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.

US 10 year yields chart June 30

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 ' 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.