US 10Y TREASURY: not so scary inflation

During the previous period, the 10Y US Treasury yields were heading toward the 4,8% level, in a fear of potential higher inflation in the US supported by the strong jobs market. However, posted inflation figures during the previous week, showed that the inflation level in December was modestly below market estimate. This was a sign for the market that the Fed might actually pursue with a planned two rate cuts during the course of this year. In this sense, Treasury yields tumbled down, toward the lowest weekly level of 4,57%. Still, they are ending the week at the level of 4,62%. In addition to a slowdown in inflation, a note from Fed Governor Waller that the Fed might cut multiple times this year, further cooled down the Treasury yields.

It could be expected that the markets will continue to consolidate in the coming period, after the inflation figures showed that there is a decreasing trend, regardless of a strong jobs market. However, there is still a day to watch on Monday, January 20th, where an inauguration of a new US administration will take place. There is some probability for a higher volatility on this day, but still, it could not be expected for some higher moves to either side.