Treasury Rally Fuels Inflation Fears Ahead of Key US CPI Report

The US Treasury bond market has followed government bonds across Asia in extending its four-day rally, raising concerns about inflation ahead of tomorrow's key US CPI report.

Oil prices have also rebounded, and with stocks holding up strongly, the broader risk-on sentiment remains intact.

However, traders should be prepared for a potential pullback or sideways consolidation due to the combination of higher oil prices and lower Treasury prices.

The 10Y US Notes chart is currently under bearish pressure, but its decline may be part of a larger diagonal formation, potentially leading to stabilization or reversal in Treasury prices.