Market analysis: If inflation data unexpectedly declines, the US Treasury yield curve will be under pressure.

Kudotrade analyst Constantinos Kritikos said that US Treasury investors continue to reflect expectations of multiple rate cuts in the pricing in the coming months, which poses the risk of the yield curve falling again if the upcoming inflation data unexpectedly falls. He pointed out that the August PPI released on Wednesday and the CPI released on Thursday will play a critical role in shaping short-term market sentiment. "If the data is weaker, it will strengthen the market's expectations for the Fed to adopt an aggressive easing policy, further increasing pressure on the dollar and yields," he said. He added that even if the data is stronger than expected, it is unlikely to change the overall dovish policy direction.