U.S. Treasury yields surged Friday after oil prices climbed and some Federal Reserve officials advocated for raising rates to curb inflation. This occurred despite the central bank's 9-3 vote on Wednesday to maintain its key interest rate at 3.5% to 3.75%. The benchmark 10-year Treasury note jumped nearly 5 basis points to 4.71%. The 2-year Treasury note yield climbed over 4 basis points to 4.273%, and the 30-year Treasury bond yield also gained more than 4 basis points to 5.249%. These movements reflect capital's demands for higher returns amidst ongoing economic uncertainty.
Cleveland Fed President Beth Hammack stated, "In my view, now is the time for the [Federal Open Market Committee] to act to speed the return of PCE inflation to our 2 percent objective and deliver on our commitment to price stability for the American people." She warned that "The longer that high inflation persists, the more challenging and costly it can be to bring it back down." Minneapolis Fed President Neel Kashkari echoed this sentiment, believing small hikes now could prevent larger moves later. He said, "In my view, a potential series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary." These statements reveal the central bank's primary concern: protecting the accumulated wealth of capital holders by suppressing inflation, even if it means higher borrowing costs for the working class.
Oil prices rose after Iran reported attacking two tankers in the Strait of Hormuz. West Texas Intermediate futures increased 2.2% to $85.41 per barrel. Brent crude futures, the international benchmark, gained 1.5% to $90.36. This geopolitical maneuver, tied to imperial interests, directly impacts the cost of living for millions, fueling inflation and straining household budgets.
The Commerce Department reported Thursday that the all-items personal consumption expenditures price index fell 0.1% for the month, largely due to a sharp decline in fuel costs. However, the core level, which excludes volatile food and energy prices, gained 0.1%. Annually, these gauges rose 3.7% and 3.3%, respectively, with the core PCE remaining above the Fed's target.
GDP data released the same day showed U.S. growth slowing to 1.5% in the second quarter, missing the Dow Jones consensus estimate of 1.8%. This slower-than-expected growth rate still outpaced forecasts for Japan and the European Union.
Other inflation measures pointed downward, suggesting a different reality than the one presented by hawkish Fed officials. The Dallas Fed's trimmed mean measure put the one-month annualized rate for June at 1.4%, a 1.3 percentage point drop from May and its lowest since November 2020. The 12-month rate fell to 2.2%, a 0.2 percentage point decrease from a month earlier and a bottom not seen since July 2021. This measure excludes significant portions of both high and low price readings to find a midpoint. The Cleveland Fed's 16% trimmed mean CPI for June was 2.63%, its lowest since May 2021.
Citigroup economist Andrew Hollenhorst noted that trimmed mean data "should also now fall closer to target-consistent rates." He added that "The fact that underlying inflation is still slowing toward target – as indicated by a broad set of indicators – is now even more relevant given Chair Warsh's suggestion that he would analyze inflationary pressure by looking across a broad range of metrics." Hollenhorst projected that "markets to price-out rate hikes in coming months on inflation data, and price-in cuts if the unemployment rate rises as we project." This reveals capital's sensitivity to labor market conditions, where rising unemployment could trigger a shift in monetary policy.
Chairman Kevin Warsh acknowledged that "Not one of my FOMC colleagues is under any illusion. We have begun a new chapter, and we understand that the five-plus years of inflation above target cannot be cured in nine weeks — or by a single month of modest price decreases." This admission highlights the protracted erosion of working-class purchasing power over half a decade.
Dallas Fed President Lorie Logan dissented from the FOMC decision, preferring a quarter percentage point increase. She argued that a change in price increase and decrease mix was making the trimmed mean appear lower than the "true inflation trend." Logan, joined by Kashkari and Hammack, stated that inflation appears to be trending toward the mid-2s, not all the way to 2 percent, with risks to the upside. Their push for higher rates represents a direct assault on the borrowing capacity of ordinary people.
The University of Michigan reported Friday that consumer sentiment improved slightly in July as inflation fears eased. The one-year inflation view dipped to 4.2%, down 0.4 percentage point from May and the lowest since March. The five-year outlook remained unchanged at 3.3%. Workers still anticipate significant price increases, despite official reassurances.
Next week, investors await key jobs data, including the nonfarm payrolls report for July and the JOLTs job openings report for June. Unemployment remains low, and jobless claims in July were at their lowest level since Neil Armstrong walked on the moon. Salaries are forecast to grow at a "healthy" 3.5% on average in 2026, matching last year's pace. While the typical worker is "at least keeping up with inflation," this barely offsets the 8% price increases and 5.3% income growth seen in 2022, revealing a persistent struggle for real wage gains.
Who Profits from 'Stability'?
The S&P 500 has gained nearly 17% since July 2025, reflecting "strong profits across a variety of sectors." This surge added wealth for the more than 60% of Americans who own stocks. This is a clear indicator of capital accumulation. The United States minted about 1,200 new millionaires every day in 2025, meaning over 440,000 Americans saw their net worth jump into seven figures in one year. This starkly contrasts with the economic realities faced by the majority. Almost 500,000 new businesses have been launched each month since January 2024, demonstrating the relentless expansion of capital.
The Cost to Labor
Despite these gains for the wealthy, the poverty rate, though having dropped 16.5% since 2016, still means roughly 1 in 10 Americans live in poverty. This persistent dispossession underscores the systemic nature of economic inequality. President Trump's tariffs and the war with Iran have "kept inflation higher than it should be." These policies, driven by state power, have put a "strain on family budgets," led to "elevated interest rates on auto and home loans," and "jacked up energy costs." The state's foreign policy and trade decisions directly extract wealth from working-class households.
Managing Contradictions
An opinion piece concluded that the U.S. economy is "healthy and growing," but would be "even stronger if the president got out of the way." This liberal analysis ignores the structural contradictions inherent in a system that generates immense wealth for a few while imposing significant costs on the many. It frames systemic issues as mere political obstacles, obscuring the fundamental class dynamics at play.