The swap market shows a 90% probability of a rate cut by the Fed in September.

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Odaily News U.S. Treasury prices fell as the earlier released U.S. Producer Price Index data was stronger than expected, prompting traders to adjust their bets on a Fed rate cut next month. The two-year Treasury yield — the most sensitive to changes in monetary policy — erased earlier losses in morning trading in New York, rising 2 basis points to 3.69%. The U.S. dollar strengthened against a currency basket. According to a report released by the U.S. Bureau of Labor Statistics on Thursday, the Producer Price Index rose 0.9% compared to last month, remaining flat month-over-month in June. After the report was released, the swap market indicated a 90% probability of a Fed rate cut at the September meeting. Just a day earlier, the market had fully digested that scenario.

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