Cooler-than-expected inflation readings and positive bank earnings provided a string of good news for bulls, after a dismal start of the year.

There's no guarantee that a cut is coming, but more soft economic data may eventually prod the Fed to be convinced to follow its own dot-plot from late last year.

US stocks soared as traders cheered encouraging inflation data, while the 10-year Treasury plunged 13 basis points.

U.S. Treasury yields dipped on Tuesday after data showed U.S. producer prices rose less than expected in December, and stock indexes mostly fell as investors remained cautious ahead of U.S. consumer price data on Wednesday and the start of quarterly earnings reports.