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Treasury yields fell to 4.40% on the 10‑year and 4.15% on the 2‑year, easing pressure on stocks ahead of Thursday’s PCE inflation report.
The 10‑year Treasury yield dropped to 4.40% on Wednesday, down from 4.50% the day before, while the 2‑year slipped to 4.15% from 4.16%【1】. The move came as investors digested the latest inflation figures and reassessed the Federal Reserve’s near‑term rate‑hiking outlook, giving equities a modest reprieve.
| At a glance | |
|---|---|
| 10‑yr Treasury yield | 4.40% (down 0.10 pts) |
| 2‑yr Treasury yield | 4.15% (down 0.01 pts) |
| S&P 500 | 7,358.22 (‑0.1%) |
| Dow Jones | 51,848.90 (+0.4%) |
The yield slide was modest but notable because Treasury rates have remained elevated relative to early‑year levels, especially on the short end that tracks Fed policy expectations. The 2‑year’s dip to 4.15% follows a brief peak at its highest since February 2025, suggesting the market is pricing in a less aggressive rate path than previously feared【2】. The 10‑year’s fall to 4.40% mirrors a similar move reported a day earlier, when the benchmark slipped below 4.50%【1】.
Equity markets responded unevenly. The technology‑heavy Nasdaq fell 0.4% to 25,476.64, dragged down by Microsoft’s 2.3% drop and Oracle’s 4.6% slump, while the broader S&P 500 edged lower by 0.1%【1】. By contrast, the Dow Jones rose 0.4%, buoyed by non‑tech sectors such as homebuilders, with KB Home surging 16.7% after legislative approval【1】. The mixed equity reaction reflects the tension between easing bond yields, which reduce financing costs, and lingering concerns over inflation and potential Fed hikes.
Thursday’s Personal Consumption Expenditures (PCE) price index is the focal point. Economists anticipate a 4.1% year‑over‑year rise in May, the highest in three years, which would keep the Fed’s inflation‑targeting agenda front‑and‑center【1】. The Fed has signaled a possible rate increase by year‑end, and market participants are watching the PCE release to gauge the likelihood of that move【1】. A higher‑than‑expected PCE could reignite rate‑hike expectations, pushing yields back up, while a softer reading might cement the recent yield retreat.
The yield decline underscores how closely bond markets are tethered to upcoming inflation data. If the PCE comes in below consensus, yields could keep falling, further supporting equity valuations. Conversely, a stronger‑than‑expected reading may reverse the trend, reviving pressure on both bonds and stocks. The coming days will test whether today’s easing is a brief pause or the start of a broader shift in monetary expectations.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 3 outlets · Jun 25, 2026 · How we report
The CPI rose 4.1% from a year earlier, the largest annual increase since April 2023.
Core CPI increased 3.4% YoY, while core PCE inflation matched market expectations.
Yes, Treasury yields fell, with the 10‑year yield dropping about 2 basis points to around 4.38%.
Higher gasoline prices, increased costs for semiconductors and computer equipment, and rising service prices such as restaurant meals and hotel rooms contributed to the rise.
Analysts cited in the AP report suggest the Fed may consider a rate hike rather than a cut, though the Fed is not expected to raise rates until next year.