FX.co ★ Treasury Yields Fall After Soft CPI Data

The yield on the US 10-year Treasury note decreased by nearly 5 basis points to 4.43% on Wednesday. This movement followed the release of inflation data that was softer than anticipated, providing temporary respite to investors concerned about the inflationary pressures stemming from President Trump's trade policies. The data has also heightened expectations for interest rate cuts from the Federal Reserve later this year. All primary inflation indicators were lower than predicted, with annual headline inflation rising slightly to 2.4% in May, and core inflation remaining stable at 2.8%. On a monthly scale, both headline and core Consumer Price Index (CPI) figures increased by only 0.1%, falling short of expectations. In response, traders are now factoring in a 25 basis-point rate cut by September, with an increased likelihood of another cut by December. Concurrently, US and Chinese officials reached an agreement on a framework for executing the Geneva consensus, which led to tariff reductions last month. However, markets remain cautious due to the lack of detailed information and the requirement for final approval from Presidents Donald Trump and Xi Jinping.