Investors remain cautious ahead of July CPI data, with US 10-year yields slipping despite a rally in oil prices to $84.61.
US Treasury yields edged lower on Tuesday, with the 10-year benchmark note dipping one basis point to 4.69%. Caution prevailed as traders awaited July’s Consumer Price Index (CPI) data, expected to show a slight decline in inflation to 3.4% year over year from 3.5%. Core CPI is also forecast to ease to 2.5% from 2.6%.
Oil prices continued their upward trend, with West Texas Intermediate (WTI) hitting a seven-day high of $84.61. However, this failed to lift yields, as geopolitical risks, including US-Iran tensions, added to market uncertainty. Economic data showed ADP employment figures averaging 8.25K jobs over four weeks, with a downward revision of 4K from the previous 11K print.
Market sentiment reflected reduced expectations for Federal Reserve rate hikes in 2026. Odds for unchanged rates in September stand at 65%, while a 26-basis-point hike holds a 35% probability. The US Dollar Index (DXY) remained steady at 99.81, unchanged on the day.