The yield on the 10-year US Treasury note stood at 4.65% on Friday, easing after briefly touching a 19‑month high of 4.75% on Tuesday, as recent economic data reduced the perceived urgency for the Federal Reserve to raise interest rates further. Producer prices came in well below expectations in July, and consumer inflation slowed for a second consecutive month, indicating that the recent rebound in energy prices has so far had only a limited impact on overall price growth.
At the same time, retail sales unexpectedly contracted, prompting some market participants to view the data as evidence of temporary consumer weakness. Even so, the decline in yields was more contained at the longer end of the curve, as persistent concerns over energy supply continued to support near‑term inflation risks.
These worries were compounded by the ongoing depreciation of the Japanese yen, which raises the prospect of selling pressure from Japan—the largest foreign holder of US Treasuries—should authorities in Tokyo intervene in the foreign exchange market. Such concerns were evident in the pronounced tail observed in the latest 30‑year bond auction.
