US 10Y TREASURY: easing with lower groundsInflation data posted during the previous week were the ones that the market was closely watching. A better than expected inflation in June in the US made an impact on Treasury yields. The consumer price index in June was down 0.1% from the figure posted in May, bringing CPI to the level of 3.0% on a yearly basis. At the same time core inflation was higher by 0.1% on a monthly basis, bringing core inflation to the level of 3.3% y/y. The evident slowdown in inflation figures supported market expectations that the Fed might cut interest rates in September this year, in which sense, 10Y Treasury yields dropped to the level of 4.18% as of the end of the week.
In terms of technical analysis, the 10Y Treasury yields are still testing the 4.20% level. In this sense some lower volatility might be expected in the week ahead. The market might turn once again to the upside, to the levels modestly above the 4.20% level. Charts are indicating probability for 4.30%, however, this might be the case for a week or two weeks ahead. In any case, the longer term perspective for Treasury yields is further decreased.
