Shorter-dated US Treasury yields ease in line with lower oil price

Shorter-dated US Treasury yields eased, with the 2-year note down 1.7 basis points at 4.198%, as optimism over diplomatic efforts and lower oil prices reduced inflation expectations. US one-year-ahead inflation expectations have dropped below the Federal Reserve's 2% target for the first time since October 2024. Money markets now price in roughly a 66% chance of a quarter-point rate hike by September, with the Fed expected to keep rates unchanged at its July 28-29 meeting.