U.S. Treasury yields fell Wednesday after the April consumer price index matched economists’ expectations. The statistics lifted sentiment among some investors worried that price pressures may have been stronger than forecasts.

U.S. consumer prices rose in April on higher gasoline and rents, while core inflation remained strong because of a rebound in used car prices.

“The index matched forecasts, but I think a lot of people were expecting stronger numbers, so the market reaction was notable,” said Priya Misra of TD Securities.

U.S. indicative 10-year bond yields fell about 5 basis points to 3.462% and two-year bond yields (US2YT=RRR) fell about 12 bps to 3.949%. Approximately the same situation is observed on the T-Bond Futures market. 

The closely watched inversion of the section of the U.S. government debt yield curve that measures the gap between two- and ten-year bond yields 

Market participants assume that the Fed will keep rates unchanged in June unless there is an unexpected spike in price pressures. Inflation statistics for May will be released June 13, the day before the Fed finishes its June meeting.

Traders are now pricing in an 86% probability that the Fed will leave rates at current levels next month, while a 25 basis point rate hike is estimated at 14%. 

One-month UST (US1MT=RR) yields hit a record 5.811% earlier Wednesday, as some investors shunned U.S. bonds, which mature when the U.S. Treasury probably exceeds the souvenir debt limit.

U.S. President Joe Biden and top U.S. lawmakers on Tuesday agreed to continue talks and seek a solution to the impasse over raising the national debt ceiling.

Earlier, we reported that European stocks fell ahead of the ECB.