The longest continuous rise in three years! Expectations of Fed rate cuts ignite the US bond market, investors face a crucial decision-making week!

According to the VESYNC financial APP, the rising trend in the US Treasury market has opened a week full of variables for the global bond market. The continuous rise in bond prices indicates the potential for a third consecutive month of growth, the longest uptrend in three years. In Monday's trading, long-term bonds led the way, with the yield on the US 30-year Treasury bond falling by about 5 basis points, mainly as traders prepared for the Federal Reserve's policy decision on July 31. The market widely expects the Fed to signal the imminent start of an easing cycle, driving the rise in US Treasury prices.

Erik Nielsen, macro strategist at Fuguo Bank, said, "Observing market pricing, it seems we are already prepared for a rate cut in September." He further posed the question, "Can we cut rates twice? Of course. But I think the market is more concerned about whether we can cut rates six times—or even more?"

Recent gains have pushed a key indicator of US debt up by 1.3% this month, with returns since the end of April rising to around 3.9%. Meanwhile, the Bloomberg Dollar Spot Index fell by about 0.8% in July.

This week, global investors are focusing on a series of major central bank decisions, including the Bank of Japan and the Federal Reserve on Wednesday, and the Bank of England on Thursday. Market participants hope to find clues to the future global borrowing cost trends through these decisions.

In the US, swap traders expect the Fed to cut rates at least twice by the end of 2024, with each cut being 25 basis points, with the first cut possibly in September. Last week, former New York Fed President William Dudley called for a rate cut in July, although signs of a quick economic recovery in the US quickly dampened expectations for a rate cut.

Furthermore, on Wednesday, bond traders widely expect the US Treasury to adhere to its previously announced guidelines for Treasury issuance in its so-called quarterly refunding announcement, maintaining the long-term Treasury issuance size stable for two consecutive quarters. Nevertheless, some Republicans have accused the Biden administration of manipulating issuance strategies to suppress yields and boost the economy, increasing market attention to this event.

It is understood that some Republicans frequently accuse the Biden administration of wantonly manipulating US Treasury issuance strategies. According to many investment banks such as Bank of America and Goldman Sachs, given the worsening deficit expectations of the US government, the Treasury may have to revise its future debt issuance guidance, and raising issuance expectations will undoubtedly push various Treasury yields into an upward trajectory, especially short-term Treasury yields.

In response, Treasury Secretary Yellen stated clearly last Friday that the US Treasury "does not have such a strategy" to try to ease financial conditions. Josh Frost, responsible for federal bond issuance, gave a detailed speech earlier this month explaining various aspects of Treasury issuance, demonstrating how the department's decisions are made within normal ranges, and emphasizing alignment with the expectations and suggestions of market participants In conclusion, the dynamics of the U.S. Treasury market and the upcoming central bank decisions indicate that the global financial markets will face a week full of uncertainty and opportunities. Investors and decision-makers are closely monitoring these developments in hopes of capturing the next market trend