Long-Term U.S. Treasury Yields Reached Fresh 2026 Highs
August 3, 2026
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Markets opened stronger, with Treasury yields moving lower following oil’s overnight decline, after longer-term yields reached fresh 2026 highs last week.1 Last week, the Federal Reserve (Fed) left the federal funds rate unchanged at 3.50%–3.75% but delivered a more hawkish message than expected, drawing three dissents in favor of a 25-basis-point hike.2 The inflation backdrop, however, moved in the Fed's favor: core Personal Consumption Expenditures (PCE) rose 0.13% month over month in June—the smallest gain since March 2025—slowing to 3.29% year over year, while the headline PCE Price Index fell 0.11% as energy prices dropped roughly 6%.3 The first estimate of second-quarter gross domestic product (GDP) came in at 1.5% annualized, below consensus, though final sales to private domestic purchasers increased 3.9%, the strongest since early 2023—a signal that underlying demand remains firm.4 At the end of last week, the yen rallied after the U.S. Treasury and Japan conducted a coordinated yen-buying intervention, their first coordinated currency intervention since 2011.5
The combination of cooling inflation, resilient demand and uncertainty surrounding the Fed’s policy path kept upward pressure on rates. The 10-year Treasury yield finished the week near 4.74%, its highest level since January 2025, as investors reassessed the odds of additional tightening.6 Despite the move in rates, credit markets remained remarkably well behaved—the Bloomberg U.S. Aggregate Bond and Bloomberg Credit Index posted modest weekly gains, while spreads remained tight.7 Equities advanced, with the S&P 500 Index up roughly 1% as a busy week of mega-cap technology earnings reinforced the artificial intelligence (AI) capital-spending theme.8 Amazon rose approximately 15% on strong cloud results while Apple fell roughly 7% on softer Services revenue.9 Microsoft made market history, adding nearly $450 billion in market capitalization in one trading session, the largest one-day increase on record for a company.10 The gain exceeded the market capitalization of approximately 96% of S&P 500 constituents.11
In the week ahead, the labor market takes center stage. The July employment report on Friday is the key event for Treasury rates, preceded by the Job Openings and Labor Turnover Survey (JOLTS), ADP private payrolls and the Institute for Supply Management (ISM) manufacturing and services surveys.12 With the Fed explicitly data-dependent and forward guidance de-emphasized, each release carries added weight for the September policy path. Earnings season also continues, offering additional insight into corporate health and consumer resilience.13 For fixed-income investors, the central question remains whether a moderating—but not weakening—economy can keep the Fed on hold even as inflation gradually improves.
Sources:
1CNBC – Dow futures jump 600 points after Trump calls off planned attacks, oil prices slide: Live updates; 8/3/26
2Board of Governors of the Federal Reserve System – Transcript of Chairman Warsh’s Press Conference July 29, 2026
3,4Main Management – Week of July 27–31, 2026; 7/31/26
5Bloomberg – U.S. and Japan Aim to Transform Yen Landscape with Joint Moves; 8/3/26
6U.S. Treasury: Daily Treasury par yield curve rates; as of 8/3/26
7,8LPL Financial – Weekly Market Performance; 7/31/26
9Reuters – Wall Street ends higher as Amazon soothes AI jitters; 7/31/26
10,11Bloomberg – Microsoft’s $450 Billion Jump is Biggest in Stock Market History; 7/30/26
12MarketWatch – Economic Calendar; as of August 3, 2026
13Kiplinger – Earnings Calendar and Analysis for This Week (August 3-7)
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