U.S. CPI slows to 3.4% as expected, Treasury yields fall

U.S. consumer prices rose 3.4% in the 12 months through July, matching economists' expectations and marking a slight deceleration from the prior month's 3.5% increase. Core inflation, which excludes volatile food and energy prices, also aligned with forecasts at 3.4%, down from 3.6% in June.

The data, released by the Labor Department on Tuesday, suggests inflationary pressures continue to ease gradually, though they remain above the Federal Reserve's 2% target. Treasury yields fell across the curve following the report, with the benchmark 10-year yield dropping to session lows as investors priced in a higher likelihood of near-term monetary policy easing.

Bitcoin held near $64,000 during the session, consolidating gains after a volatile period in recent weeks. The cryptocurrency's price action appeared to reflect a cautious stance among traders, with no significant reaction to the inflation data. Analysts noted that Bitcoin's correlation with risk assets and broader macroeconomic indicators has remained elevated in 2024, limiting its sensitivity to isolated economic releases.

Market participants will now focus on upcoming Fed communications, including speeches from policymakers and the release of the minutes from the July Federal Open Market Committee meeting, for further signals on the timing and magnitude of potential rate cuts. The next major U.S. economic data point, the August jobs report, is scheduled for release on September 6.