The Narrative Is Behind the Data — Again

• The Fed minutes release will stoke the negative narrative.

• Oil prices are down over $40 from the peak.

• Gas prices fell almost 10% in June.

If you chase every scary headline, you’ll miss every real opportunity…

One of the hardest things to do when investing is separate the signal from the noise. We’re wired to react to headlines, especially the ones that lean into worst‑case scenarios. Those stories feel urgent. They feel consequential. They feel like the kinds of developments that can blow a hole in a portfolio. But most of the time, they’re just hype dressed up as risk.

This week is likely to deliver another round of negative narrative. The Federal Reserve will release the minutes from its latest policy meeting. The headlines will zero in on one thing: the suggestion that a rate hike is still on the table this year. If you look at the most recent quarterly forecast, you’ll see exactly why that storyline is going to get airtime…

At the June 16–17 meeting, Fed governors and regional presidents projected interest rates finishing the year around 3.8% versus roughly 3.6% today. That implies a hike by December. It’s also a meaningful jump from the March projection, which had rates ending 2026 closer to 3.4%.

But here’s the problem: those forecasts are backward‑looking. They were made at the exact moment the U.S. and Iran were inching toward a ceasefire in the Middle East. Oil prices were still climbing. Inflation was still moving higher. And the Fed didn’t yet have the benefit of seeing how quickly the energy shock would unwind. Since then, oil has fallen sharply. That alone eases pressure on the Fed and improves the economic outlook. That should underpin a steady rally in the S&P 500 Index.

But don’t take my word for it, let’s look at what the data’s telling us…

On February 28, the U.S. and Israel launched a tightly coordinated sequence of airstrikes against Iran. The opening wave hit core military infrastructure — ballistic‑missile sites, air‑defense networks, command centers — and killed senior officials inside the regime. Iran responded immediately. It locked down the Strait of Hormuz with and struck regional energy assets, freezing some of the most important shipping lanes in the world.

That single choke point handles roughly 20% of global daily oil flows. When it shut, the supply chain snapped. West Texas Intermediate (“WTI”) crude spiked to $114 per barrel almost overnight…

In March, when the Fed published its first‑quarter forecasts, the conflict was still unfolding. No one knew whether it would last weeks or months. As a result, policymakers didn’t want to react too quickly, endorsing higher inflation, rising interest rates, and slower economic growth.

Yet, as you can see in the chart above, high oil prices persisted. From the start of March until mid-June WTI averaged just over $98/barrel compared to $62.80 in the nine months prior. That’s an increase of around 56%.

Fast‑forward to the June policy meeting. Once again, the Fed updated its forecasts based on what had already happened. Oil had stayed elevated. Inflation had stayed sticky. Growth had softened. So, officials raised their inflation and rate projections, while trimming their growth expectations.

But everything changed on June 14. The U.S. and Iran announced a framework to halt military operations and opened a 60‑day window to negotiate a permanent settlement, including the nuclear file. The deal immediately reopened the Strait of Hormuz, paused Iranian oil sanctions, and allowed supply to flow back into global markets. Oil fell from roughly $92 to about $72 per barrel.

That matters because energy has been the single biggest driver of inflation over the last few months. As oil dropped, the average U.S. gas price fell to $4.18 from the May peak of $4.61, a decline of nearly 10% versus the typical June increase of 0.4%...

During the conflict, month‑over‑month price gains blew past normal seasonality. Inflation accelerated. Now the opposite is happening. The decline in gas prices is just as sharp as the run‑up we saw during the conflict. Inflation should follow it lower.

And here’s the key point: the Fed’s latest meeting and forecasts were finalized before officials had time to incorporate the ceasefire, the reopening of Hormuz, the collapse in oil, or the improving inflation trajectory. They were reacting to a world that no longer exists. When the next forecast arrives in September, it will almost certainly reflect a more constructive outlook.

Which brings us back to the narrative you’ll hear this week. The media will latch onto the most negative lines from the June minutes. They’ll highlight rising inflation, potential rate hikes, and slowing growth. But those comments are backward‑looking.

The data is forward‑looking. And the data says inflation is easing, growth should be stabilizing, and the Fed has room to stay on hold. That backdrop supports a healthier economic outlook and a steady rally in the S&P 500.

Five Stories Moving the Market:

Oil and gas shipping along a U.S.-protected corridor in the Strait of Hormuz showed signs of recovering after a batch of vessels performed unexplained U-turns and detours in the vital energy corridor – Bloomberg. (Why you should care – six oil and gas freighters were observed transversing the route while many other made the crossing with their transponders off)

OPEC+ has agreed a further increase in output targets from August, the group said in a statement, ‌adding to global supply at a time when oil prices are falling due to the gradual reopening of the Strait of Hormuz for oil exports – Reuters. (Why you should care – OPEC+ has increased daily output quotas by about 800,000 barrels per day since the conflict between U.S. and Iran has started)

Cheaper, more plentiful crude offers countries a chance to restock energy reserves more quickly and counter Iran’s Strait of Hormuz leverage; oil prices have fallen to prewar levels, tanker traffic through Hormuz is recovering fast, and Gulf producers are already restarting idled wells – WSJ. (Why you should care – more plentiful oil supply and lower prices could undermine Iran’s bargaining power in peace talks with the U.S.)

Federal Reserve Bank of San Francisco President Mary Daly said inflation should start to slow, but that there are large uncertainties around the economic outlook; Daly said monetary policy remains slightly restrictive and should weigh on inflation growth – Bloomberg. (Why you should care – Daly’s comments imply there’s no need for the U.S. central bank to raise rateas)

A weaker-than-expected jobs report could renew debate at the U.S. Federal Reserve about how to read the labor market ​at a time when the number of people available to work may also be in decline due to an aging population and tough immigration laws – Reuters. (Why you should care – about 1.5 million workers have left the labor force since the start of 2025)

Economic Calendar:

Germany – Factory Orders for May (2 a.m.)

Eurozone – Retail Sales for May (5 a.m.)

U.S. – S&P Global services, composite PMI for June (9:45 a.m.)

U.S. – Conference Board employment trends index for June (10 a.m.)

U.S. – ISM Non‑Manufacturing PMI for June (10 a.m.)

U.S. – Fed's Waller (Board Member, Voter) Speaks (11 a.m.)

ECB's Schnabel (Executive Board) Speaks (11 a.m.)

Treasury Auctions $92 Billion in 13-Week Bills (11:30 a.m.)

Treasury Auctions $79 Billion in 26-Week Bills (11:30 a.m.)

ECB's Lagarde (President) Speaks (12 p.m.)

ECB's Lane (Chief Economist) Speaks (2:30 p.m.)

U.K. – BoE's Mann (Board Member) Speaks (12:45 p.m.)

BoC Business Outlook Survey (10:30 a.m.)

U.S. – CFTC Commitment of Traders report (3:30 p.m.)

Japan – Household Spending for May (7:30 p.m.)

Japan – Wage Income of Employees for May (7:30 p.m.)