After the CPI surged, the Federal Reserve's expectation of interest rate cuts rose for the first time, and the yield on 10-year U.S. Treasury bonds fell to 4.33%

The Zhitong Finance APP noted that due to traders increasing their bets on the Federal Reserve's interest rate cuts and the impact of U.S. President Trump's tariff plans on risk appetite, U.S. Treasury prices rose.

As of the time of writing, the yield on the 10-year U.S. Treasury bond fell by 7 basis points to 4.33%, the lowest level in over two months, while the yield on the 2-year U.S. Treasury bond dropped by 5 basis points to 4.12%. The money market indicates that the Federal Reserve will further ease monetary policy, fully expecting for the first time in four weeks that the Federal Reserve will cut rates by 25 basis points twice this year.

Previously, due to U.S. inflation exceeding expectations, bond traders pushed back their bets on the Federal Reserve's next rate cut to December.

As the uncertainty of the Trump administration's policies affects business expectations, the market increasingly believes that the U.S. economy is weakening and that rate cuts will resume. Data released last Friday showed that the services sector contracted for the first time in two years in February, and strong demand was seen in Monday's 2-year Treasury auction.

Elias Haddad, a senior market strategist at Brown Brothers Harriman, stated, "Danger signals for the U.S. economy are emerging. If U.S. economic data continues to perform poorly for another month or two, the narrative of American exceptionalism will be undermined."

Currently, swap pricing indicates that the Federal Reserve will ease by 53 basis points before the end of the year, compared to 48 basis points on Monday.

Dallas Federal Reserve President Lorie Logan, speaking in London about the future of the central bank's balance sheet, stated that in the medium term, it is appropriate for the Federal Reserve to purchase more short-term securities rather than long-term securities, so that its portfolio can more quickly reflect the composition of U.S. Treasury issuance.

The Federal Reserve is currently reducing its holdings of U.S. Treasury bonds, and traders remain vigilant for any signs of a possible pause or slowdown in the balance sheet reduction pace, as discussions on this matter were revealed in the minutes of the Federal Reserve's meeting last month. Logan did not comment on the timing of such a slowdown or pause in her speech on Tuesday