Treasuries Gain as US Inflation Data Bolsters Fed Rate-Cut Bets

Group 1 - The US Treasury yields advanced as softer-than-expected inflation data increased expectations for at least two interest rate cuts by the Federal Reserve next year [1] - The two-year yield fell to 3.46%, the lowest since October, while the 10-year yield decreased to 4.11% [1] - The consumer price index showed a year-over-year increase of 2.7% in November, below the median forecast of 3.1%, indicating a slowdown in inflation [1] Group 2 - The report is expected to support the argument that inflation is not as persistent as previously thought, prompting the Fed to consider further rate cuts [2] - Market expectations for a quarter-point cut in January are around 21%, with traders anticipating two quarter-point reductions in policy rates next year, exceeding the Fed's median forecast [3] - Fed Governor Christopher Waller's dovish stance on interest rates aligns with the recent inflation data, suggesting a potential shift in monetary policy [4] Group 3 - Despite the positive inflation news, analysts caution that the bond rally may not sustain as 10-year yields approach 4%, indicating a complex market environment [5]