US Treasury yields fell after the United States reported July producer price index data that came in below expectations, which would slow the Federal Reserve's pace of interest rate increases. At 10:01 p.m. Thailand time, the 10-year Treasury yield stood at 4.627 percent, while the 30-year yield stood at 5.194 percent. Investors increased the probability they assign to the Fed holding rates steady in September and October, pushing the next hike to December, after PPI came in below forecasts and initial jobless claims came in above expectations. CME Group's FedWatch Tool indicated that investors assigned a 65.6 percent probability to the Fed keeping rates at 3.50 to 3.75 percent at the September meeting, up from 45.0 percent last week, and a 51.1 percent probability to the Fed holding rates in October, up from 31.0 percent. Meanwhile, investors assigned a 69.5 percent probability to the Fed raising rates by at least 0.25 percent at the December meeting, and only a 30.5 percent probability to the Fed holding rates steady that month. The US Labor Department reported that headline PPI rose 4.7 percent in July from a year earlier, below the 4.9 percent forecast and down from 5.5 percent in June. On a monthly basis, headline PPI was unchanged, while analysts had expected a 0.2 percent increase. Core PPI rose 4.2 percent from a year earlier, in line with expectations and down from 4.7 percent in June. On a monthly basis, core PPI increased 0.2 percent, below the 0.3 percent forecast. Initial jobless claims rose by 9,000 to 209,000 last week, above the 205,000 forecast.
PPI below expectations increases odds of Fed holding rates, lowering expected policy rate.
Treasury yields fall as PPI miss supports Fed rate hold, reducing yield.
30-year yield falls as PPI miss supports Fed rate hold, reducing yield.
