Bond Yields Feeling that Gravitational Pull

How low could the 10-year Bond Yield decline if the Federal Reserve finally removes a unique and artificial yield barrier?

Ever since the inflation rate peaked in mid-2022, the 10-year U.S. Treasury bond yield has separated from underlying inflation trends causing a growing gap between yields and the fundamental inflation rate.  Despite a persistent moderation in the inflation rate during the last two years, bond yields have risen further and remain elevated.   As the gap between yields and inflation grows, bond yields are beginning to feel that gravitational pull from lowered inflation which could result in a much larger drop in yields than most currently anticipate.

Charts 1 and 2 demonstrate that bond yields were tied closely to price pressures as inflation accelerated between mid-2020 to mid-2022.  But since inflation peaked, bond yields have ignored moderating inflation and continued climbing.  Why have bond yields risen as the annual CPI inflation rate has declined from 9.1% to 3% and while U.S. commodity prices have collapsed by over 30% from their high two years ago?   And how much longer can inflation keep heading south while bond yields stubbornly stay elevated?