The aftermath of CPI is not over! The US Treasury yield is approaching the 4% mark, the market is holding its breath as it waits for the employment data to validate the path of interest rate cuts.

The rising trend of US Treasury bonds last week continued after trading resumed on Tuesday following the holiday. The yield on the benchmark 10-year Treasury bond fell by 2 basis points to 4.03%, while the yield on the 2-year Treasury bond approached its lowest level since 2022 in subdued trading in Asia. Last week, strong demand for US Treasury bonds closed the market as market expectations of slowing inflation prompted the Fed to cut interest rates at least twice this year. "Last week's weak US CPI data and continued deleveraging of quantitative hedge funds in the stock market are driving bond buyers," said Prashant Nena, senior strategist at Singapore's DBS Securities. "From a technical perspective, the 4% level on the 10-year Treasury bond yield is becoming a key level of success or failure. If this level is broken, it is expected that the yield will plummet significantly." Bond yields in the region generally rose, with Australian and New Zealand bond yields also slightly lower. After signs of stabilization in demand for 5-year bond auctions, Japanese bond yields plummeted. US stock index futures fell. This week, traders are closely monitoring more data on the US job market and the minutes of the Fed's January meeting in search of new clues about potential timing of interest rate adjustments.