Since late July, market pricing in a September rate hike by the Federal Reserve has decreased from nearly a full rate hike to around 39%, but the 30-year Treasury yield has actually risen from 5.08% to 5.24%. This divergence stems from two conflicting logics: weak non-farm payrolls and moderate CPI have reduced the necessity for a near-term rate hike; however, long-term Treasury bonds are trading on inflation, fiscal supply, and term risks over the next few decades.
July's job losses of 23,000 and core CPI falling to 2.5% year-on-year explain the decline in short-term policy expectations.
