Global Weekly Fixed Income Report - August 28, 2026

US Treasuries

The curve bear flattened hard. The 1-year rose 11 basis points to 4.15%, the 2-year and 3-year 10 each to4.34% and 4.41%, and the 5-year 7 to 4.48%. Beyond ten years nothing happened: the 20-year closedunchanged at 5.21% and the 30-year a basis point lower at 5.22%. 2s10s narrowed 7 basis points to 39, theflattest in this series, and 2s30s narrowed 11 to 88.

Friday's Jackson Hole keynote is the whole story. Warsh called inflation concerning and signalled rates couldneed to move higher without more progress, but the market reaction came from three specifics rather thanthe general tone: he named PCE as the gauge he will act on, he described financial conditions as notrestrictive, and he declined to offer forward guidance or a reaction function, adding that the Fed should notbe where market participants look for their next trade. Hike odds for the 16 September meeting moved from roughly 30% to about 56%.

The long end's refusal to follow is the important part, and it is the inverse of last week. Then the 30-yearrallied because the Treasury doubled its buybacks, which suppressed a symptom and told us nothing about value. This week the 30-year absorbed a 10 basis-point hawkish shock at the front and did not move. Acurve that prices more tightening now and no more inflation later is a curve expressing confidence in thecentral bank, and that is a reason to own duration at the back rather than the front.