US Treasury yields eased on Tuesday as investors remained cautious ahead of the release of US inflation figures and the resolution of the US-Iran conflict, which has encountered hurdles [1]. Despite a continued rally in oil prices, with West Texas Intermediate (WTI) reaching a seven-day high of $84.61, the US 10-year benchmark note dipped one basis point to 4.69% [1]. July’s Consumer Price Index (CPI) is expected to decline slightly from 3.5% to 3.4% year over year, while the core CPI is forecasted to decrease from 2.6% to 2.5% YoY. The Producer Price Index, due August 13, is also projected to soften [1].
US economic data showed the ADP Employment Change 4-week average at 8.25K jobs, with the previous week's figure revised downward by 4K, from 11K [1]. Last week’s US Nonfarm Payrolls data prompted investors to reduce their hawkish bets on the Federal Reserve for 2026. According to Prime Terminal data, the odds of the Fed keeping rates unchanged at the September meeting are 65%, while the odds of a 26-basis-point rate hike are 35% [1]. The US Dollar Index (DXY) remained steady at 99.81, unchanged from previous levels [1].
In addition to the inflation data release, traders are closely watching Initial Jobless Claims for the week ending August 8 and the University of Michigan Consumer Sentiment survey, both of which could further influence market sentiment [1]. The easing of Treasury yields reflects investor caution and anticipation of upcoming economic data, while the oil rally has not translated into higher yields, suggesting that inflation concerns are currently outweighing commodity price movements [1].
CONCLUSION
US Treasury yields have edged lower as investors await key inflation data and monitor geopolitical developments. Despite a strong oil rally, market sentiment remains cautious, with expectations of softer inflation and a steady US Dollar Index. The upcoming economic releases and Federal Reserve decisions are likely to shape further market movements.