Treasury Yields Tick Higher Ahead of June PPI Print

Treasury yields edged higher Wednesday morning, a day after softer consumer inflation data boosted expectations that the Federal Reserve could cut rates before year-end.

The 10-year note rose more than 1 basis point to 4.5996%. The 2-year yield also added a basis point, at 4.2039%. The 30-year bond yield climbed above 5.11%.

Investors are waiting for June producer price data, due later Wednesday. Consensus forecasts call for the headline PPI to hold steady at a 1.1% annual rate, while core PPI – excluding food and energy – is seen rising 0.3% month-over-month.

The moves follow Tuesday’s consumer price index report, which showed the CPI falling 0.4% in June to a 3.5% year-on-year rate, below expectations. That sent bond yields lower and dialed back bets on a July rate hike.

Meghan Shue, chief investment strategist at Wilmington Trust, said on CNBC’s "Morning Call" Wednesday that core inflation signals higher energy costs have not broadly passed through to consumer prices, and that tariff headwinds continue to fade.

“On the encouraging side [we’re seeing] continued disinflation that should allow the Fed to cut by the end of the year,” Shue said.