US Treasury bonds rise as inflation data moderately reduces expectations of interest rate hikes.

Short-term US Treasury bond prices rose, as the mild inflation readings favored by the Federal Reserve slightly dampened traders' expectations of future rate hikes in the coming months. The increase in bond prices pushed the yields on the two-year Treasury bonds, which are most sensitive to changes in Fed policy, down by 4 basis points to 4.10%. The benchmark 10-year Treasury bond yield also fell by 3 basis points to 4.36%. Interest rate swaps indicate that traders have reduced their bets on rate hikes by the Fed this year. Currently, pricing suggests a rate hike of around 33 basis points by December, compared to 36 basis points at the close of trading on Wednesday. Pricing also reflects a further reduction in the likelihood of a rate hike by officials at the July meeting.