The Lead
Fixed income starts Thursday with CPI relief, lower rate volatility, and a still-difficult long-end setup. The 10-year Treasury eased to 4.69%, but the 30-year Treasury rose to 5.25%, and the 10-year real yield held at 2.42%. That keeps long-duration Treasuries tactical even after a benign CPI report.
July CPI came in line with expectations: headline CPI rose 0.1% month over month and 3.4% year over year, while core CPI rose 0.2% month over month and 2.5% year over year. Reuters reported that the data reduced pressure for a September Fed hike, though inflation remains above target and policymakers are still watching energy prices.
Oil remains the offsetting risk. August 13 market reports showed oil easing below recent highs but still elevated as investors tracked Iran negotiations, Strait of Hormuz risk, and crude-inventory data.
The setup still favors an income-oriented allocation: collecting yield from ultrashort, short-duration, municipal, AAA CLO, high-quality credit, and selective high-yield segments while keeping long-duration Treasury exposure tactical.
Rates Tape
| Rate | Latest | 1D Change | 1W Change |
| 2Y Treasury | 4.20% | -2.5 bp | +2.0 bp |
| 10Y Treasury | 4.69% | -0.5 bp | +7.0 bp |
| 30Y Treasury | 5.25% | +1.0 bp | +7.8 bp |
| 2s10s Curve | 48.7 bp | +2.0 bp | +5.0 bp |
| 5s30s Curve | 87.2 bp | +2.6 bp | +2.5 bp |
The curve steepened again, with the front end helped by CPI and Fed pricing while the long end remained under pressure. That is still a better setup for intermediate duration than for aggressive long-duration exposure.
Macro Signal Board
| Signal | Latest | 1D Change | 1W Change | 1Y Percentile | Trading Read |
| 10Y Treasury | 4.69% | -0.5 bp | +7.0 bp | 98th | Yields remain near one-year highs. |
| 30Y Treasury | 5.25% | +1.0 bp | +7.8 bp | 99th | Long-end risk remains the main constraint. |
| 10Y Real Yield | 2.42% | -1.0 bp | +1.0 bp | 97th | Real yields still limit duration upside. |
| 10Y Breakeven | 2.26% | -1.0 bp | +4.0 bp | 27th | Inflation compensation is contained but rising. |
| Fed Funds Implied Rate | 3.63% | 0.0 bp | 0.0 bp | 15th | Front-end policy pricing remains relatively dovish. |
| IG OAS | 79 bp | 0 bp | +1 bp | 62nd | IG credit stress remains contained. |
| HY OAS | 271 bp | -1 bp | -4 bp | 13th | HY spreads remain very tight. |
| MOVE Index | 72.1 | -5.8 | -1.5 | 46th | Rates volatility improved after CPI. |
| WTI Crude | $83.27 | +$0.07 | +$8.05 | 70th | Oil remains the main inflation-risk input. |
The macro message is mixed but better than last week. CPI helped, volatility fell, and credit spreads remain contained. The constraint is still the level of long-end yields and real yields. The 30-day Fed funds futures proxy implies a monthly average policy-rate expectation near 3.63% using the standard 100 minus futures price convention; New York Fed research notes that Fed funds futures are commonly used as a proxy for policy-rate expectations.
Calendar Watch
Today’s calendar is focused on PPI and jobless claims:
| Time | Release | Consensus | Prior |
| 8:30 a.m. | Initial Claims | 205K | 199K |
| 8:30 a.m. | Continuing Claims | 1.778M | 1.801M |
| 8:30 a.m. | PPI M/M | +0.10% | -0.30% |
| 8:30 a.m. | PPI Y/Y | +4.9% | +5.5% |
| 8:30 a.m. | Core PPI M/M | +0.30% | +0.20% |
| 8:30 a.m. | Core PPI Y/Y | +4.2% | +4.7% |
The BLS schedule confirms the July PPI release is due today at 8:30 a.m. ET.
For bonds, the key question is whether PPI confirms CPI’s benign message. A soft PPI print would support the front end, intermediate duration, and core bonds. A firm core PPI print would likely keep the market focused on oil, services inflation, and the 30-year Treasury yield above 5%.
Friday’s calendar adds retail sales, business inventories, and Michigan sentiment. Retail sales matter because the labor market has softened, but consumer activity has not yet broken enough to force a clean growth-scare rally in bonds.
ETF Flow Leaders
Latest available ETF universe data dated August 12, 2026.
| ETF | Segment | 1W Return | 1W Flows | 1M Flows |
| TLT | Long Treasuries | -0.98% | +$3.27B | +$3.55B |
| GLD | Gold / Macro Hedge | +2.91% | +$1.86B | +$2.75B |
| SGOV | Ultra-Short Treasuries | +0.06% | +$1.72B | +$4.21B |
| BND | Broad Market Bonds | -0.35% | +$984M | +$2.88B |
| AGG | Broad Market Bonds | -0.40% | +$546M | +$526M |
| LQD | Investment Grade Credit | +0.19% | +$500M | -$2.37B |
| JAAA | AAA CLOs | +0.10% | +$344M | +$872M |
| VTEB | Municipal Bonds | +0.28% | +$341M | +$1.11B |
| BNDX | Global Bonds | -0.35% | +$336M | +$1.17B |
| HYG | High Yield | -0.01% | +$309M | +$988M |
The flow signal is a barbell. TLT inflows show aggressive dip-buying in long-duration Treasuries, but that trade remains tactical because the 30-year yield is still above 5.25%. SGOV confirms continued cash-management demand. BND and AGG show core bond allocations remain active. VTEB and MUB support municipal demand. JAAA continues to attract senior structured-credit flows.
The macro-hedge signal remains important. GLD was one of the largest weekly flow leaders, consistent with investor demand for inflation and geopolitical hedges as oil and Middle East risks remain active.
Trading Implications
Core bonds: Maintain exposure. CPI helped stabilize the rate backdrop, and broad bond ETF flows remain constructive.
Duration: Keep long Treasuries tactical. TLT inflows show dip-buying, but the 30-year Treasury above 5.25% and real yields near the top of their one-year range argue against a broad duration chase.
Credit: Prefer short and intermediate investment-grade exposure. LQD had positive weekly flows, but one-month flows remain negative, showing longer-duration credit demand is still fragile.
High yield: Stay selective. HYG flows are constructive, and HY spreads remain contained, but spreads are very tight and the trade is sensitive to PPI, retail sales, and oil.
Cash management: Keep ultrashort Treasury ETFs in the allocation mix. SGOV remains one of the strongest flow leaders and front-end yields are still attractive.
Munis: Maintain tax-aware municipal exposure. VTEB and MUB continue to attract assets, though duration should still be managed carefully.
TIPS / inflation hedges: Favor short-term inflation protection and macro hedges over broad long-duration TIPS. Breakevens are contained, but oil is still the main inflation-risk input.
CLOs / loans: Senior floating-rate credit remains useful as a volatility buffer. JAAA flows remain constructive.
Bottom Line
The August 13 setup is better than last week’s oil-shock tape but still not a duration all-clear. CPI came in line with expectations, rate volatility fell, and credit stress remains contained. However, the 30-year Treasury is still above 5.25%, real yields are elevated, and oil is up sharply over the past week. ETF flows show a barbell of TLT dip-buying, SGOV cash demand, core bond exposure, muni demand, AAA CLO flows, and macro hedging through GLD. Keep long Treasuries and longer-duration credit tactical until PPI and the long end confirm that inflation pressure is easing.
Sources
- FactSet Research Systems Inc., August 13 rates, credit, volatility, commodity, FX, and economic calendar data
- FactSet Research Systems Inc., ETFFixedIncome.com Fund Universe Return & Flow Database, August 12, 2026
- Reuters reporting on July CPI, Fed expectations, oil prices, Strait of Hormuz risk, and global market conditions
- U.S. Bureau of Labor Statistics PPI release schedule
- Federal Reserve Bank of New York reference material on Fed funds futures methodology
Disclaimer: This commentary is for informational and educational purposes only and should not be considered investment advice. ETF return and flow data can change quickly and may reflect short-term trading activity rather than durable allocation trends. Fixed income investments are subject to interest-rate risk, credit risk, liquidity risk, inflation risk, tax considerations, and potential loss of principal.
