On January 14, 2025, Morgan Stanley reported that the U.S. 10-year Treasury yield increased by 1.5 basis points to 4.792%, reflecting market reactions to a softer-than-expected December Producer Price Index (PPI) and firm components feeding into Personal Consumption Expenditures (PCE). Despite the initial rally in U.S. Treasuries following the PPI release, which showed a 0.2% m/m increase (below the consensus of 0.4%), the yield curve steepened as investors digested stronger-than-expected airfare prices, which rose 4.65% m/m. This development has led Morgan Stanley economists to adjust their forecast for December core PCE to 0.23% m/m. The anticipation of the upcoming Consumer Price Index (CPI) release has kept market participants cautious, with the 10-year yield trading in a narrow range.