Wolf Street

Unabated fears of inflation and worries about the onslaught of new debt keep pushing up long-term yields. By Wolf Richter for WOLF STREET. The yield of 30-year Treasury Inflation Protected Securities (TIPS) rose to 2.91% on Thursday and closed at 2.87% on Friday, the highest since 30-year TIPS were reintroduced in February 2010, up from -0.6% at the end of 2021.

And 28 were down from their peaks in prior years, led by Austin -27% and Oakland -25%. By Wolf Richter for WOLF STREET. Prices of mid-tier homes in June were down from their respective peaks in prior years in 28 of the 33 big and expensive cities we follow here, led by Austin (-27%), Oakland (-25%), and New Orleans (-19%), Washington D.C. (-13%), Denver (-13%), Phoenix (-11%), Fort Worth (-10%), and Portland (-10%). All of the prices are seasonally adjusted. Here’s is Austin.

The first shock was due to the supply-chain chaos in 2021 through 2022. The second shock is now, it’s huge, and it’s due to the AI investment boom. By Wolf Richter for WOLF STREET. The US imports about $3.3 trillion worth of goods a year currently, and so import prices matter to inflation in the US. Import prices had exploded during the first wave of inflation in 2021 through early 2023 amid the supply chain chaos and shortages at the time.

Sales sag in all regions, plunge the most in the Midwest, drop to lowest for June in the South. Demand stuck in the deep-freeze. By Wolf Richter for WOLF STREET.

Sales at gas stations were pushed by massive price movements of gasoline; we look at retailer categories separately to sort it out. By Wolf Richter for WOLF STREET. Retail sales rose by 0.2% in June from May, seasonally adjusted, but the price of gasoline plunged by nearly 10% in June from May, off the spikes in the prior month, and sales at gasoline stations were pushed down by the lower prices. Gas station sales accounted for 7.5% of total retail sales.

The plunge in energy prices pushed down overall PPI inflation, to a still very high 5.5%. It has been zigzagging higher since mid-2023. By Wolf Richter for WOLF STREET. Energy prices plunged in June off the spike in the prior months. And this plunge in energy prices spread through the Producer Price Index final demand (PPI), which tracks inflation in prices that companies pay each other, and which dropped by 0.28% seasonally adjusted in June from May (annualized -3.3%, blue in the chart).

How much of that foreign demand for US Treasuries is actually “foreign?” Less than it seems. Here are some clues. By Wolf Richter for WOLF STREET. All foreign investors combined added $18 billion of Treasury securities to their holdings in May, bringing them to $9.37 trillion. Over the past 12 months, their holdings increased by $549 billion (red line in the chart). $7.92 trillion (84.5%) were long-term Treasury notes and bonds with terms between 2 years and 30 years (blue).

The CPI headline does not provide political backing for a politically unpopular rate hike at the July FOMC meeting. Details – such as outliers reverting in a month or two – don’t matter today. By Wolf Richter for WOLF STREET. The Consumer Price Index for gasoline prices plunged in June from the spike in the prior months, roughly as expected as prices at the pump started dropping in May.

“Sternly staring at inflation until it melts before our withering gaze is not an option,” he said with a sense of urgency. By Wolf Richter for WOLF STREET.

Lots of new supply: Treasury debt of notes and bonds outstanding ballooned by $70 billion this week. By Wolf Richter for WOLF STREET. The US government sold $743 billion of Treasury securities during the week, in 10 auctions. Of them, $612 billion were Treasury bills, spread over seven massive auctions, with maturities from 4 weeks to 52 weeks, most of them to replace maturing T-bills.