U.S. raw steel production fell slightly to 1.851 million tons this week. That is down 0.2% from last week but still up 6.1% year to date. Capacity utilization held at 79.8%. The 50% tariff protection remains the structural backbone of domestic output. The slow-growth economy is a headwind. But the AI data center boom is a powerful new demand driver that is helping offset that weakness.
Oil Drops to a 4-Month Low
WTI crude fell to $69.23/barrel this week — the lowest level in four months. The driver is significant. Oil volumes flowing through the Strait of Hormuz are accelerating. The reopening of that critical waterway is bringing supply back to global markets. That is genuinely good news for consumers, businesses, and the broader economy. U.S. crude production rose to 13.81 million barrels per day — near its all-time record high. Previously higher prices and strong U.S. export demand are keeping output elevated. The rig count rose to 44 — the highest level in about a year. Both the production and rig count gains reflect decisions made when prices were higher. That production momentum will continue for some time.
Scrap Steady, Steel Eases Slightly
Scrap steel #1 HMS composite held steady at $365/gross ton. Supply and demand remain well balanced. There is little pricing pressure in either direction heading into July. Hot-rolled coil steel slipped slightly to $59.70/cwt ($1,195/ton). The 50% tariff protection is still providing a strong pricing floor. But slow demand growth is limiting further upside. Steel prices remain near multi-year highs.
Copper and Aluminum Both Fall
Copper dropped to $6.20/lb — the lowest level in about seven weeks. Two forces are driving the decline. Concern is growing that the Federal Reserve could raise interest rates. Higher rates slow the economy. A slower economy reduces industrial and construction demand for copper. On the positive side increased electric vehicle adoption and broader electrification trends are partially offsetting that weakness. The long-term structural demand story for copper remains intact.
Aluminum
Aluminum fell to $1.45/lb ($3,199/MT) — a three-month low. Two factors drove the decline. Chinese and Indonesian aluminum output is rising significantly. And the resumption of aluminum shipments through the Strait of Hormuz is restoring the 9% of global supply that had been blocked. More supply from multiple directions is pushing prices lower.
Inflation Still Well Above Target
The May core PCE inflation index — which excludes food and energy — rose to 3.4%. Total PCE including food and energy came in at 4.1%. Both readings are well above the Federal Reserve’s 2% target. The Fed has very little room to cut rates with inflation running this hot. And there is growing market speculation about a possible rate hike. That tension between a slowing economy and persistent inflation is the defining challenge facing policymakers right now.
Trade Deficit Widens
The May goods trade deficit widened to $105.8 billion — the worst reading in a year. Imports rose 3.6% despite multiple broad-based tariffs. Consumer goods, industrial supplies, and food all drove the increase. A widening trade deficit is a direct drag on GDP. It also raises questions about whether the tariff strategy is achieving its intended goal of reducing import dependence.
Housing Weakens
May sales of new single-family homes fell 7.3% from April to a 580,000 annualized rate — a four-month low. High mortgage rates and persistently low consumer sentiment are keeping buyers away. The housing market will not recover until interest rates come down meaningfully. Right now that seems unlikely given the inflation picture.
GDP Revised Up
U.S. Q1 2026 GDP was revised up to 2.1% — better than the previous 2.0% estimate. Better-than-expected trade data and increased business investment drove the revision higher. Consumer spending fell. That is an important nuance. The economy is being held up more by business investment than by the consumer. A healthy economy needs both.
Consumer Sentiment Edges Higher
The June University of Michigan consumer sentiment index was revised up to 49.5 — an improvement from May’s approximately 70-year low. Moderating gasoline prices drove the improvement. The cost of living remains the number one concern for American households. The index is still below 50. But two consecutive months of improvement is an encouraging trend.
Manufacturing Hits a 4-Year High
The June S&P manufacturing index rose to 55.7 — an excellent reading. New orders surged to their highest level in over four years. That is a powerful signal of future production activity. Supplier lead times increased — a sign of strong demand putting pressure on supply chains. The one concern within the report is employment. Manufacturing employment fell at the fastest rate in six years. Companies are expanding output but not adding workers. That is a productivity story worth watching.
Wall Street Rises on Middle East Optimism
The Dow Jones Industrial Average rose 363 points to close at 51,565. The market pulled back from record highs reached during the week. Optimism about the Middle East deal is the primary positive driver. But that optimism is being tempered by growing concern about a possible Federal Reserve interest rate hike. The tension between good geopolitical news and potential monetary policy tightening is creating daily volatility. Markets are trying to price both simultaneously.
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