Federal Reserve Chairman Kevin Warsh looks on during his first press conference since taking over the central bank’s post in Washington, DC on June 17, 2026.
Chip Somodevilla | Getty Images
If it weren’t for oil prices, this could have been a big week for bond bears.
U.S. GDP exceeded expectations, and the Fed’s recommended inflation measure hit its highest level since October 2023. Still, U.S. Treasuries remained strong. 10 year yield iShares Long Term Bond ETF drops below 4.4% (TL) It rose two-thirds of a percent and is up 5% from last month’s low.
One explanation is the sharp decline in oil prices. crude oil futures It is down about $10 from last Friday’s high, reducing the risk of higher inflation and a more hawkish central bank.
“It definitely looks bearish and the curve is flattening a little bit,” Phil Streible, chief market strategist at Blue Line Futures, said on a conference call. “You won’t find oil in the 50s, but it could be comfortable in the 60-65 degree range.”
Judging from the flow of options surrounding oil ETFs, (USO)further mitigation may be on the way. Friday’s put trades were about 30% more common than calls, according to ThinkOrSwim data, and the least popular directional trade was put sales. Of the $114 million in premium traded in the fund, $81 million was tied to calls, according to SpotGamma data.
If oil prices continue to slump, that could alleviate concerns at the currently hawkish Federal Reserve, led by Kevin Warsh. Warsh told reporters earlier this month that the central bank would spend more time developing an internal task force than publicly speculating about the direction of interest rates.
iShares 20+ Year Treasury Bond ETF (TLT) YTD
Although there were more puts than calls on the TLT ETF on Friday, selling puts was the most common trade based on volume. One of the biggest trades of the day was the simultaneous sale of 11,000 80-strike puts and 44,000 55-strike puts, resulting in approximately $2.6 million in proceeds. Of the $51 million traded on TLT, $30 million was tied to puts.
“We’ve probably seen a peak in CPI inflation. When Mr. Warsh sees inflation coming down, you’d think they’d go from being hawkish to being neutral or dovish,” Strible said.
