Markets Await Key Inflation and Policy Data (11-15 August)

U.S. 10-year Treasury yields rose for a fourth consecutive session to 4.27% on Friday, rebounding from a three-month low. The move followed weak U.S. data, newly announced gold tariffs, and President Trump’s nomination of Stephen Miran to the Fed, which fueled concerns about a politicized central bank. Waning demand at recent bond auctions and rising expectations for rate cuts also influenced markets. Investors now look ahead to next week’s CPI release for policy signals.

Germany’s 10-year yield climbed 5 bps to 2.69% on August 8, up 6 bps for the month and 47 bps from a year earlier.

UK 10-year Gilt yields moved above 4.55%, extending their recovery from a one-month low after the Bank of England cut rates by 25 bps to 4%. Divisions within the committee and services inflation above 4% limited expectations for further easing, while reduced long-term Gilt issuance lent additional support to yields.

Japan’s 10-year yield held near 1.49% as Bank of Japan minutes revealed differing views on future rate hikes. Some members supported gradual tightening due to inflation risks, while others favored caution amid economic uncertainty. June household spending declined, pressured by tariffs and rising prices.

Fixed Income

US 10-year Treasury yields rose for the fourth day to 4.27% on Friday, rebounding from a 3-month low after weak US data, new gold tariffs, and Trump’s Fed nominee Stephen Miran, which raised fears of a politicized Fed. Waning demand at recent auctions and growing rate cut expectations also weighed. Markets now await next week’s CPI data for policy clues.

Germany’s 10-year yield climbed 5 bps to 2.69% on August 8, up 6 bps this month and 47 bps year-on-year.

UK 10-year Gilt yields rose above 4.55%, extending their rebound from a 1-month low after the BoE cut rates by 25 bps to 4%. A divided committee and services inflation above 4% tempered expectations of further cuts, while limited long-term Gilt issuance also supported yields.

Japan’s 10-year yield held near 1.49% as BoJ minutes showed divisions on future hikes. Some members favored gradual tightening over inflation risks, while others preferred caution amid economic uncertainty. Household spending fell in June under pressure from tariffs and inflation.

S&­P Global Services PMI (Jul)

The S&P Global US Services PMI® Business Activity Index rose to a seven-month high of 55.7 in July, up from 52.9 in June. The latest reading signaled a marked monthly expansion of output in the service sector, extending the current sequence of growth to two-and-a-half years. The increase in total new business was recorded in spite of a further reduction in new export orders as tariffs - and government policy-related factors - continued to negatively impact inflows of new business from abroad. New export orders have now decreased in each of the past four months, although the latest reduction was only marginal and the slowest in this sequence.

BoE Interest Rate Decision (August 2025)

The U.K. central bank cut its Bank Rate by 25 basis points to 4%, from 4.25%, its fifth reduction in 12 months.

The rate cut comes as the U.K. economy retreats and amid concerns that a more worrisome deterioration in the jobs market is imminent. Inflation is running above the BoE’s projections and forecast by some economists to reach 4% in the coming months, double the central bank’s target.

30-Year Bond Auction

The Treasury Department sold $25 billion worth of 30-year debt at a yield of 4.813%, which was more than two basis points above the yield’s level at the pre-bidding deadline. Higher rates at auctions signal that demand is weak, as the Treasury has to entice investors to buy U.S. debt. One basis point is equal to 0.01%.
ISM Non-Manufacturing PMI (Jul)

The Manufacturing PMI slipped to 48 in July from 49 in June, indicating contraction. New orders remained weak at 47.1, production improved to 51.4, and the prices index eased to 64.8. Employment fell to 43.4, highlighting labor market softness.

Currencies

The dollar index fell to 98.2, heading for a 0.8% weekly loss on weak US data, stronger Fed cut bets, and concerns over political influence after Trump nominated Stephen Miran to the Fed board. Markets now price a 91% chance of a 25bps cut in September. EUR/USD dropped 0.30% to 1.1642, down 0.82% for the month but up 6.66% year-on-year. The yen held at 147.3 as BoJ minutes showed divisions on rate hikes, with some members backing gradual tightening. The pound rose to $1.34, a two-week high, after the BoE cut rates by 25bps to 4% in a narrow 5–4 vote, signaling any further easing will be gradual.

Commodities

Spot gold held near $3,400, while December futures hit a record $3,534 after the US unexpectedly imposed tariffs on one-kilo and 100-ounce gold bars. Gold gained nearly 1% for the week. Silver traded above $38, up 3% weekly, on safe-haven demand driven by Fed cut expectations and tariff uncertainty. WTI crude steadied at $63.9, down over 5% on the week, as tariffs fueled concerns over global growth and oil demand.