US 10-Year Yield Pulls Back

The yield on the 10-year note fell to 4.25% on Wednesday, halting six sessions of increases as the outlook of lower interest rates by the Federal Reserve returned to the market's forefront.

The latest consumer price data suggested that tariffs passed by President Trump have so far not triggered any aggressive inflationary pressure to the US economy, consolidating bets that the Fed is due to lower borrowing costs.

Rate futures indicated a stronger consensus of a 25bps cut in the Fed's upcoming September meeting, while two-thirds of the market was positioned by three rate cuts until the end of the year.

These bets had already been gaining momentum this month after aggressive downward revisions to payroll aggregates in the latest report, erasing the view of a strong labor market.

On the trade front, President Trump extended the US-China truce by another 90 days, preventing an escalation to their trade war.