US bond yields paring gains

US Treasury yields fell on Tuesday, paring part of the substantial gains made in the previous session, as investors assessed the possibility of the Federal Reserve taking a more aggressive step in its fight to bring down inflation.

The annual pace of inflation in the US rose to 8.6% in May according to the latest Consumer Price Index data released by the US Bureau of Labour Statistics on Friday. That was above the expected reading of 8.3%. MoM, the headline inflation rate was 1.0%, well above the expected rise to 0.7% from 0.3% back in April.

Core measures of the CPI also came in hotter than expected. YoY, core prices were up 6.0%, above the expected drop to 5.9% from 6.2% a month earlier. MoM, the rise in core prices was also higher than expected at 0.6% and unchanged versus one month ago, versus expectations for a drop to 0.5%.

The yield on the benchmark 10-year Treasury fell nearly 6 basis points to 3.33%, trimming gains after climbing to 3.39% and making its most significant move since 2020 in the previous session. The following chart reflects the performance of ten-year bond yields in the one-month time frame

The yield on the 30-year Treasuries also fell 4 basis points to 3.325%. Meanwhile, the two-year yield settled at 3.276%.