Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee

July 30, 2024Letter to the SecretaryDear Madam Secretary,Since the TBAC last met in late April, slowing inflation and a loosening labor market have led Treasury yields to move lower with growing expectations of rate cuts from the Federal Reserve. Yields on 10-year Treasuries have fallen by close to 40 basis points, with 2-year Treasury yields lower by around 50 basis points in the last three months. Various political developments are increasingly in focus as the November election approaches, but so far have had a limited impact on asset prices.After a 3.7%QoQ annualized increase in Q1, core PCE inflation slowed to 2.9% in Q2. The monthly inflation readings for May and June were particularly subdued. Goods prices, while not as soft as in the second half of 2023, have moved largely sideways despite elevated shipping costs.