Treasury Yields Fall After Soft CPI Data

The yield on the US 10-year Treasury note fell nearly 5bps to 4.43% on Wednesday, after softer-than-expected inflation data offered investors a momentarily relief over the inflationary impact of President Trump’s trade policies and bolstered expectations for Fed rate cuts this year.

All major inflation metrics came in below forecasts.

Annual headline inflation edged up to 2.4% in May while core inflation held steady at 2.8%.

On a monthly basis, both headline and core CPI rose just 0.1%, undershooting expectations.

Traders are now pricing in a 25 basis-point cut in September, with the probability of another cut in December rising.

In the background, officials from US and China agreed on a framework to implement the so-called Geneva consensus, which last month led to tariff reductions.

However, the absence of concrete details and the need for final approval from Presidents Donald Trump and Xi Jinping kept markets cautious.