The yield on the 10-year US Treasury note inched up to 4.65% on Wednesday as investors digested a fresh batch of economic data for signals on the Federal Reserve’s policy outlook. The PCE price index rose 0.2% in July, overshooting expectations for a 0.1% increase, while the annual inflation rate reached 3.7%, slightly above the 3.6% forecast. Core PCE, the Fed’s preferred inflation gauge, advanced 0.2% month-over-month and 3.3% year-over-year, both matching consensus estimates. Consumer spending and personal income also came in modestly stronger than anticipated.
Additional reports showed that US GDP expanded 1.5% in the second quarter, in line with the initial estimate, while durable goods orders climbed 1.1% in July, more than double the expected 0.5% increase. However, the rise in Treasury yields was tempered by a third straight daily decline in oil prices, which helped ease concerns about near-term inflation pressures.
At the same time, investors continued to scrutinize the US Treasury’s plan to at least double the size of its buyback program. Billionaire investor Stanley Druckenmiller criticized the proposal, arguing that it undermines the credibility of the Treasury market and squanders an opportunity to pursue meaningful reform of the federal debt structure.
