The US debt market has "voted", signaling that the Federal Reserve is about to cut interest rates.
Bond investors expect the Federal Reserve to keep interest rates unchanged this week, but will signal an impending rate cut, so they are betting that the US Treasury yield curve will become less inverted and eventually return to normal. Reportedly, the closely watched two-year/ten-year US Treasury yield curve has been inverted for two consecutive years, which is the longest inversion in history, and the current spread between the two is negative 22 basis points. The market generally expects the Federal Reserve to keep its overnight benchmark interest rate unchanged in the 5.25%-5.50% range for the eighth consecutive time on Thursday. Investors are hoping that Federal Reserve Chairman Powell will give a "dovish" hold signal in the post-meeting press conference, indicating that he may hint at the earliest rate cut in September, which would be the first in four years.
