Global 10-year rates edged lower on Monday, supported by easing oil prices and a rebound in AI stocks. Demand for longer-dated bonds has been rising, with a 10-year UST yield around 5% appearing attractive amid stretched equity valuations. However, volatility remains high as markets oscillate between AI and inflation concerns.
The upcoming US CPI release is expected to show a 0.3% month-over-month increase, exceeding the 0.17% needed to align with the Fed’s 2% annual target. The annual figure won’t be available due to the 2025 government shutdown. Brent oil nearing $90 per barrel has reduced some inflation pressure, but the focus remains on potential second-round effects.
Tuesday’s key events include the US CPI release and speeches from Fed officials Waller, Logan, Schmid, and Paulson. In Europe, the BoE’s Watcher conference will feature central bank speakers, while primary market activity includes EU bond sales, Dutch DSL auctions, UK Gilt offerings, and a US Treasury 10-year note sale.