(Bloomberg) — US Treasuries rallied ahead of a closely watched inflation reading that could cement bets on the size of the Federal Reserve’s interest-rate cut this month.
Most Read from Bloomberg
Data later Wednesday is expected to show US consumer prices increased 2.5% in August from a year earlier — down from 2.9% in July. As the market counted down to the release, the yield on two-year notes fell to 3.55%, the lowest since September 2022. The rate on the 30-year bond touched 3.92%, a level last seen over a year ago.
While the Fed is widely expected to start lowering interest rates at its meeting on Sept. 18, the question is whether it will deliver a half-point cut, especially if incoming data suggests the economy is losing momentum. Traders currently see a roughly 20% chance that it could, bolstering the investment case for bonds.
“Clearly the market wants to be long,” said Evelyne Gomez-Liechti, a strategist at Mizuho…
