Source: US Dept. of Treasury End of Day
• Rates were little changed last week with the 2-year decreasing by three basis points to 4.18% while the 5-year Treasury notes remained unchanged at 4.36%.
• Headline CPI eased to 3.4% year-over-year, and core CPI declined to 2.5%, reinforcing the view that inflation is gradually moderating but remains above the Fed’s 2% target.
• Consumer spending remained resilient despite softer than expected retail sales, supported by a healthy labor market and continued wealth gains among higher-income households.
• Markets reduced the probability of a September rate hike following the latest inflation and spending data, reflecting growing confidence that the Fed can remain on hold if inflation continues its gradual downward trend.
• Geopolitical tensions and volatile energy prices remain the primary upside risk to inflation, as sustained increases in oil prices could slow progress toward the Fed’s target and reignite calls for additional policy tightening.
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