FX.co ★ Treasury Yields Retreat from Session Highs

The yield on the US 10-year Treasury note was little changed at 4.52% on Wednesday, easing from an intraday high of 4.55% after the latest US CPI report offered some reassurance that the recent energy shock has not yet meaningfully spilled over into broader price pressures. Annual inflation accelerated to 4.2% in May, matching market expectations, while core CPI rose just 0.2% on the month, coming in below forecasts. In response, traders slightly scaled back expectations for additional Federal Reserve rate hikes this year, although a 25 bps increase in December remains fully priced in. Attention now turns to Thursday’s PPI release for further insight into underlying inflation dynamics. At the same time, last week’s labor market data indicated a resilient—and potentially reaccelerating—jobs market, and other economic indicators continue to point to solid momentum in the US economy.