Traders work on the floor of the New York Stock Exchange (NYSE) during the opening bell in New York on March 18, 2026.
Angela Weiss | Afp | Getty Images
US Treasury yields fell on Tuesday following the release of a weaker-than-expected inflation report.
The key Cash flow at 10 years the yield — the main benchmark for U.S. government borrowing — fell more than 2 basis points to 4.583%.
The yield on the Cash flow over 2 years Note, which are more sensitive to the Federal Reserve’s short-term rate policy, fell more than 5 basis points to 4.204%. THE 30 year deposit the yield, meanwhile, lost less than 1 basis point to 5.091%.
One basis point is 0.01%, or 1/100th of 1%, and yields and prices move inversely to each other.
The consumer price index fell 0.4% in June, a bigger drop than investors expected, bringing its annual increase to 3.5%. Economists surveyed by Dow Jones forecast a 3.8% year-over-year increase in the CPI.
These declines also came after Fed Chairman Kevin Warsh testified before Congress. He promises to make inflation a “thing of the past”.
“The Fed’s number one goal is to get monetary policy right — or as close to it as possible. That’s our clear and consistent goal, the star we follow,” he added. “And if we get policy right – and we will – the inflationary surge of the last five years will be a thing of the past.”
Yields have risen lately as oil prices rise due to the ongoing war between the United States and Iran, fueling fears of persistent inflation. However, these fears have not yet translated into an increase in consumer prices.
Expectations of an interest rate hike by the Fed at its July meeting fell sharply after the release of the inflation report, with investors pricing in just a 17% chance of a 25 basis point hike after giving it a 42% chance on Monday, according to CME’s FedWatch tool.
“You can take these Fed rate hikes off the table for now because the current neutral federal funds rate of 3.75% is perfectly balanced for upside and downside risks to the economy and inflation. Bet on it. Markets are,” wrote Chris Rupkey, chief economist at FWDBonds.
Traders, however, still expect a hike at the Fed’s September meeting, with about a 60% chance the target rate will be a quarter or half point higher at that meeting.
