FX.co ★ US 10-Year Yield Declines

The yield on the 10-year US Treasury note retreated to 4.52%, down from a nearly two‑month high of 5.62% reached on July 13th, as softer inflation data and weakening risk appetite supported demand for government bonds. Both consumer and producer prices eased in June, and inflation expectations in the University of Michigan survey fell for a second consecutive month, indicating that lower wholesale fuel costs are increasingly feeding through to the broader economy.

Fixed-income markets also found support in renewed geopolitical tensions after US President Trump alleged that China interfered in the 2020 US presidential election, raising concerns about the fragile truce that followed last year’s tit-for-tat tariff hikes. At the same time, upside inflation risks persisted as commercial shipping continued to avoid the Strait of Hormuz amid fresh clashes between Iran and the United States.

Interest-rate futures showed more than two-thirds of market participants anticipating at least one Federal Reserve rate hike by year-end, even though policymakers are widely expected to leave rates unchanged at this month’s meeting.