(Bloomberg) -- Bond traders are waiting for a key inflation report on Tuesday for clues on the direction of the Federal Reserve's policy path and whether the recent Treasury rally has more room to run.
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Treasury yields across the curve fell to their lowest since September last week after a Democratic sweep in the midterms led to a selloff in technology stocks that sent investors fleeing to safety. As equities showed signs of stabilizing Monday, the 10-year yield ticked up to 4.88%, but remained well off levels above 5% reached last month. It was little changed in Asia on Tuesday.
Economists expect consumer price data later in the US session to show the pace of inflation moderating while remaining elevated, keeping pressure on the Fed to hike rates at its next meeting in December.
"If we get another relatively hot inflation print, I think it's quite likely you start to see some of the rate hikes get pulled forward again," said Scott Barnard, a portfolio manager of a $1.2 billion multi-asset fund at Westwood Management Corp.
US consumer prices are expected to have risen 0.3% in October from a month earlier, according to a Bloomberg survey of economists. That's...