Market News

(Bloomberg) -- US Treasury yields hovered around their highest levels in a month as traders awaited data on producer prices that could provide more evidence trade tariffs are stoking inflation.

The rate on 10-year bonds was steady at around 4.48% on Wednesday after a five basis-point jump the day before. The 30-year yield kept above 5%.

June’s inflation numbers on Tuesday offered early clues that Donald Trump’s sweeping levies are feeding through into price growth, curbing bets on Federal Reserve interest-rate cuts and dimming appetite for bonds. Despite the headline number coming in softer than predicted, money markets now see a less than 50% chance of a September Fed cut.

Trump Tariffs Once Viewed as Punitive Win Market Approval

Mohit Kumar, Jefferies International chief European strategist, says he’s waiting to see if US producer price data due later Wednesday confirm tariffs are having an impact.

“The coming months should see higher inflation and weaker employment data as the tariff impact feeds through,” he said.

Tuesday’s numbers were “optically better than expected,” he said, but the details showed “the tariff effect had started to creep in.”

Bloomberg Economics predicts headline PPI prices rose 0.3% in June and core PPI rose 0.2%, accelerating from 0.1% for both in the previous month.

Also on Wednesday, the Fed’s July Beige Book survey of regional business contacts will offer a snapshot of economic activity.

There are signs inflation is reviving in other developed markets.

In the UK, traders scaled back wagers on Bank of England interest-rate cuts on Wednesday after headline inflation in June come in hotter than expected.

Gilts fell across the curve and the pound rose 0.1% to $1.34, set to snap a eight day losing run.