📉 Expectations of Fed rate cuts increase, market trends attract attention 📉
U.S. Treasuries rose, yields fell, and mixed data on the labor market led traders to bet that the Fed will cut interest rates this year. Although the June non-farm payrolls report showed higher-than-expected job growth, data in previous months were revised downward and the unemployment rate rose.
🔹 Expectations of rate cuts increase
Derivatives market traders once again expected a 100% probability of two rate cuts this year. Currently, the probability that the Fed will cut interest rates as early as September is 76%.
🔹 Expert opinion
Thornburg Investment Management co-head of investment Jeff Klingelhofer said that U.S. bonds still have room to rise, Powell's recent statement tends to be moderately loose, the labor market has returned to balance, the risk of inflation downside has increased, and the economy may slide into recession.
BlackRock portfolio manager Jeffrey Rosenberg said that the expectation of a rate cut in September needs more data support, and next week's inflation data and next month's data are particularly critical.
