U.S. 10-Year Yield Drops 12 Bps After January CPI Eases to 0.2%
U.S. 10-year Treasury yield fell by 12 basis points after January CPI rose just 0.2%, the smallest monthly gain in seven months. Two-year yields declined 10 basis points and the dollar index eased 0.3% as markets cut Federal Reserve rate-hike expectations.
1. Cooling Inflation Spurs Bond Rally
Treasury yields initially inched higher ahead of the January CPI release but reversed course sharply once data showed a 0.2% month-on-month rise, the smallest since mid-2025. Demand for U.S. government debt surged as investors scaled back bets on further Fed tightening.
2. Curve Moves and Dollar Reaction
The 10-year yield fell 12 basis points while the two-year dropped 10 basis points, flattening part of the curve. The Bloomberg dollar index slipped 0.3% as lower rate-hike expectations reduced greenback demand ahead of next week’s Federal Reserve policy announcement.