Bloomberg Surveillance · Monday, September 14, 2026
David Tinsley of Bank of America reported that consumer spending in August was up 4.5% year-over-year, with a 0.9% increase month-over-month, indicating a resilient consumer. Notably, the gap between higher and lower-income consumer spending has largely closed, with both groups showing a 5.7% discretionary spending growth in August.
“So I would say in my work, Tom, there's a clear line between sort of where we are right now on the 10-year and what's being priced in in terms of hikes, which is about three hikes over the next 12 months. Our rates team is still forecasting 10-year yields are going to stay below 5% over the next 12 months. That seems to be like what equities can handle. It wouldn't necessarily be pleasant. I'm not saying we wouldn't have a short-term drawdown, but when I look out on a 12-month view, the market looks okay. But if we sort of take things up to, say, six hikes, if we take inflation closer to 4% than 3%, and if we kind of model in 5.5% on the 10-year yield, then we start to see some real damage done to equities on a year-over-year basis.”
“So I think we're at sort of a critical juncture right now. And my modeling says, you know, as Blake, when our rate strategist put it, he's expecting three kind of adjustment hikes over the next three meetings. I think equities can handle that. But we are kind of pushing up against the ceiling of what they can handle.”