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Inflation came in below expectations and Q2 U.S. gross domestic product (GDP) growth exceeded forecasts, while labor data pointed to slower hiring. Together, the releases showed continued economic expansion alongside moderating labor demand and inflation above the Federal Reserve’s target.

Business sentiment surged to multiyear highs while labor market data continued to improve. However, several hard economic indicators have yet to fully confirm the growing optimism, creating an increasingly important question for investors heading into the fourth quarter.

Economic data last week continued to show a resilient U.S. economy, although the primary focus was the Federal Reserve’s September policy meeting and the inflation outlook. Treasury yields remained elevated throughout the week, with the 10-year Treasury finishing near 5.0% and the 30-year ending around 5.34%, as investors digested the Federal Reserve’s 25-basis-point rate increase and updated economic projections.

The economic data last week continued to show a U.S. economy that remains resilient, but with inflation pressures moving back into focus ahead of the September Federal Open Market Committee (FOMC) meeting. Treasury yields moved sharply higher over the week, with the 10-year finishing around 4.97%, up from roughly 4.78% the prior Friday, while the 30-year ended near 5.38%, reaching its highest level in nearly two decades.

The week of August 31 was characterized by continued economic expansion and generally constructive labor market data, while inflation-related indicators remained elevated. The data suggested the U.S. economy continued to grow despite some moderation within selected manufacturing measures.