10-Year Treasury Yield Edges Lower As Investors Await Key Inflation Data This Week

The benchmark 10-year Treasury yields edged lower on Monday morning as investors await the release of key inflation data to gauge the probability and quantum of the Federal Reserve’s interest rate cuts in September.

At the time of writing, the 10-year Treasury yields were down three basis points to 4.055%. The 2-Year T-bill yields hovered around 3.488%, down one basis point, while the longer-term 30-Year bills yielded 4.715%, down five basis points.

Wall Street expects the consumer price index (CPI) to rise to 2.9% on an annual basis for the month of August, according to a Dow Jones estimate as reported by MarketWatch.

According to ING’s Regional Head of Research, Americas, Padhraic Garvey, investors should brace for a whipsaw in U.S. Treasuries. “Higher inflation prints in the coming months will likely cause long end yields some issues, requiring a significant backup. And we've seen this before. The last time the Fed cut, the 10yr yield rose,” he said in a recent note.

Analysts at Bank of America (BofA) expect the Fed to cut interest rates twice in 2025 by 25 basis points each. BofA previously forecast no interest rate cuts in 2025. The CME FedWatch tool indicates that there is now a 90.2% probability of the central bank cutting rates by 25 basis points in September.

Meanwhile, U.S. equities gained in Monday morning’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.32%, while the Invesco QQQ Trust (QQQ) surged 0.81%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.18% at the time of writing.

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