August’s consumer price index ex-food and energy (Core CPI), rose only 0.1% from the previous month. The headline CPI rose 0.4%, but this was mostly driven by a jump in gasoline price. The Core CPI is still only 1.4% higher than where it was last August, thus inflationary pressures remain subdued.
CRT Capital Group points out that the real interest rate (the spread between US treasury yields and actual inflation) is currently the highest since the 1980’s. This could be one reason why US treasuries have been experiencing strong demand.