Despite the highly anticipated U.S. CPI data for November being released on Wednesday, the $29 trillion U.S. Treasury market's reaction to this latest inflation data has become less volatile, even less so than the volatility during the release of non-farm employment data.

The U.S. core CPI year-on-year for November was recorded at 3.3% unadjusted for seasonal variations for the third consecutive month, in line with expectations; the month-on-month figure was 0.3%, also meeting expectations and unchanged from the previous value. The U.S. unadjusted CPI year-on-year for November was recorded at 2.7%, rising from the previous value of 2.6% as expected, marking the second consecutive month of increase, reaching a four-month high; the month-on-month figure was 0.3%, rising from the previous value of 0.2% as expected, reaching the highest level since April.

As of Wednesday afternoon Eastern Time, the two-year U.S. Treasury yield rose by about 1 basis point, as the November CPI data aligned with economists' expectations, without any significant surprises, leading to a muted market reaction.

Gang Hu, Managing Partner at Winshore Capital Partners LP, stated, "The volatility brought by inflation data is decreasing, making the Federal Reserve's policy actions easier to predict."

He stated, "The Federal Reserve is still focused on inflation, but the labor market carries greater weight in its decision-making process."

According to data compiled by foreign media, although the volatility in the U.S. Treasury market on the day the recent CPI report was released has weakened, the volatility in the bond market has unusually intensified on the day the non-farm employment data was released.

Over the past five months, the average volatility of the two-year U.S. Treasury yield on the day of CPI data release was about 4 basis points. In the same period, the average volatility on the day of non-farm employment report release was about 13 basis points.

Hu stated that the inflation report is now a "lagging indicator"; President-elect Trump has vowed to implement a broad policy agenda that includes combating immigration and imposing tariffs on trading partners. He stated, "The market knows Trump is about to take office, and he could completely change the situation. Investors should not overinterpret today's inflation data."

Article forwarded from: Jin10 Data