Inflation worries resurface

8.3.23 - Inflation worries resurface

Gold last traded at $1,934 an ounce. Silver at $23.59 an ounce.

Inflation worries resurface as long-term U.S. bond yields start to come unglued - MarketWatch

Inflation worries are back in some corners of the financial market, judging by soaring long-term Treasury yields that point to worries about higher-for-longer future price gains.

Yields on 10- BX:TMUBMUSD10Y and 30-year Treasury yields BX:TMUBMUSD30Y finished at fresh 2023 highs on Thursday, fueled by an aggressive selloff of long-term government debt. After factoring in the highest rates on 10- and 30-year Treasury inflation-protected securities in more than a decade on Thursday, traders continued to envision a scenario in which U.S. inflation remains above 2% for the long term.

A number of factors may be at play, chief of which is the continued strength of the U.S. economy and labor market.

Economists pointed to Wednesday's better-than-expected private-sector employment report, which showed the U.S. added 324,000 jobs in July, and said expectations for Friday's monthly jobs report were being revised upward even though the private-sector reading doesn't always act as a reliable predictor. Before Wednesday's data, economists polled by The Wall Street Journal expected July's nonfarm payrolls report to show a gain of 200,000, little changed from the 209,000 increase seen in June.

The robust data comes at a time when the U.S. fiscal outlook is in focus following the Treasury's plans to borrow $1 trillion in the third quarter and Fitch Ratings' downgrade of the U.S. government's debt rating.