Yields Flat as Traders Await July CPI Print
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- Treasury yields were flat across the curve Wednesday morning — the 10-year at 4.682%, the 2-year at 4.212%, and the 30-year at 5.231% — as Wall Street awaited the July CPI print due later in the session.
- Dow Jones-polled economists expect July CPI to rise 0.1% month-over-month and 3.4% annually, with core CPI projected at 0.2% monthly and 2.5% annually.
- Federal Reserve policymakers take a reprieve in August before the September meeting, where three dissenters at the last meeting voted to raise rates — a signal the inflation print carries heightened weight.
- Globalt Investments' Keith Buchanan warned that if CPI surprises hot, 'we'll start to see the long end of the Treasury curve shift higher,' framing the print as the decisive catalyst.
- ING strategist Padhraic Garvey noted market break-evens sit below the expected 2.5% core reading — calling the path 'auspicious' — but flagged the fiscal deficit moving in a 'bond-negative direction.'
- Producer Price Index data for July follows on Thursday, adding a second inflation checkpoint after last month's softer-than-expected reading.
Why it matters: With three Fed members already dissenting in favor of hikes at the last meeting, a hot July CPI could harden hawkish expectations heading into September and push the already-elevated 30-year yield (5.231%) even higher, raising costs on long-term borrowing from mortgages to corporate debt. A cooler print, by contrast, would confirm ING's view that break-evens have already priced in enough restraint to keep the curve stable.
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