U.S. Core Inflation Unexpectedly Cools in May, Traders Still Bet on Fed Rate Hike by Year-End

Odaily reported that the U.S. core CPI rose 0.2% month-on-month in May, below the market expectation of 0.3%. U.S. Treasuries strengthened slightly, while bond traders maintained their bets that the Federal Reserve will raise interest rates by the end of the year. The data is seen as relieving some pressure on the Fed ahead of Kevin Warsh’s first meeting as Fed Chair next week.

Following the CPI release, most U.S. Treasury yields fell by less than 1 basis point. The two-year Treasury yield, which is more sensitive to near-term monetary policy changes, stood at 4.11%, down from around 4.13% earlier in the session. Dan Carter, senior portfolio manager at Washington Fort Investment Advisors, said, “This gives the Fed a little breathing room.” (Jin Shi)