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No Inflation Follow-Up Today as USD and Treasury Yields Retreat

The retreat in bond yields continues today

The USD made a strong rally after the CPI inflation rate for January came above expectations. But it stopped later in the day and today there was no spillover, meaning that markets are not running away with yesterday’s positive CPI numbers, with Janet Yellen and other actors in the financial world calling for markets not to get carried away by just a 0.1% above expectations.

Treasury Secretary Janet Yellen Comments on Inflation

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Former Federal Reserve Chair Janet Yellen, now serving as Treasury Secretary, emphasized that fixating on minor fluctuations in the Consumer Price Index (CPI) is a significant oversight. She pointed out that prices of various commodities such as fuel, eggs, automobiles, and trucks have declined, indicating a normalization of inflation levels.

Yellen noted that Americans are increasingly optimistic about the economy, attributing this sentiment to the creation of substantial employment opportunities across the nation. However, she acknowledged that there is still more progress to be made. Yellen cautioned against repeating the errors of the 1970s and stressed the importance of closely monitoring economic data to make informed policy decisions.

The Buck has been slowly retreating lower today, with EUR/USD reaching its peak for the day, climbing 30 pips to 1.0730, while the US dollar struggles to gather momentum. This development warrants close observation as Treasury rates are currently at their lowest points of the day across the yield curve, with 10-year yields dropping by 5.5 basis points to 4.26%. This decline can be attributed partly to the fact that rates remain comfortably above the pre-Consumer Price Index (CPI) peak of 4.20%, indicating some market reassurance.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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