Source: US Dept. of Treasury End of Day
• Rates rose slightly last week with the 2-year Treasury note increasing by three basis points to 4.21% while the 5-year Treasury note increased by six basis points to 4.31%.
• Renewed U.S./Iran tensions have revived inflation concerns, pushing oil prices and gasoline costs modestly higher and erasing some of the relief consumers experienced following the mid-June ceasefire agreement.
• Higher asset prices and borrowing costs are widening economic bifurcation, benefiting wealthier households while pressuring lower-income consumers.
• Consumer credit is showing signs of stress, as delinquencies rise, borrowing slows, and lenders tighten lending standards.
• While inflation expectations remain elevated, disinflation is expected to resume, supporting the case for eventual Federal Reserve rate cuts as wage growth moderates and productivity improves.
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