A cooler than expected reading on inflation is offering some support to U.S. Treasurys today, with short-term yields slipping and longer-term yields holding fairly steady.

The Commerce Department said Wednesday that the core personal consumption expenditures price index rose 3.0% from a year earlier. That was below the 3.3% reading expected by economists and the 3.2% number that Federal Reserve Chairman Kevin Warsh had predicted earlier this month at a post-meeting press conference.

Though the drop in core inflation from the previous month was influenced by a technical adjustment made by the government, the bond market's reaction suggested investors still found it modestly encouraging.

The yield on the 2-year Treasury note, which is particularly sensitive to the near-term outlook for interest rates set by the Fed, dropped to 4.864% in recent trading from 4.887% Tuesday, according to Tradeweb.

The 10-year yield was still slightly higher at 5.270%, as investors remained sensitive to heavy issuance of corporate bonds and a small uptick in oil prices. The key borrowing benchmark is close to a 24-year high, needing only to rise above its 2007 peak of 5.303%.