Ahead of the key consumer inflation report, treasury yields decrease.

On Wednesday, Treasury yields decreased as investors anticipated the publication of U.S. inflation data, which would provide insights into the magnitude of a possible interest rate reduction from the Federal Reserve the following week.

The yield on the was nearly 2 basis points lower at 3.627%, while the yield was down 2 basis points at 3.588%.

Prices and yields move in opposite directions. A basis point is equivalent to 0.01%.

This week, market participants are eagerly awaiting the publication of two crucial inflation reports: the U.S. consumer price index (CPI) for August, which will be made public on Wednesday before the market opens, and the U.S. producer price index (PPI) report for August, which is scheduled for release on Thursday.

Reports suggest a rate cut by the Fed on Sept 17-18, with traders anticipating the reduction. The only uncertainty is the magnitude of the rate cut.

Some economists contend that the Fed should reduce interest rates by half a percentage point next week, asserting that the central bank has previously overstepped with its monetary policy tightening.

Instead of a "very dangerous" move, others have suggested that the Fed should deliver a quarter-point rate cut.

The CME Group's FedWatch Tool indicates that traders are currently pricing in a 67% chance of a 25-basis-point rate cut, with 33% expecting a 50-basis-point rate reduction.