The U.S. Treasury curve steepened in August, with shorter maturities leading rates lower as the market began pricing in a greater chance of a September Fed rate cut. The 10-year yield fell 13 bps to close the month at 4.23%. July payrolls showed slowing job growth, providing the FOMC cover for rate cuts, though the unemployment rate might offer better insights into the overall condition of the labor market amid tighter immigration policy. Goods inflation has increased in the past year, likely due to tariffs, but higher services prices present a more significant inflation concern.

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