The Fed may release a signal of a September rate cut this week, and the market is waiting for the interest rate decision.
This week, the global financial market is focused on the upcoming monetary policy meeting of the Federal Reserve. The market generally expects that the Federal Reserve will maintain the current interest rate level at this meeting, but more importantly, it may subtly release a signal of a possible rate cut in September through official statements or policy communications. The formation of this expectation is based on the advance preview of a series of key economic data: The survey results of the Wall Street Journal show that economists generally predict that the consumer confidence index and labor cost index released on the eve of the interest rate decision will show a weak trend, while the ADP employment data is expected to usher in growth. It is particularly noteworthy that the July non-farm employment report to be released on Friday may show a decrease in employment, while the unemployment rate remains at a relatively stable level of 4.1%.
At the same time, the bond market has also shown a positive response to the expectation of a rate cut. The 10-year U.S. Treasury yield is currently hovering around 4.156%, close to the multi-month low hit earlier this month; while the 2-year Treasury yield has fallen back to the level of early February, at 4.374%. On the eve of the Fed's interest rate decision, the continued decline in U.S. Treasury yields has undoubtedly added a strong atmosphere of interest rate cut expectations to the market. This week's interest rate meeting will undoubtedly become an important window for observing the direction of global economic policies, especially the Fed's monetary policy adjustment strategy.
