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The 10-year Treasury yield was slightly lower Wednesday morning ahead of the release of key consumer inflation data. The 10-year yield was around 2 basis points lower at 4.771%, further pulling back from the 14-month high reached on Monday. The yield on the 2-year Treasury was 1 basis point lower at 4.354%.
The consumer price index, the cost shoppers pay for a wide range of goods and services, rose faster than expected in December but core items did not make the same jump, according to the latest report
Better-than-expected Core CPI for December led to a sharp fall in US Treasury yields as stocks gained premarket, boosted by phenomenal banking results.
There are growing concerns about the stickiness of inflation and fears that the Federal Reserve may have to keep interest rates restrictively high for longer.
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Entering 2025, models from forecasting companies like Trading Economics anticipate inflation rates between 2.4% and 2.9% between the end of 2024 and the start of 2026. Unfortunately, actually predicting inflation can be difficult, as rates can be affected by a variety of factors, including political climates and supply-chain interruptions.
Cooler-than-expected inflation readings and positive bank earnings provided a string of good news for bulls, after a dismal start of the year.
U.S. government debt aggressively rallied after the monthly core inflation reading from Wednesday’s consumer-price index came in softer than expected, handing yields their biggest one-day declines since September-November.