Oct 5, 2026 · 16 min
Healthy growth fails to stop Treasury yields from rising
Top of the Morning: CIO Strategy Snapshot - Wash, rinse, repeat
The episode examines whether resilient growth, easing inflation, and eventual rate declines can support both bonds and risk assets.
- 1Benign economic data still pushed 10- and 30-year Treasury yields higher as Federal Reserve expectations shifted.
- 2A steeper yield curve echoes patterns from 2023 and 2024, when U.S. growth repeatedly exceeded expectations.
- 3Jason Draho sees easing inflation and eventual lower yields creating a constructive backdrop for bonds and risk assets.
Don't miss
Jason Draho connects today’s rising yields with a constructive scenario in which easing inflation and eventual lower rates benefit bonds and risk assets.
The brief
Dan Cassidy and Jason Draho review inflation, labor, and growth data that portray a healthy U.S. economy without clear signs of overheating.
The puzzle is why 10- and 30-year Treasury yields kept rising despite benign data. Draho points to a steeper curve and changing expectations for Federal Reserve policy.
Draho sees echoes of 2023 and 2024, when U.S. growth repeatedly beat expectations despite higher oil prices and geopolitical risks.
His constructive scenario pairs easing inflation with resilient growth and eventually lower yields, potentially benefiting both bonds and risk assets.
The standout tension is that economic resilience is pressuring bonds now, but could become a source of support once yields begin to fall.
What was said on this episode
10 statements · 8 positive · 1 negative · 1 mixed
The U.S. economy is performing well without overheating.
“the U.S. economy is doing quite well, but it's also a relatively benign kind of picture”
Listen at 1:06
Core PCE inflation fell to 3% year over year after methodological revisions.
“the year-over-year inflation measure for Core PC fell to 3%”
Listen at 1:45
Second-quarter U.S. economic growth was revised upward to 2.2%.
“the economy grew 2.2% in the second quarter versus 1.5% prior to that”
Listen at 2:26
The U.S. unemployment rate increased from 4.1% to 4.2%.
“The unemployment rate did tick up from 4.1% to 4.2%”
Listen at 3:17
The U.S. economy entered the fourth quarter with strong momentum.
“It means we began the fourth quarter with good momentum”
Listen at 3:35
Most tracking estimates put third-quarter U.S. GDP growth above 3%.
“most tracking estimates for third quarter GDP are at over 3%”
Listen at 3:38
Underlying U.S. economic momentum is probably stronger than investors assume.
“the underlying economic momentum is... probably stronger than most investors are assuming”
Listen at 3:48
AI is materially contributing to current U.S. economic growth.
“AI is a big factor in driving it”
Listen at 3:55
AI may be contributing more to growth and less to inflation than investors assumed.
“it's also contributing maybe more to growth and less inflation than most investors had been assuming based on the data”
Listen at 3:57
Recent data likely indicates the economy’s direction over the next couple quarters.
“but also likely where it is headed in the next couple of quarters”
Listen at 4:09
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.