dhabi have now returned to full operation.

Outside of aluminum, nickel, and zinc each finished down by about 2% on the week. Lead was off by 0.7%. Tin was the only winner, up by 4.1%. In the ferrous space, meanwhile, US steel prices continued to work higher. But we did see a weaker tone in Chinese quotations.

Precious metals

The general dollar index ended the week lower on sub-par US employment data (more on that later), triggering some decent buying in precious metals. Gold finished about $100/ounce higher on the week (+2.3%), ending at just under $4,200/ounce and snapping a four-week losing streak in the process. Silver rose about $3.60/ounce (+6%) to finish at just under $63/ounce.

USMCA not renewed

In trade news, the Trump administration has decided not to renew its trade pact with Canada and Mexico. It opted instead to conduct annual reviews of the treaty. The USMCA will now stay in effect for another decade subject to annual renewals. Provided, that is, no member tries to formally withdraw from it. If there had been no objections, the treaty would have self-renewed for 16 years.

Macro readings and other news from the past week

• Employment data came in on the disappointing side. Last Wednesday, we learned that the June ADP private payroll number clocked in at 98,000, coming in below the 112,000 expected and also below the prior reading of 122,000. Pretty much all the jobs created were concentrated in service industries. The more widely anticipated non-farm payroll number came out on Friday and increased by 57,000 in June. That was roughly half the 113,000 expected and well below May’s reading of 129,000, which itself was revised lower by 43,000 jobs from the previous estimate. The June unemployment rate dipped to 4.2% versus 4.3% in May, while hourly earnings were in line with estimates (at .03%). But earnings are failing to keep up with inflation. Finally, the May JOLTS job opening number came in at 7.594 million, just about in line with last month.

• In housing news, the April FHFA Housing price index fell by 0.1% from the 0.2% increase seen in the prior month. The S&P Case-Shiller Price Index rose by 1.1% year over year (y/y). Separately, the weekly MBA mortgage applications index came in unchanged from the prior reading of up 1%.

• May construction spending rose by 0.1%, well below estimates. It is also lagging year-ago levels by about 1.5%. The report revealed that public construction spending was behind most of the modest growth. Private construction spending remains disappointing. (Private construction was flat.)

• June Chicago PMI decelerated from last month, coming in at 56.7 versus the May reading of 62.7. But it nevertheless remains in expansion territory. Separately, the June ISM manufacturing index came in at 53.3% from 54.0% in the month prior. There was a general slowdown across most components of the report. Also concerning, is that input prices remain elevated. Finally, May factory orders dropped by 1.3%. But the prior reading was revised higher, to 5.3%. The headline weakness was a function of a large decline in the volatile transportation equipment category. Excluding that factor, factory orders were quite solid in May. Among the individual components, machinery orders rose 2.1%, computer and electronic product orders were up 13% y/y, while primary and fabricated metals were also stronger.

• US auto sales were stronger than expected in June. Cox Automotive estimated new-vehicle sales at about 1.36 million units, up 7.2% y/y. The seasonally adjusted annual rate (SAAR) stood near 16.5 million versus a prior forecast of 16.1 million. First-half sales still lagged last year. But the market has remained more resilient than expected, helped in part by rising hybrid demand.

• June consumer confidence readings came in at 91.2, up from the prior number of 90.6. (We would have expected more of an increase in confidence readings given the sharp decline in energy prices during the month). Roughly 25% of consumers saw jobs as plentiful, little changed from May. But the share saying jobs were hard to get rose to 22.5% from 19.8%.

• There were a host of June PMI numbers compiled by S&P Global that came out last week. The UK manufacturing PMI for June fell to 52.5, below May’s 53.9 reading. But it remains in expansion territory and close to its highest reading since September 2024. Growth in new UK orders slowed sharply. However, manufacturers’ input costs rose at their slowest pace since March. German factory activity expanded modestly in June, rising to 50.3 in June from 50.1 in May. Manufacturers cited lower backlogs and greater inflow of new work. But much of the new orders were related to either defense spending or inventory rebuilding. Out of Asia, China, Japan, and South Korea all saw factory activity expand in June as well on account of solid demand for chips, computers, and other AI-related products. China’s PMI hit 51.7 in June, about in line with May and expanding for a seventh straight month. Japan’s PMI rose to 54.8 from 54.5 in May, expanding for a sixth consecutive month as new orders grew at their fastest pace in more than two years. However, unlike the UK and Germany, Japanese input inflation remains high. India’s PMI fell to 54.2 from 55 in the month prior.

• In aluminum developments, Magnitude 7 Metals decided to restart a potline of its smelter in Marston, Mo. The move will add 75,000 tons of US capacity by year-end, according to the American Primary Aluminum Association (APAA). The smelter stopped operating in January 2024 due to high energy costs. “Today’s announcement is a direct result of President Trump’s Section 232 aluminum tariff delivering winning results,” APAA President Mark Duffy was quoted as saying. “Combined with Century Aluminum’s restart of capacity at Mt. Holly, domestic primary aluminum production will grow by more than 20%, launching a new resurgence for American aluminum manufacturing,” he added. With these new additions, the US will have five operating primary aluminum smelters. Combined, they will produce roughly 800,000 tons per year, levels not seen since 2019. However, the US market will still be critically dependent on imports.

• Alcoa acquired South32’s bauxite, alumina, and aluminum assets for $4.2 billion. Alcoa is paying $3.1 billion in cash plus roughly $1 billion in stock, with another $750 million contingent on aluminum and alumina prices. This acquisition should significantly expand and secure the company’s upstream raw material needs.

• Cleveland-Cliffs received a $400 million five-year contract from the Department of War to supply grain-oriented electrical (GOES) steel to its various branches through September of 2030. Cliffs is the only US producer of GOES. North American production of this kind of steel was estimated at about 150,000 ton/year in 2024 versus consumption of 448,000 tons.

This week’s US macro readings

It should be a fairly light week on the macro front. On Monday, we get the S&P Global services PMI, followed by the June ISM services reading. Tuesday brings us the May US trade balance. On Wednesday we get minutes of the June FOMC meeting (Kevin Warsh’s first one) followed by May consumer credit. Weekly initial jobless claims come out on Thursday as does June existing home sales. Nothing is scheduled for Friday.

We wish all our readers all the best for the upcoming week.