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· Treasury yields rise ahead of inflation data update

U.S. Treasury yields rose early on Tuesday, ahead of the release of the June inflation data, later in the morning.

The yield on the benchmark 10-year Treasury note rose to 4 basis points to 1.368% at 4:20 a.m. ET. The yield on the 30-year Treasury bond climbed 1 basis point to 1.994%. Yields move inversely to prices and 1 basis point equals 0.01 percentage points.

A Fed report released Friday, that Chairman Jerome Powell will present to Congress this week, reiterated the central bank’s position that the current inflationary pressures are “transitory.”

· Dollar waits on inflation data, Aussie gets China lift

The dollar barely budged against the euro, yen and pound on Tuesday ahead of U.S. inflation data, while the Australian dollar and Chinese yuan ticked higher after reassuring export numbers from Beijing.

The possibility of U.S. stimulus withdrawal - brought to the fore by a surprise shift in tone last month from the Federal Reserve - has boosted the dollar in recent weeks despite a renewed rise in coronavirus cases in many parts of the world.

With U.S. consumer price inflation later likely to feed the debate, the greenback was virtually unchanged versus the euro at $1.1856 after its more than 2% rise versus the common currency over the last month.

The U.S. Bureau of Labor Statistics is due to release the June consumer price index at 8:30 a.m. ET on Tuesday. It is expected to show a 5% year-on-year gain, matching the May level, which was the highest since August 2008.

CPI is one inflation indicator, though it factors less into the Federal Reserve’s decision-making than the personal consumption expenditures price index.

Economists polled by Reuters expect the U.S. CPI to have risen 0.5% from May and 4.9% from a year earlier. Dealers reckon a miss on either side could move the dollar and the bond market by shifting expectations on interest rates.

Analysts at JPMorgan said central banks around the world are becoming increasingly more hawkish at the moment with a few notable exceptions - the European Central Bank, the Bank of Japan and People’s Bank of China, which made an dovish adjustment on Friday.

Reference: Reuters