U.S. Treasuries Hold Steady Amid Moderate Inflation Data

U.S. Treasuries held steady on Thursday after July producer price figures showed moderation in pipeline inflation, but without sparking a sharp rally across the yield curve.

The two-year Treasury yield edged up by less than a basis point to 4.182%, while the 10-year benchmark yield dropped under a basis point to 4.657%. The 30-year bond yield rose about 1.4 basis points to 5.236%.

Investors digested a nuanced Producer Price Index report, which showed headline PPI was flat at 0.0% month-on-month in July, underperforming consensus forecasts for a 0.2% increase.

The softer monthly figures reinforce the narrative that the Federal Reserve has room to keep interest rates on hold at its September policy meeting. Money markets continue to price in roughly a 40% probability of a September Fed rate increase.