# US Treasury Advisor Defends Rising Yields Citing Stable Inflation Expectations

- URL: https://stocks.freetheai.org/news/us-treasury-advisor-defends-rising-yields-citing-stable-inflation-expectations-b6273e
- Published: 2026-10-08T13:00:12Z
- Category: macro; sentiment: mixed; impact: medium
- Symbols: [AMEX:SPY](https://stocks.freetheai.org/symbols/AMEX-SPY), [NASDAQ:QQQ](https://stocks.freetheai.org/symbols/NASDAQ-QQQ), [AMEX:DIA](https://stocks.freetheai.org/symbols/AMEX-DIA)
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A top advisor to the U.S. Treasury has defended the recent spike in 10-year Treasury yields, attributing the increase to robust economic expansion rather than rising inflation expectations. David Zervos, counselor to Treasury Secretary Scott Bessent, shared data indicating that four key core inflation measures have trended lower since the 2024 election. The charts indicate that long-term inflation expectations have remained stable within a tight band, while real yields drove the overall rise in borrowing costs.

The Treasury's perspective has faced pushback from some market experts who criticize the reliance on modified inflation metrics like trimmed-mean PCE. Critics argue that these measures artificially mask the rising cost of living by systematically excluding extreme price changes, which often include volatile but essential consumer goods and commodity spikes. Meanwhile, official projections suggest that elevated headline inflation stems primarily from temporary energy shocks, and that borrowing costs will decline once current geopolitical conflicts end.

As investors weigh these conflicting views on inflation and economic growth, major equity benchmarks have shown signs of cooling. The State Street SPDR S&P 500 ETF (AMEX:SPY) declined 0.20% today to trade at $775.60, while the Invesco QQQ Trust Series I (NASDAQ:QQQ) fell 0.48% to $754.10. The State Street SPDR Dow Jones Industrial Average ETF Trust (AMEX:DIA) also edged down 0.04% to $510.80, amid a sharp rise in global oil futures.

## Key points

- David Zervos, counselor to U.S. Treasury Secretary Scott Bessent, attributed rising 10-year Treasury yields to real economic growth rather than inflation expectations.
- Treasury data shows four core inflation measures have trended lower since the 2024 election, with long-term inflation expectations remaining stable.
- Critics argue that modified inflation metrics mask the true cost of living by excluding volatile but essential consumer goods and commodity spikes.
- Major market tracking funds, including the State Street SPDR S&P 500 ETF (AMEX:SPY), traded lower as global oil futures climbed over 4%.

## Questions and answers

### Why are 10-year Treasury yields rising?

Treasury officials attribute the rise in 10-year Treasury yields to strong domestic economic growth rather than long-term inflation expectations, which they state have remained stable.

### Why do critics challenge the Treasury's inflation data?

Critics argue that the modified inflation metrics used by officials, such as trimmed-mean PCE, mask the true cost of living by systematically stripping out volatile but essential consumer goods and commodity price spikes.

### What is the outlook for mortgage rates and oil prices?

Officials project that mortgage rates and the 10-year Treasury yield will decline once geopolitical conflicts subside, which is also expected to bring oil prices down.