Federal Reserve's Rate Cut Debate: Will US Treasuries Make New Gains? It All Depends on This Week's Non-Farm Payrolls?

Gold Daily reports that the debate over the future rate cuts by the Federal Reserve in the US Treasury market has intensified with the release of a series of key economic data. Bond traders are betting that the Federal Reserve will cut interest rates twice next year, which is one more cut than the Fed’s hints. If market expectations are correct, this will lay a foundation for US Treasuries to achieve new highs and the current bond market is heading towards its best year since 2020. George Catrambone, Head of Fixed Income at DWS Americas, said: “The direction of interest rates will depend on the labor market, so I’m only paying attention to the non-farm payroll data on Tuesday.” However, Kevin Flanagan of WisdomTree stated: “This week’s employment report may carry less weight because the government shutdown has complicated data collection, shifting his focus to the report at the beginning of next month, which will be released before the Fed’s policy decision on January 28.” On the traders’ side, according to swap market proxy indicators, they believe the Fed will end this easing cycle with interest rates around 3.2%. If the Fed remains largely unchanged in the face of stubborn inflation, it will indicate that future US Treasuries will be more likely to trade within a range. (Jin10)