TREE NEWS reports: US core PCE inflation for August came in below expectations on both a monthly and annual basis, sending Treasury futures maturing in 10 years or less to intraday highs. Short-dated contracts led gains, pushing the 5s30s spread to its widest level of the session, beyond Tuesday’s high, with the 2s10s spread also touching an intraday peak. In short-end swaps, the implied probability of a Fed hike at the October meeting fell to about 9 basis points from 12 basis points at Tuesday’s close.
US August Core PCE Rises Less Than Expected, Rate-Hike Bets Ease Further
AI take
The market's reaction is concentrated in the short end, where Treasury futures and swaps now price a sharply reduced chance of an October Fed hike. That steepening of the 5s30s and 2s10s curves suggests traders are paring back near-term tightening expectations rather than repricing the longer-run path. For crypto and RWA markets, the signal is a softer rate backdrop, but the move is modest and data-dependent; whether this repricing holds will hinge on the next inflation or labor print.
Generated by AI for reference only.
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