The 10-year U.S. Treasury yield climbed to 4.872% from Friday’s 4.858% settlement. Germany’s 10-year Bund yield rose 0.014 percentage point to 3.267%, according to Tradeweb.

October U.S. inflation is expected to remain above the Fed’s 2% target, supporting expectations of a rate increase next month. But the inflation outlook has eased as President Trump faces mounting calls to end the war in Iran. Brent crude fell 5% to $93, while the WSJ Dollar Index declined 0.3% amid growing concerns about artificial intelligence.

Jefferies global economist Mohit Kumar said the U.S. economy should continue to hold into 2027, though a sharp pullback in AI investment or negative wealth effects could pose risks. “But...we see some hiccups rather than a derailing of the AI trade,” he said in a note.

Diplomatic efforts in the Middle East have also reduced demand for safe-haven debt, said Mahmoud Mashal, senior market analyst at VT Markets Dubai. He cautioned that no agreement has been signed and markets remain vulnerable to renewed escalation.

Analysts expect Tuesday’s CPI release to omit annual figures because data from a year earlier was incomplete during a government shutdown. TD Securities strategists expect core inflation to end 2026 at 2.8% year over year, after reaching a low of 2.4%. They forecast headline inflation to rise gradually to 4.0% by year-end, from a May peak of 4.2%, with its path dependent on the outcome of the Middle East conflict. The firm expects disinflation to regain momentum by mid-2027.