10-year Treasury yield falls slightly after July consumer prices come in unchanged from prior month

The 10-year Treasury yield fell slightly on Wednesday as a highly anticipated inflation figure came in flat compared with the previous month.

The yield on the benchmark 10-year Treasury note dipped less than one basis points to 2.79%.The yield on the 30-year Treasury bond ticked up about 3 basis points to 3.035%. Both yields fell sharply after the inflation data release but reversed course later in the day. Yields move inversely to prices, and a basis point is equal to 0.01%.

Short-term yields saw more dramatic moves. The 2-year Treasury yield dropped 6 basis points to 3.224%.

The consumer price index rose 8.5% in July from a year ago, according to the Bureau of Labor Statistics, lighter than a Dow Jones estimate of 8.7%. Prices were also unchanged from the previous month.

Excluding volatile food and energy prices, so-called core CPI, rose 5.9% annually and 0.3% monthly, compared to respective estimates of 6.1% and 0.5%.

The inflation report suggested to some that price pressures might have peaked, which could spark speculations that the Federal Reserve could conduct a smaller interest-rate hike next month.

“Overall, incremental confirmation that the Fed’s efforts to combat consumer price increases have been successful,” Ian Lyngen, BMO’s head of U.S. rates, said in a note. “The combination of NFP and CPI for July leave the 75 bp vs. 50 bp Sept hike debate alive and well. Moreover, this means volatility around incoming data will remain elevated.”

The central bank has hiked benchmark borrowing rates by 2.25 percentage points so far in 2022 with inflation numbers running well ahead of their 2% long-run target. Fed officials have indicated recently that more rate increases are on the horizon.

— CNBC’s Patti Domm contributed to this report.