US Treasuries surged as traders pulled back from bets on Federal Reserve interest-rate hikes after consumer prices data came in lower than forecast. The cooler CPI reading reduced expectations for a July Fed rate hike to about 20%, down from previous estimates. Market participants reacted quickly, pushing Treasury prices higher and yields lower across the curve.

The move reflected a reassessment of the monetary policy outlook, with investors scaling back anticipations of aggressive tightening. Federal Reserve officials have not yet signaled a policy shift, but the data prompted a notable shift in sentiment. The July meeting now appears less likely to deliver a rate increase, according to updated market pricing.

Analysts noted that the bond market's response underscored the sensitivity of Treasuries to inflation indicators. As the CPI data continued to show moderating price pressures, the rally in government bonds persisted, highlighting the interplay between inflation reports and rate expectations.