US 10Y TREASURY: gearing to revert?The latest macro data are showing that the inflation is easing, however, it remains sticky. There is a lot of discussion among economists lately, whether CPI will remain on its downtrend, or we could expect another spike in inflation figures in the coming months. The PPI index posted during the previous week is showing that the inflation might stay resilient for some time. Investors ended the previous week digesting these mixed data. At the same time, the US Treasuries reacted with modestly higher yields. 10Y Treasuries ended the week at level of 4.15%, while were traded around 4% during the week.
The next Fed move cannot be anticipated with a higher level of certainty as it was for the FOMC July session because of currently mixed data. Fed Chair Powell is continuously stressing that Fed decisions will be data driven. In this way the market also reacted on Friday`s session to PPI data, anticipating another rate hike by the Fed. Markets were close to the level of 4.2%, which is significant in a sense, that it might further open a path for yields to reach 4.4% as they did last time in October 2022. However, for the moment there is a much higher probability that yields will revert a bit toward the 4.0% in order to test this level for one more time.
