U.S. Treasuries climb ahead of July consumer price inflation; lower-than-expected PPI weighs on risk sentiments

The U.S. Treasuries gained Friday ahead of the country’s core consumer price inflation (CPI) for the month of July, scheduled to be released today by 12:30GMT.

The yield on the benchmark 10-year Treasuries plunged nearly 4 basis points to 2.89 percent, the super-long 30-year bond yields also slumped nearly 4 basis points to 3.04 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 2.63 percent by 10:40GMT.

Today’s key US data focus will be the CPI inflation report for July. Core inflation is expected broadly to match the 0.2 percent m/m rate chalked up in four of the past five months. But the headline CPI seems likely to be a touch weaker than that rate on account of a decline in the energy component related to lower prices of gasoline.

Nevertheless, the annual rates should then remain unchanged at 2.9 percent y/y headline and 2.3 percent y/y core. The Federal Budget report for July is also due. Despite the likelihood of lower-than-average outlays, the deficit is expected to come in close to USD75 billion, up from USD42.9 billion a year earlier, due to weaker revenues (principally thanks to the tax reform). 

Meanwhile, the S&P 500 Futures remained 0.45 percent lower at 2,841.00 by 10:40GMT, while at 10:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 54.67 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex