With the aftershocks of the CPI still lingering, US Treasury yields are approaching the 4% threshold as markets look to more employment data this week to validate the path for interest rate cuts.

The rally in U.S. Treasuries last week continued as trading resumed after the Tuesday holiday.$U.S. 10-Year Treasury Notes Yield (US10Y.BD)$The yield on the benchmark 10-year Treasury note fell by 2 basis points to 4.03%, while the two-year Treasury yield edged closer to its lowest level since 2022 amid thin trading in Asia. Last week, Treasuries finished strongly as markets anticipated that slowing inflation would prompt the Federal Reserve to cut interest rates at least twice this year.

"Weaker-than-expected U.S. CPI data last week, combined with ongoing systematic deleveraging by quant funds in equity markets, is driving bond buying," said Prashant Newnaha, senior strategist at TD Securities in Singapore. "From a technical perspective,$U.S. 10-Year Treasury Notes Yield (US10Y.BD)$the 4% level is becoming a critical threshold. If this level is breached, yields are expected to decline significantly."

Bond prices rose broadly across the region, with yields on Australian and New Zealand government bonds also declining slightly. Japanese bond yields plunged following signs of stabilizing demand in a five-year bond auction. U.S. stock index futures retreated.

This week, traders are closely watching more data on the U.S. labor market and the minutes from the Federal Reserve's January meeting for new clues about the potential timing of interest rate adjustments.

编辑/Rcoky