Rates Rise with 40-Year High UK Inflation

Swap rates and Treasury yields jump on double-digit UK inflation. UK CPI came in at 10.1% in July, vastly outpacing estimates and pushing bond yields higher globally. Swap rates and Treasury yields climbed as much as 13 basis points before moderating into the close, the 10-year Treasury yield closing 9bps higher at 2.90%. Minutes from the Fed’s July meeting were also released today and had a dovish tilt- weighing on rates, but only slightly as rates still ended the day 3-9bps higher.

Retail sales data exceeds consensus expectations. The median estimate called for core retail sales to grow by 0.3% month-over-month, but the actual figure came in at 0.7%-a significant beat. Consumer spending accounts for over two-thirds of economic activity, and a beat in retail sales should ease some of the concerns around a decelerating economy.

Day ahead. Tomorrow there will be several economic data releases, including jobless claims, existing home sales, and the Philadelphia Fed manufacturing index. Additionally, two Fed speakers will speak publicly tomorrow, with Esther George and Neel Kashkari set to make comments at 1:20 PM ET and 1:45 PM ET, respectively.