One Number to Gauge Where the Economy Is Headed

On Wednesday, the latest data on inflation did little to change that view. Consumer prices increased 0.5 percent from June to July, a slowdown from previous months, suggesting that the surging price gains seen earlier this year aren’t going to last.

“You just have a lot of sand in the gears that’s slowing or reducing the recovery momentum,” Mr. Ivascyn added, pointing to vaccine requirements at restaurants and other measures. “We believe a lot of that’s reflected in the recent pricing,” he said of the decline in yields.

Delta’s impact — which is far greater outside the United States — is also weighing on the global growth outlook. Resurgent rates of infection in Japan, South Korea, Indonesia and Vietnam have prompted new restrictions, possibly setting back the recovery of the global supply chains.

“Setbacks in Asia could spill over to the U.S. at a time when supply chain disruptions are already the most severe and widespread in decades,” analysts at Goldman Sachs wrote in a note published last week. They added that such supply chain struggles were a key reason that economic growth in the United States was slower than they had expected in the second quarter.

But Delta isn’t the only economic disappointment in recent weeks. Investors now see that the flow of federal government spending, which propped up the economy last year, is slowing fast. Income growth and consumer spending, which surged last year thanks to giant government transfer payments, are flattening out. Savings rates, which were also lifted by stimulus payments and unemployment benefits, have tumbled as government stimulus checks have been spent.

The government’s central role in keeping the economy going was in focus again on Tuesday, when the Senate passed a roughly $1 trillion bipartisan infrastructure bill. The yield on the 10-year note rose to its highest level since mid-July, roughly 1.35 percent, well below the highs of earlier this year.

But not everyone agrees with the story the bond market seems to be telling.

“I just don’t buy it,” said Lisa Shalett, the chief investment officer at Morgan Stanley Wealth Management. She pointed out that trading activity usually declines sharply in August, when many Wall Streeters go on vacation. When trading is thin, prices in the bond market can move to extremes that might exaggerate how much of a downturn in the economy investors see in the future.

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