U.S. Treasury yields climbed on Thursday as the July consumer price index report provided another encouraging sign that inflation is abating.
The 10-year Treasury yield was up by nearly 10 basis points to 4.102%. The 2-year Treasury yield added 4 basis points to 4.846%.
Yields move opposite of prices, and a basis point is equal to 0.01%.
Treasurys
The CPI report showed that prices rose 3.2% year over year, a tick below the 3.3% forecast by economists, according to Dow Jones. The 0.2% month-over-month change in prices was in line with estimates. Shelter inflation, which is seen by many economists as lagged data that will fall sharply in the coming months, was the biggest contributor to the increase, the Labor Department said.
The core CPI reading, which excludes food and energy, is up 4.7% over the past 12 months.
"The case is building for the Fed to keep policy rates unchanged in September. Both headline and core inflation are waning and the internals of the CPI print suggest that further deceleration pressures should build over the coming months. Indeed, strong shelter inflation will not be with us forever and will eventually reinforce the disinflation narrative," Seema Shah, chief global strategist at Principal Asset Management, said in a note.
Markets are largely betting the Federal Reserve will hold rates steady at its next meeting on Sept. 20. But some people, including Federal Reserve Bank Governor Michelle Bowman, believe the current hiking cycle may not be over yet.
The Treasury will auction $23 billion in 30-year bonds on Thursday, after seeing solid demand for 10-year and 3-year sales on Wednesday and Tuesday, respectively.