The US core CPI rose 0.3% month-on-month, higher than market expectations of 0.2%, driving the short-term decline in the US bond yield curve. After the data was released, the market further increased its bets on interest rate hikes. The short end currently includes a contraction of about 23 basis points, which is higher than the 18 basis points before the data was released. On the same day, the 2-year US Treasury yield changed from the previous decline to an increase of about 5 basis points, while the long-term yield still fell by about 1 basis point. The 2-year and 10-year US Treasury yield spread narrowed by about 5 basis points from Thursday's closing, and the yield curve flattened out. Overnight index swaps show that by the end of the year, the market had accumulated a contraction of about 53 basis points, which is equivalent to fully accounting for at least two interest rate increases of 25 basis points each time.

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