This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron's.
Sticky-Inflation Indicator
Economics I U.S. Focus NDR July 24: The June inflation reports last week delivered mixed news and few (unsatisfactory) signs of inflation easing. While CPI inflation moderated, led by cheaper gasoline (now partially back up), PPI inflation showed less of a downturn, and import price inflation firmed up. Crudely thinking of it as a pipeline, elevated producer and import price inflation is an upward risk to consumer price inflation. Recent data on business inventories and sales confirm the upward risk.
Prices across the pipeline are ultimately the equilibrium between supply and demand. When supply exceeds demand, price pressures recede. Conversely, when demand exceeds supply, price pressures increase. We're currently in the latter environment, as indicated by the sharp decline in the business inventory-to-sales, or I/S, ratio to 1.28 in May, its lowest level since November 2021. The deviation from its three-year trend is also the widest in nearly five years and historically consistent with rising CPI inflation. Along with tight inventory of refined petroleum products, this is one more indicator that points to sticky inflation. It supports our outlook for elevated CPI inflation near 3.5% this year.
Veneta Dimitrova
Small-Cap Strength
Letter Heritage Capital Invest for Tomorrow July 24: The bears had their way on Thursday. It was an ugly day, but not across the board with more than a net of 1,200 stocks going down on the day. Once again, the Russell small-cap index outperformed. Industrials, healthcare, energy, and utilities bucked the trend. Don't discount the importance of small-caps outperforming on the upside and downside. The bull market ain't over, folks. It's just a little bruised, as I expected.
Paul Schatz
Bearish Omen for Bonds
Chart in Focus McClellan Financial Publications July 23: Liquidity waves that ripple through the financial markets tend to hit gold first, and then proceed to other markets afterward. For reasons I don't know, the lag time for those waves reaching the bond market is about 20 1/2 months.
Gold was making a big spike top 20 1/2 months ago, and so the expectation is that the current big rise in interest rates should be peaking right about now. I could calculate the specific date, but that would create a misleading impression about the precision of this relationship. It is not as time-precise as I would like, and it goes through periods when the turns in yields arrive a bit earlier than scheduled, and then in a few weeks they are later than depicted. This is the normal relationship, and 20 1/2 weeks is just the lag time that gets the best overall fit.
This model also doesn't tell us about the magnitudes of the moves as well as we might like. The dance steps are similar, but the magnitudes can be different. That is just the nature of this model.
And that is an important point to remember; 20 1/2 months ago, gold prices were topping just underneath $2,800 an ounce. Gold then went on to nearly double in value by the Jan. 29, 2026, peak at $5,508. This does not mean that the numerical bond yields are going to double from here. It doesn't work that way. But there should be some noticeable response.
First, though, bond yields are scheduled to match the violent sideways chop that gold's pattern shows. That sideways period should last into mid-September, and then the big rise in yields is scheduled to start.
Tom McClellan
Capex Conundrum
Equity Strategy Evercore ISI July 23: The balance between AI investment and returns has become the defining debate across the AI stack. Hyperscaler capex must remain high enough to support demand, but not at the expense of returns. Alphabet delivered a strong quarter, yet negative free cash flow and little guidance on a longer-term capex algorithm drove shares lower. GE Vernova experienced a similar dynamic as a modest profit miss and investor concerns around the pace of reservations overshadowed an otherwise strong quarter. Continued AI investments and GE Vernova's growing backlog suggest capacity remains the primary constraint to growth, with the industry still building toward demand rather than beyond it.
Julian Emanuel, Michael Chu, Barak Hurvitz, Steven Fandozzi
De Minimis Trade Twist
Daily Insights BCA Research July 22: July marked the end of de minimis exemptions in Europe, pointing to the inflationary consequences of the retreat from globalization. Starting on July 1, the European Union imposed a flat three euro customs duty on all parcels valued under EUR150, ending a duty-free exemption exploited for two decades, notably by China.
Low-value parcel volumes into the bloc quadrupled from 1.3 billion packages in 2022 to 5.9 billion in 2025, with 91% originating directly from China. Platforms like Shein and Temu used the de minimis exemption to sidestep import duties of up to 12%. The EU's trade deficit with China widened to around EUR360 billion in 2025, hurting local retailers and industries. Textiles are a telling example: The surge in low-cost imports has eroded both employment and domestic output.
The EU is following the U.S., where the Trump administration ended the $800 de minimis threshold in August 2025. While the policy change should offer some relief to European retailers, consumers should expect higher prices on everyday low-value imports, as suggested by the rise in clothes and footwear prices in the U.S. since August 2025. The policy change is also a reminder that protectionist measures will be contributing to stickier inflation over the long run.
Felix Vezina-Poirier
To be considered for this section, material, with the author's name and address, should be sent to MarketWatch@barrons.com.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 24, 2026 18:14 ET (22:14 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments