Treasury yields ease after inline July consumer inflation data

U.S. Treasury yields were lower Wednesday as Wall Street studied inflation data for July that matched expectations and showed price increases may have continued to cool.

The yield on the 10-year U.S. Treasury note — the key benchmark for pricing mortgages, auto loans and credit card debt — fell 3 basis points to 4.654%.

The 2-year Treasury note yield, which more closely tracks expectations for Federal Reserve interest rate policy, was off 4 basis points, at 4.178%. The longer-dated 30-year Treasury bond yield dropped almost 2 basis points, to 5.217%.

One basis point equals 0.01%, and yields and prices move inversely to one another. 

Consumer price index inflation in July rose 0.1% from June, widening at a 3.4% annual rate, down from 3.5% in June. Those readings, as well as the monthly and annual change in core prices, which exclude food and energy costs, all matched the Dow Jones consensus estimates of economists.

The latest CPI report will help influence what action Federal Reserve policymakers take at their next meeting in September. Three dissenters at the last meeting, in July, voted to raise rates from their current range of 3.50% to 3.75%, though a weaker-than-expected July jobs report last Friday led some investors to conclude a rate hike in September was now less likely.

"Overall, it was an as-expected release that leaves the path open for the Fed to pause in September, but is by no means definitive," said Ian Lyngen, head of U.S. rates at BMO Capital Markets. "The September decision now comes down to the August payrolls and CPI combination."

The July producer price index is due Thursday, following a softer-than-expected June report last month.

— CNBC's Sean Conlon also contributed to this report.