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After a two-week selloff, Treasury bond are starting to stage a comeback today (Tuesday) as investors review the latest inflation data.

On Tuesday morning, the government reported that the Producer Price Index (PPI), a measure of prices at the wholesale level, rose by 0.4 percent last month. That’s the same level at which it increased in August and September, and below analysts’ expectations for 0.8 percent growth.

Investors will now turn to the Consumer Price Index (CPI), which comes out tomorrow morning (Wednesday). Analysts also expect that the CPI will reveal dangerously low levels of inflation.

Bond traders watch inflation data very closely, as expectations for how quickly prices rise over the long term could compete with the low yields on government bonds.

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