US 10-year yields challenge 3.00% on hopes that we've hit peak inflation

US 10-year yields are in danger of falling below 3% for the first time since the surprise CPI report followed by the 75 bps Fed hike.

The decline comes after today's PCE report, which is the Fed's preferred measure of inflation. Prices rose 0.3% in the month, less than the +0.4% reading economists were expecting.

The decline in yields also comes despite a handful of dismal auctions in the past week.

If yields can fall and stay below 3% it will be a strong signal for risk assets and could weigh on the US dollar. In order for that to happen, the market will need to be convinced that 'peak inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term' is here and will start trending down towards the Fed's target.

There's also plenty of skepticism around market moves at this time of year. It's the end of a particularly-volatile quarter and flows are dominating fundamentals.