On My Radar: The Match, the Fuse, and 4.50%
July 17, 2026
By Steve Blumenthal
“I am the greatest. I said that even before I knew I was.”
- Muhammad Ali
Miami Beach, February 1964. A loud-mouthed 22-year-old named Cassius Clay climbed into the ring as an 8-to-1 underdog against Sonny Liston, the most feared heavyweight champion of his era. A man who'd flattened his last two opponents in a single round each.
Clay had spent weeks promising he'd dance circles around Liston and predicting, in verse, exactly which round he'd win. Almost nobody believed him. The arena wasn't even full. Six rounds later, Liston slumped over on his stool, and the kid who talked too much became heavyweight champion of the world.
I've been thinking about that fight this week, because we've got a title bout of our own shaping up in Washington.
In one corner: the reigning, undefeated champion, Inflation. We'll call him "Sticky." He is five years into his title reign, still standing after every challenger the Fed has sent at him, and is getting a fresh wind this year from oil, tariffs, and a war in the Strait of Hormuz. Sticky doesn't knock you out. Sticky wears you down, round after round, three-and-a-half-percent at a time.
In the other corner: Kevin Warsh, two months into the job, talking like he's never lost a fight in his life. "Inflation is a choice," he told Congress this week. "The surge of the last five years will be a thing of the past." That's Clay-before-Liston bravado - a challenger nobody in the market fully believes yet, promising a knockout the oddsmakers aren't pricing in.
This week wasn't fight night. It was a pre-fight weigh-in. We had Warsh's testimony on Capitol Hill, followed by a surprise scouting report that landed Tuesday: June's inflation number came in soft, and market odds of a July 29 rate hike collapsed from roughly 40% to under 20% in 48 hours. Warsh didn't blink. "That is not my view," he said, when reporters suggested mission accomplished.
Fight night is July 29. "Float like a butterfly, sting like a bee. The hands can't hit what the eyes can't see."
Grab your coffee. Here's what's on my radar this week.
On My Radar:
Personal Note: The World Cup Final
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The Match, The Fuse, and 4.50%
Back in April, I told you to watch the 4.50% yield level on the 10-year and that a break above it would be concerning. My guess then was that Trump and Bessent's line in the sand sat at 4.50%, and that a sustained move through it would rattle markets.
We're there.
The 10-year closed Thursday at 4.57%, having touched 4.62% earlier in the week - a seven-week high. Look at the monthly chart below, and you'll see the technical picture agrees with the fundamental one: MACD has turned higher, flashing the same kind of buy signal (for yields, which means a sell signal for bond prices) that has marked every prior cyclical upleg since the secular bond bear began in 2020.
Source: StockCharts.com, CMG Investment Research (annotations)
I've written it before, and I'll write it again: the 10-year yield is the match that lights the fuse. The Treasury cannot afford higher rates. Net interest on the federal debt is now running at ~ 22% of total federal revenue, depending on whose numbers you use and which quarter you measure. Up sharply from the low-teens a few years ago, and headed toward a quarter of every tax dollar collected within the decade if current trends hold. When I wrote in April, that number was closer to 20%. It hasn't gotten better.
A tougher Fed chair just showed up to the fight.
Kevin Warsh was sworn in as Fed Chairman on May 22, and the market got a lesson in being careful what you wish for. Warsh has spent his first two months talking tough. At his debut FOMC meeting on June 17, he held rates steady but removed the easing bias from the statement. Nine of the eighteen participants penciled in a 2026 rate hike. At the ECB's Sintra forum on July 1, his first major public remarks as chair, Warsh said flatly that "prices are too high". The June minutes, released July 8, showed a committee split down the middle on whether to raise rates before year-end.
This week, Warsh testified before the House Financial Services Committee on July 14 and the Senate Banking Committee on July 15, his first semiannual Monetary Policy Report to Congress.
Short summary:
He drew a hard line on inflation: June's better CPI print "isn't mission accomplished," and "inflation is a choice." It was clear that his job was to lower prices. He pledged that the "inflation surge of the last five years will be a thing of the past" if the Fed gets policy right.
Fed funds currently sit at 3.50%–3.75%.
Headline CPI jumped from 2.4% in February to 4.2% in May, largely an oil-price story tied to the disruption in the Strait of Hormuz that I've been tracking here for months. It was a larger-than-expected drop, driven by a 5.7% monthly plunge in energy prices.
We have a new Fed chairman trying to establish inflation-fighting credibility. He is arriving in a supply-side inflation shock he didn't create. He is not a chairman inclined to cut. But will he hike?
Warsh's response, same day: "There might be some that look at this morning's data and say, 'Oh, mission accomplished. Everything is swell.' That is not my view." He pointed out that underlying inflation is still elevated and reiterated that the Fed will stay data-dependent, meeting to meeting. So his stance hasn't shifted - he's still the guy who told Congress "inflation is a choice" and pledged to end it.
Hike odds for July 29 collapsed from roughly 40–46% the week before to about 15–17% right after the CPI print, and CME FedWatch had it down near 10% (90% odds of a hold) as of July 16. On July 15, Poly Market put the odds at under 4%.
The current read is: a July hike is very unlikely now, a hold is the base case, and Warsh's hawkish posture is more about setting up a possible September or year-end move if inflation reaccelerates. The wild card is the Strait of Hormuz. Maybe a rate increase comes this month due to higher oil prices and inflation. Or maybe Warsh moves quickly to make a point. The hands can’t hit what the eyes can’t see.
Following from The Kobeissi Letter:
Source: Polymarket, @KobeissiLetter
Bottom line: I don't know whether Warsh hikes on July 29, but I wouldn’t be surprised. Our prize fighter may need to channel his inner Muhammad Ali, who reportedly said before the Rumble in the Jungle fight against George Foreman, "Suffer now and live the rest of your life as a champion." He must take Sticky down.
But keep in mind that the setup matters more than the single meeting. We have a new Fed chair talking tough on inflation, a 10-year yield that has pushed through the level I flagged as the danger zone in April, a monthly MACD confirming the cyclical trend has turned, and a Treasury that is refinancing trillions of dollars of low-coupon debt into 4%+ paper at the worst possible moment. None of these things fix themselves quickly.
Watch 4.50% not as a level to trade around, but as a tell. As long as the 10-year holds above it, the story is the same one I've been signaling to you since April: the bond market, not the Fed, may end up setting policy.
Sources: On My Radar, April 24, 2026 — "I Hear the Train A-Coming"; Federal Reserve, FOMC statement, June 17, 2026; CNBC, "Markets are set for a much more hawkish Warsh Fed than expected," June 18, 2026; CNBC, "Kevin Warsh declines to hint at July rate decision, but says inflation 'too high,'" July 1, 2026; Yahoo Finance, "Warsh Hawkish Shock: 9 Fed Officials Signal 2026 Rate Hike"; Committee for a Responsible Federal Budget / PGPF, net interest revenue-share estimates. CNBC – June CPI report · CoinDesk – hike odds fall · TechTimes – hike odds collapse · CNBC – July rate hike odds rising (pre-CPI)
Ray Dalio on China
I found this post from Ray informative for understanding China’s hierarchical structure and its history.
And from Ray, “I recently spent a month in Asia, including 10 days in China, where I met with senior policy makers in several countries, and I found that over the past few months, there has been a big shift in the world order. I share my perspective in my latest article.
As always, I welcome your questions and thoughts.”
Click on the image. It’s a thoughtful read.
Source: Ray Dalio, Substack
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Several Excellent Charts
Euphoria
Peter Boockvar's market letter, the Boock Report, hits my inbox several times a day. I wrote about euphoria last week here. The following chart in Peter’s Monday AM post on July 13 jumped out at me. He wrote, “With respect to stock market sentiment, at least by the Citi Panic/Euphoria index, it is back to the recent highs of Euphoria and as a reminder, .41 is threshold so we are well above it.”
Source: Citigroup, Peter Boockvar Boock Report
Leverage
Source: Citadel Securities, GMI, @BobEUnlimited
Historic Bull Market Run
Source: Goldman Sachs, @KobeissiLetter
Price to Sales
Source: Bloomberg, Barchart
Value vs Growth
Source: Barchart, JP Morgan
History of Bubbles
Source: @Barchart
AI
Source: Apollo, Torsten Slok
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Habib - “Haven’t Got Time for the Pain”
Tying in nicely to the 10-year Treasury watch is a fun start to this morning’s comments, with Carly Simon singing “Haven’t Got Time for the Pain.” Barry and team are not currently worried about inflation. In fact, if the Fed hikes, it could be destructive to the economy, causing a recession. We haven’t got time for the pain!
The wild card on inflation is the war in Iran.
Click on the image to watch the short video.
Source: MBS Highway
He shared two charts:
Source: MBS Highway
Source: MBS Highway
Opinions are subject to change. Not a recommendation to buy or sell any security. Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only.
Trade Signals: July 16, 2026 Update
“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.”
– Charlie Munger
Trade Signals
The Indicators Dashboard - Stocks, Investor Sentiment, Bonds, Commodities, Currencies, and Gold
Valuations and Subsequent 10-year Returns
Supporting Charts with Explanations
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Personal Note: The World Cup Final
"Impossible is not a fact. It's an opinion."
— Muhammad Ali
Tuesday in Dallas, Spain shut the door on France, 2-0. Efficient, technical, businesslike - Spain has looked like the best team in the tournament for a month, and they didn't need drama to prove it again.
Wednesday in Atlanta was a different kind of soccer entirely.
England led 1-0 into the final twenty minutes on an Anthony Gordon goal, and manager Thomas Tuchel made a decision that will be picked apart for years: he pulled a midfielder and pushed on a fourth center-back, switching to a back five and then effectively a back six, dropping everyone back to defend the lead. For a while, it worked. England had just 12% possession over the final half hour.
Lionel Messi had other ideas. Days before the match, Zlatan Ibrahimović, the great Swedish striker turned Fox Sports commentator, a man who has never once undersold himself, went live with a line built for this exact matchup: "England already witnessed the Hand of God. Now they're about to see the Left Foot of God." The hand of god was a nod to Diego Maradona, who beat England 40 years ago at the 1986 World Cup with an illegal punch of a goal that VAR would erase in about four seconds today, followed three minutes later by arguably the greatest solo goal in World Cup history.
Zlatan's point: England was about to witness Messi’s left foot.
Argentina kept crossing, kept probing, and in the 85th minute, Enzo Fernández found a seam and buried a shot from 20 yards to level it. Then, deep into stoppage time, Messi, 39 years old, playing in what may be his last World Cup, served up the cross that Lautaro Martínez headed home for the winner. Two goals, two Messi assists, one impenetrable defense that was not.
Zlatan called it the "Left Foot of God." Messi delivered it with his right foot. Regardless, Messi is a soccer god. My English friends’ hearts are broken. I feel for you. Heads up, what an impressive team and an exciting run.
Coming back to that Ali line above. Tuchel built a wall. Messi treated it like an opinion, not a fact.
The final is Sunday at 3 pm ET at MetLife Stadium: Spain vs. Argentina. Two exciting teams to watch, forward-minded, fast, and skilled. Expect an end-to-end battle. I’m frequently asked who I’d like to win, and I’m really rooting for a great game. I find it hard not to want to pull for Messi, though I’d say Spain looks like the better team.
A tip: for non-soccer people, keep an eye on the shape of the defenses. For most teams, the shape is four defenders, four midfielders, and two attackers up top. Sometimes, it’s four defenders, two defensive midfielders, three offensive midfielders and one striker up top. Don’t just follow the ball. What the defense. Then look for the spaces that the opponent with the ball is trying to get through. By moving the ball, the offense forces the defense to move and hopes to create openings or cause a mistake that leads to a goal-scoring opportunity.
The game is a multi-dimensional chess match. This final is going to be a good one. Enjoy the game!
I’ll be hosting a dinner for clients and OMR readers in Chicago on Wednesday, August 19, 2026. If you are interested in joining, please email Amy@cmgwealth.com to reserve a spot (space is limited).
Steve
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Stephen B. Blumenthal
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Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management. Author of Forbes Book: On My Radar, Navigating Stock Market Cycles.
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