US yields dip after hotter CPI, stocks mixed, dollar steady
Core CPI rose 0.4% vs 0.3% expected, yet US yields edged lower and the dollar held steady, with EURUSD testing its 200-hour moving average.
US Treasury yields dipped slightly after the release of a hotter-than-expected core CPI reading, while equity futures pointed to a mixed open and the dollar held steady. The market absorbed the inflation data without a sharp risk-off reaction, suggesting traders had already priced in some upside surprise.
The core CPI rose 0.4% month-over-month in April, above the 0.3% consensus estimate, while the headline matched expectations at 0.6%. On a year-over-year basis, core inflation came in at 2.8%, slightly above the 2.7% forecast. Despite the upside surprise, the two-year yield edged up only 1.5 basis points to 3.962%, and the 10-year yield rose 1.1 basis points to 4.422%, both below pre-release levels. This muted yield response indicates that the bond market views the data as a one-off rather than a shift in the disinflation trend. For forex traders, the lack of a dollar rally suggests the market is not repricing rate expectations aggressively. The EURUSD pair briefly tested its 200-hour moving average at 1.1736 before bouncing to 1.1745, with the pair still sandwiched between its 100-hour and 200-hour moving averages. Traders can monitor these levels on NowPrice's live FX dashboard to gauge intraday momentum.
Looking ahead, the focus will shift to upcoming producer price index data and remarks from Federal Reserve officials for further clues on the rate path. If core services inflation remains sticky, the Fed may maintain its cautious stance, keeping the dollar supported. However, any signs of a softening labor market could revive rate-cut bets and weigh on the greenback. The EURUSD's ability to hold above the 200-hour moving average will be key for short-term direction, with the 100-hour moving average above acting as resistance.