Inflation Holds Firm as Growth Slows
July’s PCE price index rose 0.2% and held at 3.7% year over year, while core PCE held at 3.3%. BEA also confirmed second-quarter GDP growth at a 1.5% annual rate, down from 2.1% in the first quarter, although private domestic demand grew 4.2%. That mix argues against assuming rapid rate relief. For floating-rate BDCs, higher base rates can support interest income, but slower growth and persistent prices may squeeze borrowers and eventually weaken earnings. Mortgage REITs and commercial-real-estate lenders remain more exposed to long yields, refinancing and funding discipline. Falling market prices alone would not prove a change in dividend capacity; earnings remain the primary signal. Watch the Jackson Hole symposium beginning Thursday for officials’ rate-path signals.
Sources
- U.S. Bureau of Economic Analysis, Personal Income and Outlays, July 2026
- U.S. Bureau of Economic Analysis, GDP second estimate and corporate profits, second quarter 2026
- U.S. Treasury, August 2026 daily par yield curve rates
- Federal Reserve Bank of Kansas City, 2026 Jackson Hole Economic Policy Symposium
This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.