U.S. Treasury Yields Edge Up After Recent Falls; European Yields Decline as Oil Falls — 2nd Update

By Emese Bartha

U.S. Treasury yields rose Wednesday, following sharp falls the previous day, as fresh data showed inflation still hot, ahead of Federal Reserve Chairman Kevin Warsh's speech later this week at the Jackson Hole, Wyo., symposium.

The 10-year U.S. Treasury yield rose 4.664% from a morning low of 4.629%, according to LSEG.

As measured by the personal consumption expenditures index, the Fed's preferred gauge, prices rose 0.2% in July, following June's 0.1% decline and beating consensus forecast of a 0.1% rise. Excluding volatile food and energy prices, core PCE accelerated to 0.2% from 0.1%, in line with expectations.

The 12-month pace was 3.7%, with core at 3.3%, both repeating June's readings and above the Fed's 2% target.

The data comes ahead of Warsh's first Jackson Hole speech Friday, where he is expected to clarify his approach to inflation.

"Jackson Hole always commands attention, but this year is more pivotal than ever," said Jonathan Pryor, co-head of dealing and head of private markets at Marex FX. "This is about more than where rates go next; importantly, it's about establishing what kind of Fed Chair Kevin Warsh will be."

Bonds broadly benefit from a decline in oil prices, which sent eurozone and U.K. government bond yields lower Wednesday.

Earlier in the session, the 10-year German Bund yield fell to a 12-day low of 3.186%, while the 10-year U.K. gilt yield dropped to a 13-day low of 4.979%. They last traded at 3.210% and 4.997%, respectively.

Oil prices have been falling for three days, prompted initially by U.S. Treasury Secretary Scott Bessent announcing measures earlier this week to economically isolate Iran.

The fall in oil prices gained additional momentum from news that Iran and Oman are in talks to reopen the Strait of Hormuz for safe maritime passage.

"There were tentative signs of progress in the Middle East, which helped oil prices and rates lower and risky assets higher," said Mohit Kumar, global economist at Jefferies.

Brent oil traded 2.5% lower at $86.34 a barrel, having come down from Friday's close at $94.39 a barrel.

"While highly uncertain and dependent on the response of the U.S. (which isn't involved in the talks), the hope is that such a deal could create a path for Iran and the U.S. to return to the earlier Memorandum of Understanding," KBC Bank analysts said in a note.

Falling oil prices could "give some relief for Warsh," Jefferies's Kumar said. Jefferies also expects core inflation to remain benign over the coming months, which should allow interest rates to stay on hold, he said.

Warsh's debut Jackson Hole speech follows the Fed's July press conference that left markets uncertain about his stance on inflation and his framework for fighting it due to a lack of forward guidance, said Kevin Thozet, member of Carmignac's investment committee.

"Markets will be highly sensitive to any hint about the Fed's reaction function," Thozet said.

The Treasury last week announced it would double buybacks of long-end securities to at least $4 billion from $2 billion per operation.

--Paulo Trevisani contributed to this article.

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

August 26, 2026 10:43 ET (14:43 GMT)