2-year Treasury yield continues to slide after cool June CPI figure

The yield on the benchmark 10-year Treasury note slid 4 basis points to 3.822%, while the yield on the 2-year fell more than 9 basis points to 4.649%, and the 5-year yield dropped more than 4 basis points to 4.0277%. Yields move inversely to prices.

At the longer end of the curve, the yield on the 30-year Treasury bond was fractionally higher at 3.9529%.

June’s consumer price index came in at an annualized 3%, the lowest level since March 2021 and below consensus expectations.

Fed officials have reiterated that the battle against inflation is far from over, and the market is broadly pricing in a quarter-point interest rate hike at the central bank’s next meeting later this month.

However, the signal that inflation is meaningfully returning to earth was a welcome sign for risk assets, prompting a rally in stock markets around the world. Veteran economist Steve Hanke told CNBC’s “Street Signs Asia” on Thursday that the inflation problem is “history” in the United States.

Attention Thursday will turn to the producer price index, another closely watched inflation gauge due at 8:30 a.m. ET. The results could heavily influence the trajectory of the Fed’s monetary policy decisions and signal the road ahead for inflation.

Auctions will be held Thursday for $70 billion of 4-week Treasury bills and $60 billion of 8-week bills, along with $18 billion of 30-year bonds.