Inflation Holds at 3.7% for a Second Straight Month as Bond Yields Spike, Treasury Steps In, and Trump's Own Stock Trades Draw Scrutiny

Inflation refuses to budge

The Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation measure, came in at 3.7% in July, unchanged from June and slightly above the 3.6% consensus estimate, according to The Motley Fool. That marks the 65th consecutive month PCE inflation has run above the Fed's 2% target, a streak stretching back more than five years.

Two forces are driving it, according to Motley Fool and Hindustan Times reporting. The U.S.-Israel war with Iran, which began February 28, has choked tanker traffic through the Strait of Hormuz and pushed Brent crude up roughly 20% from its prewar price, according to the Associated Press via Courthouse News Service. On top of that, research from several Federal Reserve banks found that Trump's tariffs have made a meaningful contribution to the higher prices.

Sticky inflation raises the odds the Fed hikes rates again, which matters because rate-hike cycles have historically coincided with stock market corrections, per Motley Fool's analysis. The S&P 500 Shiller CAPE ratio, a long-run valuation gauge, has topped 40 for only the second time since 1871 record-keeping began. The first time was 1999, right before the dot-com bubble burst. Warren Buffett noted at Berkshire Hathaway's annual meeting earlier this year that some investors are treating the market like "a casino" rather than an investment.

The bond market sends a warning

While stocks have held up, the bond market reflected concern about economic conditions. The 10-year Treasury yield topped 4.70% before easing to 4.65%, up from 3.97% before the Iran war started, according to the Associated Press via PBS. The 30-year yield pushed above 5% for the first time since 2007, right before the financial crisis. Japan's 10-year yield hit a nearly 30-year high, and Germany's matched levels last seen in 2011.

Higher yields translate directly to higher mortgage rates and pricier corporate borrowing, which is a particular problem given how much AI data-center investment currently depends on cheap credit, the AP reported via PBS. In response, the Treasury Department announced Wednesday it will more than double its bond buybacks, a move that briefly pushed longer-term yields lower. Some analysts warned the move could backfire, per PBS's reporting, though the mechanism for how remains unclear from available sourcing.

The bull case hasn't disappeared

None of this means the rally is over. U.S. Bank's research team points out the S&P 500 delivered a total return above 37% from the November 2024 election through August 7, 2026, and that second-quarter earnings growth topped 50%, more than double what analysts initially forecast, for a second straight quarter. "Sustained earnings growth can support current valuations, but elevated stock prices leave companies less room to disappoint," said Terry Sandven, chief equity strategist for U.S. Bank Asset Management Group. Since the market bottomed in late March, the Dow has gained nearly 19%, the S&P almost 22%, and the Nasdaq 27%, according to the AP. Both bullish and bearish camps are looking at the same data and drawing different conclusions about whether the record profit margins can keep outrunning the inflation and rate risk.

Trump's own trades under the microscope

Trump's latest financial disclosure, released August 22, shows he made more than 1,000 stock trades in June worth between $78.1 million and $263.1 million combined, according to The New Republic. The filing shows purchases in Boeing the same day the Navy awarded it a contract for its P-8A training system, plus stakes in Palantir, Meta, Broadcom and Nvidia, all companies that have landed federal contracts this year, and in SpaceX 11 days after its IPO.

The disclosure doesn't list actual share counts or purchase prices, only value ranges, so the precise scale and timing relative to contract announcements can't be fully verified from the document alone. No investigation or charge has been announced over these trades. White House spokesman Davis Ingle told CNBC in May that "there are no conflicts of interest" and that Trump's assets sit in a trust managed by his children, adding that Trump "only acts in the best interests of the American public."

Whether that defense satisfies critics is a separate question from what the disclosure actually proves. The document shows the trades happened; it does not show why they happened, or whether Trump had any role in timing them. That gap is exactly what makes the disclosure rules controversial, since presidents aren't required to divest or use a truly blind trust the way earlier officeholders sometimes did voluntarily. The next disclosure covering Trump's third-quarter trading is due later this year, and it will show whether the pattern continues.