Markets expect the Fed to cut its benchmark interest rate by more than 2% in the next 12 months

BlockBeats news, on September 4, the U.S. Treasury bond rally continued on Tuesday, with the two-year Treasury yield falling from more than 5% at the end of April to around 3.85%. The rise in the past four months is the longest continuous rise since 2021.

The move is due to market expectations that the Federal Reserve will cut its benchmark interest rate by more than two percentage points in the next 12 months, which will be the largest drop since the 1980s except for the economic downturn.

For those who are bullish on bonds, this poses a risk: if the labor market, which cooled sharply in July, can still show resilience, the Federal Reserve will be able to cut interest rates at a more moderate pace. The first major test will be released on Friday, when the U.S. government will release non-farm payrolls data for August. Economists expect the data to show a rebound in job growth and a decline in the unemployment rate. (Jinshi)