The 10-Year U.S. Treasury Yield (TNX) experienced a significant decline of 15 basis points, driven by a softer inflation print, according to a recent report from BofA Global Research. This drop in yields has catalyzed a robust rebound in high yield bonds, with the ICE High Yield Index tightening by 12 basis points over the week, resulting in a 0.31% total return. BofA analysts highlight that lower quality bonds, particularly CCC-rated, outperformed, gaining 23 basis points over the index. The report notes that the market was positioned short ahead of the Consumer Price Index (CPI) release, which contributed to the intensity of the rebound. "Beta was the clear outperformer," BofA analysts state, with sectors like technology, packaging, media, and broadcasting leading the charge. Despite the recent rally, the report cautions that the tightening in financial conditions, including rates, the dollar, oil, and credit, could start to negatively impact economic activity, potentially prompting a reaction from the Federal Reserve.