FX.co ★ US 10-Year Yield Holds Decline

The yield on the 10-year US Treasury note hovered near 4.37% on Friday, close to a seven-week low, after a benign inflation report tempered expectations for multiple Federal Reserve rate hikes this year. The latest US PCE inflation figures were broadly in line with forecasts and, while inflation remains well above the Fed’s 2% target, the data eased fears of a sharper-than-expected acceleration in price pressures. Nonetheless, markets are still pricing in about an 80% probability of a Fed rate hike in December following last week’s hawkish pause, with the likelihood of a September increase at roughly 63%. New York Fed President John Williams also said on Thursday that inflationary pressures are expected to ease this year but will remain uncomfortably high.