The US consumer price index fell to 3.5% year-on-year in June, marking a sharper-than-expected decline from May's 4.2% rate and undershooting the consensus forecast of 3.8%. The Bureau of Labor Statistics released the June data on July 14, showing headline prices also dropped 0.4% month-on-month.
Core inflation, which strips out food and energy, came in at 2.6% annually, below the 2.8% economists had predicted. The cooling arrives as markets price a 65% probability that the Federal Reserve holds rates at its July meeting.
The report follows a June 17 ceasefire between the United States and Iran, though gasoline prices rose to $3.79 per gallon in the latest weekly reading. The 10-year Treasury yield stood at 4.57% as investors digested the data.