FX.co ★ US 10-Year Yield Holds Up on Hot PPI

The yield on the 10-year US Treasury note remained above 4.27% on Friday, following a rise of approximately 5 basis points in the previous session due to unexpectedly high wholesale inflation figures. This development has diminished the likelihood of an aggressive half-point interest rate reduction by the Federal Reserve in September. In July, the Producer Price Index saw a significant 0.9% month-over-month increase, the largest in three years and well above the anticipated 0.2%, with a year-over-year rise of 3.3%. While the markets still project a greater than 90% chance of a 25-basis-point reduction next month, the possibility of a larger 50 basis-point cut has been effectively ruled out. Investors are now turning their attention to upcoming data releases on import prices, consumer sentiment, and retail sales. Meanwhile, the Jackson Hole central banking symposium next week is anticipated to play a crucial role in providing policy guidance.