After the US inflation data showed moderation, traders still held positions to hedge that the Federal Reserve may raise interest rates at the September meeting. Currently, market pricing shows that the probability of interest rate hikes is about 50%. The consumer price index released on Wednesday was in line with expectations, helping US Treasury bonds maintain their gains. The two-year US Treasury yield, which is most sensitive to changes in the Federal Reserve's policy, fell 3 basis points to 4.18%, and the benchmark 10-year yield also fell 3 basis points to 4.65%. Later that day, the US Treasury will hold an auction of 42 billion US dollars of 10-year treasury bonds. Interest rate swaps show that after the release of economic data, traders lowered the probability of an October rate hike from about 75% the day before to about 60%. The market has fully taken into account that the Federal Reserve will take the next step in December. Steve Ryder, senior fixed income portfolio manager at Aviva Investors, said: “Although this data should keep expectations of interest rate hikes in September alive, it doesn't add much urgency to the Fed's immediate action. Policymakers may pay more attention to the next CPI report and labor market data before deciding whether further policy tightening is needed later this year.” Christopher Hodge, North America's chief economist at the French Foreign Trade Bank, said, “Every recent Federal Reserve meeting needs to take into account the possibility of an accident, but we still believe that in a context where inflation is slow and gradually falling towards targets, consumption is cooling, and employment prospects are more fragile, the Fed may barely avoid raising interest rates.”

After the US inflation data showed moderation, traders still held positions to hedge that the Federal Reserve may raise interest rates at the September meeting. Currently, market pricing shows that the probability of interest rate hikes is about 50%. The consumer price index released on Wednesday was in line with expectations, helping US Treasury bonds maintain their gains. The two-year US Treasury yield, which is most sensitive to changes in the Federal Reserve's policy, fell 3 basis points to 4.18%, and the benchmark 10-year yield also fell 3 basis points to 4.65%. Later that day, the US Treasury will hold an auction of 42 billion US dollars of 10-year treasury bonds. Interest rate swaps show that after the release of economic data, traders lowered the probability of an October rate hike from about 75% the day before to about 60%. The market has fully taken into account that the Federal Reserve will take the next step in December. Steve Ryder, senior fixed income portfolio manager at Aviva Investors, said: “Although this data should keep expectations of interest rate hikes in September alive, it doesn't add much urgency to the Fed's immediate action. Policymakers may pay more attention to the next CPI report and labor market data before deciding whether further policy tightening is needed later this year.” Christopher Hodge, North America's chief economist at the French Foreign Trade Bank, said, “Every recent Federal Reserve meeting needs to take into account the possibility of an accident, but we still believe that in a context where inflation is slow and gradually falling towards targets, consumption is cooling, and employment prospects are more fragile, the Fed may barely avoid raising interest rates.”