Treasury yields slide after cooler-than-expected wholesale inflation report

U.S. Treasury yields moved lower on Wednesday after the producer price index showed that wholesale inflation cooled in June.

Shortly after 8:45 a.m. ET, the 10-year Treasury yield was down about three basis points to 4.459%, while the 30-year yield also declined three basis points to 4.988%. The 2-year Treasury yield was more than three basis points lower at 3.929%.

The producer price index for June was unchanged. Economists expected the index to show a 0.2% increase on a monthly basis, according to Dow Jones estimates. The reading was down from a revised 0.3% increase in May.

That comes after the consumer price index came in as expected on Tuesday, with core CPI, which excludes food and energy prices, rising 0.2% on a monthly basis and 2.9% on a yearly basis. The monthly change was just less than expected, while the yearly move matched a Dow Jones consensus.

“Inflation has started a slow climb as signs of tariff-induced inflation are now evident within durable and nondurable imports,” said Joe Brusuelas, chief economist at RSM U.S. “That prompts an important question: Will service and housing inflation, which is easing but still elevated, cool further to offset what will be a more pronounced increase in durable and nondurable goods?”

“Our sense is that the Federal Reserve will continue to display patience as the direction of inflation evolves,” he added.

Investors are also monitoring the impact of President Donald Trump's tariffs on the U.S. economy. Trump announced 30% tariffs on Mexico and the European Union over the weekend, set to start from Aug. 1. He also announced on Tuesday that the U.S. had reached a trade deal with Jakarta, with a 19% tariff on its exports to the U.S.