US Treasuries declined Tuesday as investors braced for Wednesday's CPI report, which will shape expectations around future Federal Reserve rate cuts. Market participants are parsing the data for hints on how soon borrowing costs might ease this year. The yield on the 10-year note rose slightly, reflecting trader nervousness ahead of the inflation reading.

December's data could influence whether the Fed maintains its current pause in monetary tightening or signals upcoming reductions. Recent Fed commentary has emphasized data-dependent decisions, making monthly inflation reports critical market drivers. Traders are particularly focused on core CPI figures, which strip out volatile food and energy costs.

Bond markets have swung frequently this year based on economic data surprises. Any indication that inflation remains stubbornly high could push yields higher and delay expectations for rate cuts. Wednesday's CPI release will likely dictate short-term Treasury performance, with investors closely watching for signs of sustained disinflation.