US yields ease as CPI caution offsets Oil rally

US Treasury yields eased on Tuesday as most investors remain cautious, awaiting the release of US inflation figures and the resolution of the US-Iran conflict, which has encountered hurdles.

US yields edge lower as traders await inflation data, jobless claims

Oil prices continued their advance for two straight days, with West Texas Intermediate (WTI), the US crude benchmark, hitting a seven-day high of $84.61. Despite this, the US 10-year benchmark note dipped one basis point to 4.69%.

July’s Consumer Price Index (CPI) is expected to decline slightly from 3.5% to 3.4% year over year. The core CPI, excluding volatile items, is also forecasted to decrease from 2.6% to 2.5% YoY. Additionally, on August 13, the Producer Price Index is similarly projected to soften.

US economic data showed the ADP Employment Change 4-week average at 8.25K jobs. Meanwhile, the previous week's figure was revised downward by 4K, from 11K.

Last week’s US Nonfarm Payrolls data prompted investors to reduce their Fed hawkish bets for 2026. Prime Terminal data indicate that the odds of the Fed keeping rates unchanged at the September meeting are 65%, while the odds of a 26-basis-point rate hike are 35%.

The US Dollar Index (DXY), which tracks the performance of the buck’s value against six currencies, steadied at 99.81, unchanged.

In addition to the US inflation data release, traders are also watching Initial Jobless Claims for the week ending August 8 and the University of Michigan (UoM) Consumer Sentiment.

US 10-year Treasury yield chart