U.S. Treasury bulls face a double test this week of inflation and non-farm payroll revisions

US Treasury bulls will face a dual test this week from inflation and non-farm payroll revisions. With 2-year and 10-year Treasury yields closing at their lowest levels since early April last week, traders are fully pricing in a 25 basis point rate cut by the Federal Reserve in September and anticipating further cuts before the end of the year. This week's focus begins on Tuesday, when the Bureau of Labor Statistics will release its preliminary benchmark revision for the 2025 non-farm payroll survey. Whether the market can extend this month's gains will depend in part on the tone of the PPI and CPI data, to be released on Wednesday and Thursday, respectively. Traders will also be watching how the market absorbs the 3-year, 10-year, and 30-year Treasury auctions. Leslie Falconio, head of fixed income strategy at UBS, said, "The pace of rate cuts this year will be slow and measured, and the data-dependent narrative will continue. A 50 basis point cut in September is highly unlikely. Even if inflation data falls short of market expectations, we wouldn't expect such an aggressive move."