Recent US CPI data has aligned with expectations, easing inflation fears that had previously driven Treasury yields higher. The softer-than-expected PPI figures, coupled with a modest 0.2% month-on-month increase in core CPI, have reduced the likelihood of a surprise in the upcoming PCE data, the Federal Reserve's preferred inflation measure. This has led to a rally in Treasuries, as the market anticipates a more stable interest rate environment.
The decline in Treasury yields is also expected to alleviate some pressure on the US dollar and global bond yields, particularly in the UK. With inflation concerns subsiding, bond investors are finding current yield levels attractive, suggesting a favorable outlook for bond markets as the month progresses.
The 10-year Treasury yield, represented by the TNX index, is currently at 4.67% as of 09:32 on January 15, down from its last close of 4.79%. This movement reflects the market's response to the latest inflation data, indicating a shift in sentiment towards a more stable yield environment.