As US Treasury Bonds Rise, Investors Await Job Data and Speeches by Federal Reserve Officials

U.S. Treasury bond prices are rising, as investors await the upcoming U.S. labor market data and a speech by a Federal Reserve official to further clarify the monetary policy path. Data shows that U.S. bond yields are all falling, while the market's bets on a Fed rate cut have not changed much. Following the weak U.S. July non-farm payroll report released last week, investors are more concerned about the U.S. economic outlook, leading to sharp fluctuations in the bond market over the past few days. The initial strong rebound in U.S. bonds later lost momentum, and traders are now looking for more clues on how the U.S. and the Fed will react. This increases the risk of the latest data on U.S. initial jobless claims to be released tonight. The market currently expects that the number of initial jobless claims in the U.S. for the week ending August 3 will drop to 240,000, below the previous value of 249,000. Some analysts point out that if the latest initial jobless claims exceed 250,000, it will be seen as a significant bearish signal, and speculation about an "economic recession" will resurface. Deutsche Bank strategist Jim Reid said, "Given last week's non-farm payroll data, we remain highly vigilant about the related data on the U.S. labor market." He added that the market will focus on the $25 billion 30-year U.S. Treasury auction scheduled for Thursday afternoon at 1 p.m. local time, which is the "final test of investor interest in U.S. bonds this week." Demand for the $42 billion 10-year U.S. Treasury auction on Wednesday was weaker than expected, with yields significantly higher than the indicated levels before the auction. However, the $58 billion 3-year U.S. Treasury earlier this week attracted significant demand. Later on Thursday, market focus will be on the speech by Richmond Fed President Barkin at 3 p.m. local time. Barkin stated last week after the release of the U.S. July non-farm payroll report that the economic conditions are good, although it is not yet clear whether the labor market is recovering at a normal hiring pace or deteriorating more severely. Meanwhile, market pessimism continues to grow. JPMorgan Chase currently believes that there is a 35% chance of the U.S. economy entering a recession by the end of this year, up from 25% at the beginning of last month. Andres Sanchez Balcazar, Global Head of Bonds at Pictet Asset Management, said, "The market is struggling to digest all this information and is viewing it as a new macro situation." "What we are seeing is actually the unwinding of many consensus trades that were relatively complacent in the market." Currently, the swap market implies a 112 basis point rate cut by the Fed this year, significantly higher than the 65 basis points cut implied just over a week ago. The market also believes that there is a 70% chance of a 50 basis point rate cut by the Fed in September On this, Mohit Kumar, Managing Director of J.P. Morgan, said: "We still believe that the market's expectations for a Fed rate cut are too high." He expects the Fed to cut rates by 25 basis points in September, totaling 50 basis points by 2024