Treasuries-Longer-dated US yields on track for monthly gains

With limited clarity from the policy meeting, investors latched onto domestic economic data for clues on the health of the American economy.

The annual personal consumption expenditures (PCE), the Fed's preferred inflation gauge, increased 3.7% in June after advancing by 4.1% in May, but the easing is likely to be temporary, given the recent surge in oil prices linked to the Iran conflict, data on Thursday showed.

"The softer inflation data along with Chair Warsh's comments ... downplaying both the effectiveness of the Fed's tools in fighting inflation and his commitment to 2% PCE inflation leave risks tilted to further steepening moving forward," J.P. Morgan analysts wrote in a note.

The 10-year TIPS breakeven rate, which subtracts the TIPS yield US10YTIP=RR from the nominal Treasury yield US10YT=RR and is viewed as a proxy for inflation expectations, was last at 2.409%, indicating the market sees inflation averaging about 2.4% a year for the next decade.