Source: US Dept. of Treasury End of Day
• Rates moved higher last week with the 2-year rising 13 basis points to 4.76% while the 5-year Treasury notes increased basis points to 4.87%.
• The Federal Reserve increased the federal funds target range to 3.75%-4.00% and signaled that the tightening cycle is likely to continue, with 16 out of 19 FOMC members expecting at least one additional rate hike before year-end.
• Markets are pricing in at least three more rate increases through mid-2027, reflecting a sharp shift in Fed priorities from labor market support toward restoring inflation-fighting credibility.
• The Fed's focus has shifted from supporting the labor market to restoring price stability, driven by elevated energy prices, tariff-related pressures, and rising inflation expectations.
• Consumer spending remains resilient despite higher prices and borrowing costs, with August retail sales exceeding expectations and supporting a stronger growth outlook.
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