The bond market’s gauge of inflation expectations, i.e. the 10-year breakeven rate, or the yield difference between 10-year Treasury Inflation Protected Securities (TIPS) and regular 10-year Treasury notes, fell to 1.78%; the lowest since November 10.
The drop in the inflation expectations represents Trump trade fade and the cool down in the Chinese PPI.
Note that the reflation trade was the result of the spike in the Chinese PPI in Q4, 2016. Both the Chinese PPI and US inflation expectations bottomed out in July/August 2016.