US Treasury yields fall as August inflation data reduces Fed rate hike odds

US Treasury yields fell on Wednesday after August inflation data came in lower than expected, reducing market expectations for a Federal Reserve interest rate hike in October. The 2-year and 10-year note yields both declined following the release. The Commerce Department reported the Personal Consumption Expenditures Price Index rose 0.3% in August, while core PCE inflation held at 3.0% year-on-year, below the initially estimated 3.3% for July. Market odds of the Fed keeping rates steady next month rose to 65%, up from 55% before the data. Luis Alvarado of Wells Fargo noted the lower core PCE figure was partly due to calculation changes, arguing inflation pressures remain and the Fed still needs to act. The 10-year yield fell to 5.241%, while the 30-year yield rose slightly for a seventh straight day.