MUFG: Softer US Inflation Trims Yield Upside, Lowers Fed Hike Expectations

MUFG analyst Lloyd Chan commented on the latest US inflation data for June, noting that the softer reading has reduced upside risks to US Treasury yields.

As a result, markets have begun to unwind much of the pricing for a July Federal Reserve rate hike, while tightening expectations for the remainder of the year have also been scaled back.

The shift in rate expectations is putting downward pressure on the US dollar, as lower yields reduce the currency's carry advantage.