TPL Aug 8 26

Roll With the Punches… We know now that it is not the vibrancy of the job market that has triggered the backup in bond yields. The yield on the US 10-year Treasury slid on Friday after a weaker-than-expected jobs report scaled back bets on Fed rate hikes. But long-term U.S. interest rates did move higher over the past two weeks as the bond market priced in the effects of unpredictable geopolitical uncertainties, stubborn inflation tendencies, and new leadership at the Federal Reserve. The July Fed meeting was significant. It marked the fifth consecutive hol for rate policy. However, new Fed Chairman Warsh’s message to markets was that the Fed would reduce its level of forward guidance. That added veil will elevate rate curves; long-term interest rates have increased, steepening the yield curve. The evidence on inflation is challenging to the Fed’s mandate. The personal consumption expenditures price index rose 3.7 percent in the 12 months through June. That is nearly double the target. Elevated energy prices have contributed significantly to inflation over the past year, but it is not the only factor. Core prices, which exclude food and energy costs, rose 3.3 percent over the same period - - still too high for the Fed’s strict guidelines. Overall economic growth in the U.S. remains solid this year. After being adjusted for inflation, output grew at a 1.8 percent pace through the first half of the year and is on track to grow at a faster pace in the second half. An important driver of those gains is the AI-related investment I have regularly highlighted in these pages. Overall business investment rose at a 10 percent annual rate in the first half of the year. Meanwhile, U.S. households appear resilient, with consumer spending advancing at close to a 2 percent rate in the first half. Housing continued to be a soft spot, with the level of residential investment edging down about 3 percent. This housing anomaly is a holdback on full throttled growth and will remain a problem sector in the growth equation.

How does this sound? Is America Out of Ammo or Just Incompetent? AstraZeneca investors balk at prospect World Cup, hot weather and inventory Iran has placed significant strain on the U.S. Navy. of $400 billion Bristol Myers pharma deal building provide economic boost

Market warning signals flare up again Can Hamas Really Be Disarmed? The yield on the 30-year US Treasury as tech, inflation fears intensify bond surged to the highest since 2007, to reflect concerns of higher inflation in Beijing’s longtime position as both a financial lifeline Higher Rates? the longer term.

to Iran and a customer for its foes has helped it work Only the Bank of Japan Can Arrest the Yen’s Decline around blockades. America is printing dollars so Japan can buy yen. It isn’t quite quantitative easing, US-based employers announced because the Federal Reserve is lending Japan money in return for temporary ownership 33,429 job cuts in July, the fewest Italy Suspends Schengen Free Travel of Treasurys in repurchase agreements, rather than outright buying the Treasurys. But like in two years, down 27% from June With Spain Over Ceuta Migrant Surge QE it expands the Fed balance sheet and pumps billions of dollars into the economy. and 46% compared with the same A deal maker? When the Fed is widely thought to be moving toward raising rates, this is exactly the month last year. AI led all reasons for opposite of what it should be doing. Expanding the balance sheet is also the opposite of Is this true? The Hormuz plan that reportedly job cuts for a fifth straight month what Chairman Kevin Warsh has repeatedly said he wants to do. blocks Israeli and US ships is not only a non-starter while the tech sector cut the most but a joke that shows Iran is just jerking around the Oil prices fell as optimism over renewed US-Iran jobs, followed by financial, government U.S. and the rest of the world. talks eased supply concerns. Hopes for a deal grew and services. after Qatar said a proposal had been drafted, while ABRAHAM GULKOWITZ US Treasury Secretary Scott Bessent expressed confidence that an agreement to reopen the Strait of Hormuz could be reached soon.

August 8, 2026…