Source: US Dept. of Treasury End of Day
• Rates moved higher last week with the 2-year rising 26 basis points to 4.63% while the 5-year Treasury notes increased 24 basis points to 4.79%.
• August CPI held at 3.4% YoY, keeping inflation above target and reinforcing the case for policymakers to maintain a hawkish bias.
• Core CPI came in hotter than expected on a monthly basis, 0.3% as compared to the expected 0.2%, though the annual rate eased to 2.4% YoY.
• Consumer prices have outpaced wage growth for five consecutive months, leaving real hourly earnings effectively unchanged since mid-2025 and pressuring household purchasing power.
• Despite declining real wages, consumer spending has remained resilient, supported by tax refunds, savings drawdowns, and wealth effects from a strong equity market.
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