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Yield moves signal growth optimism, not credibility concerns
42 minutes ago•Source: Financial Times
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US-Canada tariff clash could reshape fertilizer use for years
A new US-Canada tariff dispute could raise fertilizer costs and create price uncertainty, prompting farmers to reduce potassium and phosphorus applications and potentially yield smaller harvests in coming seasons, with Canada’s role as a major potash supplier and related supply disruptions potentially pushing food prices higher even if tariffs are lifted later.
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Jobless claims dip to 203,000 as hiring remains sluggish
ABC News - Breaking News, Latest News and Videos•4 hours ago
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Fed Governor Cook Pushes Back as Trump Seeks Ouster Over Mortgage Claims
Federal Reserve Governor Lisa Cook rejected President Trump’s attempt to remove her over mortgage‑fraud allegations, saying there is no legal basis to oust a Fed governor for political reasons. The White House had warned of removal, but a June Supreme Court ruling had already blocked firings at will, underscoring the Fed’s independence. Cook’s lawyers argued the accusations are a pretext to influence policy, as the broader clash between the executive branch and the Fed continues amid past investigations related to Powell’s tenure that were ultimately dropped.
US inflation sticks at 3.7% in July, fanning Fed rate-hike expectations
US inflation held at 3.7% in July, above the Fed's 2% target, with the monthly PCE up 0.2% and core PCE at 3.3%, boosting expectations for a possible rate hike at the September meeting as energy prices stay elevated amid ongoing geopolitical tensions.
Iran Strait Crisis Could Spark 2030 Deflation, Strategist Warns
Market strategist Marko Papic warns that a sustained Iran-strait crisis could trigger a surge in capital spending that overbuilds capacity, potentially leading to disinflation or deflation by the 2030s as governments expand energy, AI-related infrastructure, and resilient supply chains faster than demand.
Sticky PCE Keeps Fed Divided Ahead of Jackson Hole
July core PCE rose 3.3% year over year and 0.2% month over month, signaling sticky inflation even as prices cool, which preserves a split within the Fed between rate hikes and holding. With Jackson Hole approaching, officials differ on whether to move in September, and some economists still call for a possible December hike depending on forthcoming data, amid elevated energy prices and ongoing policy scrutiny.
Inflation sticks around as incomes rise and energy costs creep up
U.S. inflation remains above the Federal Reserve’s target even as real incomes climb about 0.4% last month and gasoline prices rebound toward about $4.10 a gallon, threatening August readings; with inflation stubborn for more than five years, Fed officials warn rates may need to stay higher for longer, helping push longer‑term yields higher even as Treasury buybacks aim to stabilize markets. The broader picture includes energy costs and ongoing trade frictions amid a backdrop of geopolitical tensions.
Core Inflation Holds at 3.3% as July PCE Gains Cruise On
The Fed’s preferred inflation gauge, the PCE index, rose 0.2% in July, with core PCE up 0.2% to 3.3% year-over-year (overall PCE at 3.7%). Despite softer goods, spending and incomes rose, while energy prices fell and services costs advanced. Markets trimmed some gains as yields moved higher. With no August FOMC meeting, traders eye a potential year-end rate hike—most likely December—while investors await Jackson Hole remarks from Chairman Kevin Warsh.
Trump-Canada tariffs threaten NYC’s recovery as tourism and construction feel the pinch
Trump’s escalating Canada trade war threatens New York’s recovery by shrinking Canadian tourism (visitors down about 26% and spend down 14%), jeopardizing the city’s tourism-led economy. Tariffs—such as a 50% duty on $20 billion of Canadian goods—would raise costs for cement, building materials, and consumer goods, lifting prices on construction, restaurants and retailers and potentially delaying NYC’s forecast of about 66.3 million visitors this year unless a deal with Canada is reached.
Treasury Debt Loses Its Safe-Haven Luster as Markets Reprice Risk
Stanford economist Hanno Lustig argues U.S. Treasuries no longer provide superior risk-adjusted returns or a guaranteed safe haven; investors are seeking higher-yield, high-grade corporate debt and non-dollar assets, the traditional stock–Treasury link has weakened, foreign buyers and banks are retreating, and the Fed is reducing its Treasury holdings, leaving deficits funded more by yield-seeking investors than safety—hinting at potential mispricing of risk and a move toward financial repression if policymakers cling to the old safe-debt mindset.
US consumer confidence eases in August as gas prices exceed $4 a gallon
The Conference Board’s August consumer confidence index slipped to 89.4 from 90.2 as gas prices stay above $4 per gallon. Sentiment improved regarding the current labor market (27% say plentiful vs 24.4% in July) but weakened on the six‑month outlook (14.6% expect more jobs, down from 16.4%). July payrolls fell 23,000 and the unemployment rate held at 4.1% as a shrinking labor force kept the jobless rate down. Inflation, via the Fed’s preferred PCE index, remained elevated at 3.7% y/y in June, signaling continued price pressures alongside geopolitical concerns.
Bond markets tilt to a higher-rate path for U.S. debt
A Reuters explainer says U.S. Treasuries still look safe, but debt dynamics are shifting as global rates rise and deficits stay large. Public debt sits near 100% of GDP and interest payments run about 3% of GDP, while growth remains around 2%—not enough to sustainably shrink the debt burden. Deficits have lingered at recession‑era levels even as the economy expands, aided by tax cuts and spending in aging demographics. The combination raises the risk of a debt cliff further out, prompting talk of potential Fed/treasury interventions to cap long-term yields. AI and other growth catalysts could help, but their timing and fiscal impact remain uncertain, making higher borrowing costs and tighter financing conditions a growing backdrop for U.S. debt sustainability.