The 10-year Treasury yield surges above 4% before the crucial inflation data release.

On Wednesday, U.S. Treasury yields decreased, as investors anticipated the release of inflation data on Thursday and its potential impact on interest rates and the economy.

The yield on the increased by approximately 2 basis points to 4.04% after fluctuating around 4% during the early part of the week. The yield on the was only 0.009% lower at 4.371%.

An inverted relationship exists between yields and prices, with one basis point equal to 0.01%.

The release of inflation data on Thursday and Friday could influence the Federal Reserve's interest rate policy plans, causing investors to prepare themselves.

The consumer price index for December will be released on Thursday, while the producer price index, which monitors wholesale prices, will be published on Friday. According to a poll by Dow Jones, economists predict that the CPI increased by 3.2% year over year in December.

As inflationary pressures ease, investors are hoping that the figures will reflect this, indicating that elevated interest rates may take effect and rates could be cut soon, or at least not go any higher.

The Federal Reserve's meeting minutes published recently indicated that policymakers are likely to cut interest rates this year, but significant uncertainty remains about monetary policy. Additionally, some officials suggested that further rate hikes may be possible if the economy continues to develop in a certain way, according to the minutes.

The Fed has not disclosed a timeline for when interest rates may be reduced, although many investors are hoping for the first reduction to occur during the Fed's second meeting in March. However, markets anticipate that rates will remain unchanged at the Fed's January meeting, which is scheduled for January 30-31.