US inflation on the rise and yields at highest since 2023: the week leading up to the Fed
Four sessions of declines and a final rebound on Wall Street, with the August price index above expectations and the US Treasury 10-year note near its late-2023 highs. OPEC cuts crude demand estimates for the fifth time.
This analysis opens a section that the morning had left uncovered, and it does so from the opposite side of today’s opening: not crude oil as an effect of a war, but crude oil as an item feeding into an economy’s accounts and into a monetary policy decision.
The data point that moved the week is the US consumer price index for August: up 0.4% month-on-month, against 0.1% in July. The core index — the one stripped of the most volatile components — rose 0.3%, above the market consensus of 0.2%. The reading, based on Bureau of Labor Statistics data, is reported by Charles Schwab and CNBC.
The movement of prices, day by day
US stock indexes lost ground for four consecutive sessions, before Friday’s rebound. The Nasdaq shed about 0.7% over the course of the week: it is the first negative weekly close after two in a row of gains.
In the bond market the movement was sharper: the yield on the US Treasury 10-year note touched its highest level since late 2023. When the yield rises, the price of the note falls: it means that today’s buyers demand more to lend money for ten years, and this demand is passed on to the cost of credit for businesses and households.
| Indicator | Latest data |
|---|---|
| US consumer prices, August | +0.4% monthly (from +0.1% in July) |
| Core index | +0.3% (consensus +0.2%) |
| Nasdaq, week | about −0.7% |
| US Treasury 10-year | highest since late 2023 |
From the oil supply side
The commodities picture explains why the rise in consumer prices was not filed away as an isolated data point. OPEC cut its estimate of global oil demand growth for 2026 to 380,000 barrels per day: it is the fifth consecutive downward revision. A Reuters survey also shows that the organization’s output fell by 640,000 barrels per day in August. Both elements are reported by Offshore Technology.
On a weekly basis, Brent and WTI — the two benchmark crudes — posted their strongest advance since the week ended July 17, according to the Reuters reading carried by Yahoo Finance.
Analyst Priyanka Sachdeva, of Phillip Nova, frames the question in terms of thresholds: the point, in her reading, is whether the market will manage to stabilize below $120 or whether a new supply disruption will push crude into a price regime different from the one observed so far. This is an assessment from a private market operator, not a forecast by this newspaper, which makes none.
On a weekly basis the two benchmark crudes posted their strongest advance since the week ended July 17.
The appointment for the week ahead
Market participants point to the Federal Reserve’s monetary policy committee meeting, scheduled for the week following the one just closed, as the main market event. The combination facing central bankers is the least comfortable one: prices rising for a push that comes largely from energy, that is, from a factor over which monetary policy has no direct grip, and the cost of money already perceived as high by the bond market.
What we don’t know
Our material does not contain the year-on-year inflation figure, nor the breakdown by spending category of the August index. It does not contain official Federal Reserve forecasts or indications of the expected vote. And it does not contain estimates of how much of the price rise is attributable to energy: whoever calculates that, at this point, does so on bases we have not verified.
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