After an uptick to 3.23% early in the month, the 10-year U.S. Treasury rate fell significantly and closed the period at 2.98%. The yield curve flattened; particularly noticeable was the 2- to 5-year segment which is now nearly flat. Ten-year Treasury Inflation Protected Securities breakeven spreads fell to 196 basis points (bps) from 206 the month prior, as core PCE fell below 2.0%.
Equity market volatility dominated the news and influenced rate markets, as did a sharp decline in oil prices. Economic weakness overseas, nervousness over trade issues, continued soft numbers from the U.S. housing market, and benign inflation data helped push rates down. Nevertheless, both employment and consumer spending point to continued growth in the domestic economy, and wage data have finally begun to show some strength.