To The Moon

The week started with a slight decline in US Treasury yields as investors gear up for a busy economic calendar, with attention centered on a core inflation gauge.

The 10-year Treasury yield dipped more than 1 basis point, while the 30-year yield also fell by 1 basis point. The 2-year yield remained roughly flat, edging slightly higher.

Note: 1 basis point equals 0.01%; bond yields move inversely to prices.

A snapshot of real-time Treasury yields across maturities shows: the 10-year note at 4.656%, a change of -0.002; the 1-month bill at 3.709%, a change of +0.013; the 1-year note at 4.020%, a change of +0.008; the 2-year note at 4.212%, a change of +0.008; the 30-year bond at 5.207%, a change of -0.003; the 3-month bill at 3.818%, a change of +0.017; and the 6-month bill at 3.942%, a change of +0.015.

July's nonfarm payroll data, released last week, fell short of expectations, leading markets to lower forecasts for further Federal Reserve rate hikes. Analysts at Deutsche Bank noted in a Monday report that the weaker employment data "reduces the urgency for the Fed to tighten monetary policy further in the near term."

The CME Group's FedWatch Tool indicates that traders now price in roughly a 44% probability of a rate hike at the Fed's September meeting, down from 67% a week ago.

Market focus now shifts to the July core inflation data, which excludes volatile food and energy prices, set for release at 8:30 AM Eastern Time on Wednesday. Deutsche Bank analysts added that this inflation report "will largely determine the pricing of rate hike expectations for the September FOMC meeting."

Following the inflation data, the Producer Price Index (PPI) and weekly initial jobless claims are due on Thursday. Friday will bring July retail sales data and the preliminary University of Michigan consumer sentiment index.