US10Y drops below 4% for the first time in 5-months as CPI data arrives

[Bond yield with dollar banknotes. Business and financial management.]
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U.S. Treasury yields retreated on Thursday morning as investors piled into government bonds following a hotter-than-expected consumer price index (CPI) report, fueling speculation over the Federal Reserve’s next policy move.

The benchmark U.S. 10 Year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y]) briefly dipped below 4% for the first time since April 7, touching levels not seen since the “Liberation Day” lows. Before the open, the US10Y was down 3 basis points at 4.01%, marking a fresh five-month trough.

On the short end of the curve, the rate-sensitive U.S. 2 Year Treasury yield (US2Y [https://seekingalpha.com/symbol/US2Y]) slipped 4 basis points to 3.50%.

The move builds [https://seekingalpha.com/news/4493727-treasury-yields-drift-down-after-surprise-decline-in-august-producer-inflation] after Wednesday’s dip in Treasuries, which was fueled by cooler-than-expected producer price index (PPI) data. Together, the back-to-back reports underscore shifting market sentiment toward inflation trends and monetary policy.

Thursday’s CPI release [https://seekingalpha.com/news/4494059-consumer-inflation-speeds-up-mm-in-august-core-cpi-holds-steady] showed consumer prices climbing 0.4% month-over-month in August, exceeding the consensus forecast of +0.3% and accelerating from July’s +0.2% pace, according to the Bureau of Labor Statistics. Core measures stalled from a month earlier at +0.3%, meeting forecasted expectations.

Adding another layer, initial jobless claims [https://seekingalpha.com/news/4494042-initial-jobless-claims-unexpectedly-rises-in-past-week#hasComeFromMpArticle] for the week ending September 6 rose to 263K, an increase of 27K from the prior week’s 236K. The uptick suggests some cooling in labor market momentum, a trend Fed officials are closely monitoring.

For a broader look at Treasury market performance, visit Seeking Alpha’s bond page [https://seekingalpha.com/etfs-and-funds/etf-tables/bonds].

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