According to the Economic Information APP, Ray Dalio, the billionaire investor and founder of the top global hedge fund Bridgewater Associates, recently stated that he expects the Federal Reserve to not make a 'significant rate cut.' Starting with a 50-basis-point rate cut is by no means the norm, as the US economy is still 'relatively in a good balanced state.' He emphasized that due to the recent sharp fluctuations in the US Treasury market caused by rate cut expectations, US bonds have become a high-risk investment.

"Currently, US Treasury bonds are not a very good investment," said the founder of Bridgewater Associates, a legendary figure in the hedge fund industry, during the Greenwich Economic Forum on Tuesday. "In my view, we face interest rate risks in the bond market."

Dalio mentioned that investors focusing on the US Treasury market are betting on a rapid rate cut pace by the Federal Reserve, yet this aggressive dovish expectation seems overly hasty. Last month, the Federal Reserve unexpectedly cut the federal funds rate by 50 basis points for the first time in four years, marking the beginning of a new rate cutting cycle. However, the exceptionally strong nonfarm payrolls report in September provides policymakers at the Federal Reserve with the space to cut rates at a slower pace. Even some interest rate futures traders are betting that with the strong nonfarm data, combined with a possibly higher-than-expected CPI announced this week, the Federal Reserve may announce a pause in rate cuts in November or December.

Since August 1, pricing in the interest rate futures market for the first time suggests that the year-end Fed funds target rate cut will be less than 50 basis points. This implies that some traders are even pricing in the possibility that the Federal Reserve may choose to pause the rate-cutting process at the FOMC meetings in November or December.

Ohsung Kwon, a stock and quant strategist at Bank of America, stated in a report released on Sunday: 'Inflation is unlikely to be weak enough to warrant a 50-basis-point rate cut, but very strong inflation data may make the rate cut process in November by the Federal Reserve less certain. The market calls for a pause in rate cuts may grow stronger.' This crucial CPI data report will be released late Thursday Beijing time.

The US Treasury market has experienced significant volatility this year, with the 2-year US Treasury yields, which are most sensitive to rate expectations, fluctuating between 3.5% and over 5%, indicating a very large price fluctuation for bonds at that maturity, which is very rare for bond assets. This is primarily due to the intense fluctuations in US bonds caused by rate cut expectations.

In the current US bond trading market, as most bond traders around the world have temporarily abandoned their bullish bets on US Treasury bonds, this has pushed the 10-year US Treasury bond yield, known as the 'global asset pricing anchor', to its highest level since August, breaking through the key 4% level. In terms of the price trend of the 10-year US Treasury bonds this year, the price fluctuation range is less than that of the 2-year US Treasury bonds, but it is still very significant compared to historical average volatility.

Since the strong performance of the September employment report released late last week, bond traders in the US market have been abandoning their long positions in multiple futures contracts linked to the secured overnight financing rate (SRF). This largely indicates that the bullish bets on significant rate cuts for this year and early 2025 in the US bond market have been unwound, which may drive US bond prices into a steep downward trend.

In his speech, Dalio stated that US Treasury bonds account for a significant proportion in the portfolios of institutional investors and central banks, which is not good news for US bonds due to this 'overweight' allocation. He added that the uncertainty brought by global geopolitical issues is also a problem for the US bond market. The high interest costs for the US Department of the Treasury also pose risks. 'Foreign institutional investors may be concerned about the risks of holding US bonds because they could face unexpected sanctions.'

In a more extensive interview, Dalio focused on the impact of the US presidential election on the market. The founder of Bridgewater Associates is bullish on the economic policies of former US President Donald Trump, stating that this presidential candidate's proposal to reduce corporate tax rates 'is more in line with the essence of classical capitalism'.

'He has come up with a very good point about increasing tariff capabilities,' Dalio said, adding that he had calculated Trump's tariff proposal to increase by about $800 billion annually.

However, he stated that such tariffs could lead to a resurgence of inflation rates.