After CPI's sharp rise, the Fed's rate cut expectations have increased for the first time. The yield on 10-year U.S. Treasuries fell to 4.33%.

It is noted that due to traders increasing their bets on the Fed cutting rates and the impact of President Trump's tariff plan on risk appetite, US Treasury prices have risen. As of the time of writing, the yield on the 10-year US Treasury bond has fallen by 7 basis points to 4.33%, the lowest level in over two months, while the yield on the 2-year US Treasury bond has dropped by 5 basis points to 4.12%. The money market implies that the Fed will further ease monetary policy, with expectations for two rate cuts of 25 basis points each this year for the first time in four weeks. Previously, due to US inflation exceeding expectations, bond traders had postponed their bets on the next Fed rate cut until December. Due to the uncertainty of the Trump administration's policies affecting business expectations, the market is increasingly believing that the US economy is weakening and rate cuts will resume. Data released last Friday showed that the service sector contracted for the first time in two years in February, and strong demand was seen in Monday's auction of 2-year government bonds. Eli Hadad, senior market strategist at Brown Brothers Harriman & Co., said, "Danger signs for the US economy are emerging. If US economic data continues to disappoint for another month or two, the narrative of America's exceptionalism will be challenged." Currently, swap pricing shows that the Fed will ease policy by 53 basis points before the end of the year, compared to 48 basis points on Monday. Dallas Fed President Robert Kaplan, speaking in London about the future of the central bank's balance sheet, said that in the medium term, it is appropriate for the Fed to purchase more short-term securities rather than long-term securities so that its portfolio can more quickly reflect the composition of US debt issuance. The Fed is currently reducing its holdings of US Treasury bonds, and traders are cautious about any signs of a possible pause or slowdown in the pace of balance sheet reduction, as discussed in the minutes of the Fed's meeting last month. Kaplan did not comment on the timing of such a slowdown or pause in his speech on Tuesday.